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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
For the Fiscal Year Ended December 31, 1995 -- Commission File Number 1-6523
NATIONSBANK CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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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
7 3/4% Debentures, due 2002 American Stock Exchange
8 1/2% Notes, due 1996 New York Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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 in SEC Rule 405), is approximately $21,637,312,000 computed by reference
to the closing price of Common Stock of $74.00 per share on March 15, 1996, on
the New York Stock Exchange Composite Transactions List, 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 300,462,332 shares
outstanding as of March 1, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
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DOCUMENT OF THE REGISTRANT FORM 10-K REFERENCE LOCATIONS
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1995 Annual Report to Shareholders PARTS I, II and IV
1996 Proxy Statement PART III
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PART I
ITEM 1. BUSINESS
GENERAL
The registrant is a North Carolina corporation and 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 AND DISPOSITIONS
On March 31, 1995, the registrant's mortgage banking subsidiary acquired a
$10 billion residential mortgage servicing portfolio from Source One Mortgage
Services Corporation at a purchase price of approximately $190 million.
On March 31, 1995, the registrant's mortgage banking subsidiary acquired
the residential mortgage servicing business of KeyCorp Mortgage Inc. from
KeyCorp and Key Bank of New York. The acquired assets included primarily a $25
billion residential mortgage servicing portfolio, for which the registrant's
subsidiary paid approximately $339 million, and a mortgage servicing operation
employing about 430 people and other servicing-related assets, for which this
subsidiary paid approximately $150 million.
The registrant and BankAmerica Corporation formed MECA Software LLC
("MECA"), and, on June 30, 1995, MECA purchased MECA Software, Inc. and its
"Managing Your Money" software for an aggregate purchase price of approximately
$35 million. First Bank System, Fleet Financial Group and Royal Bank of Canada
subsequently joined MECA.
On December 4, 1995, the registrant completed the sale of the portion of
its corporate trust business that deals with bond servicing and administration
to The Bank of New York.
On December 13, 1995, the registrant completed the acquisition of
Intercontinental Bank ("ICBK"). As of the acquisition date, ICBK had assets of
approximately $1.1 billion and deposits of approximately $910 million. The
registrant issued 0.4153 shares of its common stock in exchange for each
outstanding share of ICBK common stock, for an aggregate purchase price of
approximately 3 million shares of the registrant's common stock.
On December 21, 1995, the registrant completed the acquisition of North
Florida Bank Corporation ("NFBC"). As of the acquisition date, NFBC had assets
of approximately $50 million and deposits of approximately $44 million. The
registrant issued 0.7797 shares of its common stock for each outstanding share
of NFBC common stock, for an aggregate purchase price of approximately 103,000
shares of the registrant's common stock.
On January 9, 1996, the registrant completed the acquisition of Bank South
Corporation ("BKSO"). As of the acquisition date, BKSO had assets of
approximately $7.4 billion and deposits of approximately $5.1 billion. The
registrant issued 0.44 shares of its common stock for each outstanding share of
BKSO common stock, for an aggregate purchase price of approximately 26 million
shares of the registrant's common stock.
On January 10, 1996, the registrant completed the acquisition of CSF
Holdings, Inc. ("CSF"). As of the acquisition date, CSF had assets of
approximately $4.8 billion and deposits of approximately $3.8 billion. The
purchase price was approximately $516 million and was paid in cash.
On January 25, 1996, the registrant entered into an agreement to acquire
Charter Bancshares, Inc. ("CBI") by exchanging each outstanding share of CBI
capital stock for 0.385 shares of the registrant's common stock, for an
aggregate purchase price of approximately 1.4 million shares of the registrant's
common stock. As of December 31, 1995, CBI had assets of approximately $915
million and deposits of approximately $734 million. Subject to certain
regulatory approvals, the approval of CBI's shareholders and other closing
conditions, this transaction is expected to be completed in the second quarter
of 1996.
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On January 31, 1996, the registrant completed the acquisition of Sun World,
N.A. ("Sun World"). As of the acquisition date, Sun World had assets of
approximately $136 million and deposits of approximately $123 million. The
purchase price was approximately $16 million and was paid in cash.
On February 15, 1996, the registrant, through NationsCredit Commercial
Corporation, its wholly owned, indirect subsidiary engaged primarily in the
commercial financial services business, entered into an agreement to acquire LDI
Corporation ("LDI") by purchasing all the outstanding shares of capital stock of
LDI at an aggregate purchase price of approximately $28 million, payable in
cash. As of October 31, 1995, LDI had assets of approximately $335 million.
Subject to certain regulatory approvals, the approval of LDI's shareholders and
other closing conditions, this transaction is expected to be completed in the
second quarter of 1996.
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 such
financial institutions and other businesses. As a general rule, the registrant
publicly announces such material acquisitions when a definitive agreement has
been reached.
OPERATIONS
The registrant provides a diversified range of banking and certain
nonbanking financial services and products through its various subsidiaries. The
registrant manages its business activities through three major business units:
the General Bank, Global Finance and Financial Services.
The General Bank provides comprehensive services in the commercial and
retail banking fields, including trust and private banking operations, the
origination and servicing of home mortgage loans, the issuance and servicing of
credit cards (through a Delaware subsidiary), indirect lending, dealer finance
and certain insurance services. The General Bank also offers full service
brokerage services and discount brokerage services and provides investment
advisory services to a proprietary mutual fund, as well as investment
management, banking and fiduciary services through subsidiaries of the
registrant. As of December 31, 1995, the General Bank operated approximately
1,833 banking offices through the following Banks: NationsBank, N.A. (serving
the States of North Carolina, South Carolina, Maryland and Virginia and the
District of Columbia); NationsBank, N.A. (South) (serving the States of Florida
and Georgia); NationsBank of Kentucky, N.A.; NationsBank of Tennessee, N.A; and
NationsBank of Texas, N.A. The General Bank also provides fully automated,
24-hour cash dispensing and depositing services throughout the states in which
it is located, through approximately 2,292 automated teller machines.
Global Finance provides comprehensive corporate banking and investment
banking services to domestic and international customers, including treasury
management, loan syndication, asset-backed lending, leasing, factoring and
arrangement of asset-backed and project financing, as well as underwriting,
trading or distributing a wide range of securities (including bank-eligible
securities and, to a limited extent, bank-ineligible securities as authorized by
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") under Section 20 of the Glass-Steagall Act), and trading and
distributing a wide range of derivative products in certain interest rate,
foreign exhange, commodity and equity markets. Global Finance provides its
services through various offices located in major United States cities as well
as in London, Frankfurt, Singapore, Bogota, Mexico City, Grand Cayman, Nassau,
Seoul, Tokyo, Osaka, Taipei and Hong Kong.
Financial Services consists of NationsCredit Consumer Corporation (formerly
NationsCredit Corporation), primarily a consumer finance subsidiary, and
NationsCredit Commercial Corporation (formerly Greyrock Capital Group Inc.),
primarily a commercial finance subsidiary. NationsCredit Consumer Corporation,
which has approximately 371 offices located in 34 states, provides personal,
mortgage and automobile loans to consumers and retail finance programs to
dealers. NationsCredit Commercial Corporation consists of six divisions that
specialize in one or more of the following areas: equipment loans and leasing;
loans for debt restructuring, mergers and acquisitions and working capital; real
estate, golf/recreational and health care financing; and inventory financing to
manufacturers, distributors and dealers.
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Additional information about the registrant and its operations is
incorporated by reference from Table Two (page 16) and the narrative comments
under the caption "Management's Discussion and Analysis -- Business Unit
Operations" (pages 14 through 19) in the registrant's 1995 Annual Report to
Shareholders.
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
Banks 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 Banks are also subject to regulation by the
Federal Deposit Insurance Corporation (the "FDIC") and other federal regulatory
agencies. 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 supervision and examination by other regulatory agencies,
all of which directly or indirectly affect the operations and management of the
registrant and its ability to make distributions. The following discussion
summarizes certain aspects of those laws and regulations that affect the
registrant.
Under the Act, the activities of the registrant, 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. Generally, 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 stock of any bank which is not already majority-owned by the bank holding
company. Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 (the "Interstate Banking and Branching Act"), which became effective
September 29, 1995, a bank holding company may acquire banks in states other
than its home state subject to any state requirement that the bank has been
organized and operating for a minimum period of time, not to exceed five years,
and the requirement that the bank holding company, prior to or following the
proposed acquisition, controls no more than 10% of the total amount of deposits
of insured depository institutions in the United States and no more than 30% of
such deposits in that state (or such lesser or greater amount set by state law).
The Interstate Banking and Branching Act also authorizes banks to merge
across state lines, thereby creating interstate branches, beginning June 1,
1997. Under such legislation, each state has the opportunity either to "opt out"
of this provision, thereby prohibiting interstate branching in such states, or
to "opt in" at an earlier time, thereby allowing interstate branching within
that state prior to June 1, 1997. Furthermore, pursuant to the Interstate
Banking and Branching Act, a bank is now able to open new branches in a state in
which it does not already have banking operations if such state enacts a law
permitting such DE NOVO branching.
As previously described, the registrant regularly evaluates merger and
acquisition opportunities, and it anticipates that it will continue to evaluate
such opportunities in light of the new legislation.
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. In 1995, several bills were introduced in
Congress that would have the effect of broadening the securities underwriting
powers of bank holding companies and, possibly, permitting bank holding
companies to engage in nonfinancial activities. The likelihood and timing of any
such proposals or bills and the impact they might have on the registrant and its
subsidiaries cannot be determined at this time.
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CAPITAL AND OPERATIONAL REQUIREMENTS
The Federal Reserve Board, the Comptroller and the FDIC have issued
substantially similar risk-based and leverage capital guidelines applicable to
United States banking organizations. In addition, those regulatory agencies may
from time to time require that a banking organization maintain capital above the
minimum levels, whether because of its financial condition or actual or
anticipated growth. The guidelines are summarized in the narrative comments
under the caption "Capital Resources and Capital Management" (page 40) set forth
in the 1995 Annual Report to Shareholders of the registrant which are hereby
incorporated by reference.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, identifies 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% of the bank's assets at the time it became "undercapitalized"
or the amount needed to comply with the 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 requires 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 considered adequately or
well capitalized.
Banking agencies have also adopted final regulations which mandate that
regulators take into consideration concentrations of credit risk and risks from
non-traditional activities, as well as an institution's ability to manage those
risks, when determining the adequacy of an institution's capital. That
evaluation will be made as a part of the institution's regular safety and
soundness examination. Banking agencies also have proposed amendments to
existing risk-based capital regulations to provide for the consideration of
interest rate risk (when the interest rate sensitivity of an institution's
assets does not match the sensitivity of its liabilities or its
off-balance-sheet position) in the determination of a bank's minimum capital
requirements. This proposal, while still under consideration, would require
banks with interest rate risk in excess of defined thresholds to maintain
additional capital beyond that generally required.
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 the Banks. The
amount of dividends that each Bank may declare in a calendar year without
approval of the Comptroller is the Bank's net profits for that year, as defined
by statute, combined with its net retained profits, as defined, for the
preceding two years. In addition, from time to time the registrant applies for,
and may receive, permission from the Comptroller for one or more of the Banks to
declare special dividends. In 1996, the Banks can initiate dividend payments,
without prior regulatory approval, of up to an aggregate of $905 million plus an
additional amount equal to their net profits for 1996 up to the date of any such
dividend declaration.
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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 established under FDICIA, as described
above. 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.
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.
Similarly, under the cross-guarantee provisions of the Federal Deposit Insurance
Act, in the event of a loss suffered or anticipated by the FDIC -- either as a
result of default of a banking or thrift subsidiary of the registrant or related
to FDIC assistance provided to a subsidiary in danger of default -- the other
Banks may be assessed for the FDIC's loss, subject to certain exceptions.
ADDITIONAL INFORMATION
The following information set forth in the 1995 Annual Report to
Shareholders of the registrant is hereby incorporated by reference:
Table Three (page 18) for average balance sheet amounts, related
taxable-equivalent interest earned or paid, and related average yields
earned and rates paid.
Table Four (page 20) and the narrative comments under the caption "Net
Interest Income" (page 19) for changes in taxable-equivalent interest
income and expense for each major category of interest-earning assets and
interest-bearing liabilities.
The narrative comments under the caption "Securities" (pages 25 and
26) and Note Three (pages 54 through 56) of the Notes To Consolidated
Financial Statements for information on the book values, maturities and
weighted average yields of the securities (by category) of the registrant.
Tables Eight (page 26), Nine (page 27) and Twenty (page 39) for
distribution of loans and leases, selected loan maturity data and
interest-rate risk.
Table Fifteen (page 34), the narrative comments under the caption
"Credit Risk Management And Credit Portfolio Review -- Nonperforming
Assets" (pages 33 and 34), and Note One (page 52) of the Notes To
Consolidated Financial Statements for information on the nonperforming
assets of the registrant. The narrative comments under the captions "Credit
Risk Management And Credit Portfolio Review" (pages 31 and 32) and "Loans
and Leases" (pages 26 and 27) and Tables Seventeen, Eighteen and Nineteen
(pages 36 and 37) for a discussion of the characteristics of the loan and
lease portfolio.
Tables Thirteen (page 32) and Fourteen (page 33), the narrative
comments under the captions "Provision for Credit Losses" (page 19) and
"Credit Risk Management And Credit Portfolio Review -- Allowance for Credit
Losses" (pages 32 and 33) and Note One (page 52) of the Notes To
Consolidated Financial Statements for information on the credit loss
experience of the registrant.
Table Three (page 18) and the narrative comments under the caption
"Deposits" (page 27) for deposit information.
"Six-Year Consolidated Statistical Summary" (page 69) for return on
assets, return on equity and dividend payout ratio for 1990 through 1995,
inclusive.
Table Ten (page 28) and Note Six (pages 58 and 59) 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 14
through 45 and pages 68 and 69 for additional data on the consolidated
operations of the registrant and its majority-owned subsidiaries.
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COMPETITION
The activities in which the registrant and its three major business units
(the General Bank, Global Finance and Financial Services) engage are highly
competitive. Generally, the lines of activity and markets served involve
competition with other banks and non-bank financial institutions, such as
investment banking firms, brokerage firms, mutual funds and insurance companies,
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
registrant's three major business units is highly competitive. The General Bank,
Global Finance and Financial Services compete with other commercial banks,
savings and loan associations, finance companies and other businesses which
provide similar services. The three major business units 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
registrant's non-banking subsidiaries and the Banks. In its consumer lending
operations, the competitors of the three major business units include other
banks, savings and loan associations, credit unions, regulated small loan
companies and other non-bank organizations offering financial services. In the
investment banking, investment advisory and brokerage business, the registrant's
non-banking subsidiaries compete with other banking and investment banking
firms, investment advisory firms, brokerage firms and mutual funds. The
registrant's mortgage banking subsidiary competes with commercial banks, savings
and loan associations, government agencies, mortgage brokers and other non-bank
organizations offering mortgage banking 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
registrant and its three major business units 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, as well as money market mutual funds.
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 banking and
branching legislation and certain state legislation.
EMPLOYEES
At December 31, 1995, the registrant and its subsidiaries had 58,322
full-time equivalent employees. Of the foregoing employees, 32,763 were employed
by the General Bank, 5,429 were employed by Global Finance, 2,744 were employed
by Financial Services, 13,300 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 holding company
and the registrant's other subsidiaries.
ITEM 2. PROPERTIES
The principal offices of the registrant are located in the 60-story
NationsBank Corporate Center in Charlotte, North Carolina, which is owned by a
subsidiary of the registrant. The registrant occupies approximately 512,000
square feet at market rates under a lease which expires in 2002, and
approximately 593,000 square feet of office space is available for lease to
third parties at market rates. At December 31, 1995, approximately 99 percent
was occupied by the registrant or subject to existing third party leases or
letters of intention to lease.
The principal North Carolina offices of NationsBank, N.A. are located in
leased space in the 40-story NationsBank Plaza, Charlotte, North Carolina.
NationsBank, N.A. is the major tenant of the building with approximately 669,000
square feet of the net rentable space, of which approximately 438,000 square
feet of space is under a lease which expires in 2009 and the remaining space is
under leases of shorter duration.
The principal South Carolina offices of NationsBank, N.A. are located in
approximately 91,000 square feet of leased space in the NationsBank Tower in
Columbia under a lease which is in the process of being renewed. NationsBank,
N.A., through subsidiaries, owns partnership interests in the building and the
underlying land. In addition, NationsBank, N.A. maintains offices in
approximately 81,000 square feet of leased space
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in NationsBank Plaza in Columbia under a lease that expires in 1999.
NationsBank, N.A. has four five-year renewal options on this space.
The principal Virginia offices of NationsBank, N.A. are located in
approximately 383,000 square feet of space in NationsBank Center in Richmond,
Virginia, a facility that is owned by NationsBank, N.A. The remaining
approximately 157,000 square feet are leased to a third party tenant.
The principal Maryland offices of NationsBank, N.A. are located in
approximately 135,000 square feet of leased space in the Rockledge Executive
Center in Bethesda under a lease that expires in 2002. NationsBank, N.A. has two
five-year renewal options on this space. The approximately 19,000 square feet of
space remaining is occupied by third parties under sub-leases with NationsBank,
N.A. The sub-leases, which are at market rates, expire in 1997 and 2002.
The principal offices of NationsBank of Texas, N.A. ("NationsBank Texas")
are located in approximately 680,000 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.
The principal Florida offices of NationsBank, N.A. (South) ("NationsBank
South") are located in approximately 238,000 square feet of leased space in the
NationsBank Plaza in downtown Tampa. The lease expires in 2005. NationsBank
South has four five-year renewal options on this space.
The principal Georgia offices of NationsBank South are located in leased
space in the 55-story NationsBank Plaza in Atlanta. 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 South is the major tenant of the building with
approximately 579,000 square feet of the net rentable space, under a lease that
expires in 2012. NationsBank South has three ten-year renewal options on this
space. Of the approximately 684,000 remaining square feet, 596,000 square feet
has been leased to third parties, with 88,000 remaining square feet available
for lease to third parties at market rates.
The principal offices of NationsBank of Tennessee, N.A. ("NationsBank
Tennessee") are located in approximately 220,000 square feet of leased space in
NationsBank Plaza in Nashville 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 Consumer Corporation are located in
approximately 136,000 square feet of space in Allentown, Pennsylvania in a
facility which it owns.
The principal offices of NationsCredit Commercial 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.
As of December 31, 1995, 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, South Carolina, Virginia,
Maryland and the District of Columbia 673 366
Texas 203 152
Florida and Georgia 253 416
Tennessee 50 67
Delaware 1 0
Kentucky 3 3
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ITEM 3. LEGAL PROCEEDINGS
In the ordinary course of business, the registrant and its subsidiaries are
routinely defendants in or parties to a number of pending and threatened legal
actions and proceedings, including several actions brought on behalf of various
classes of claimants. In certain of these actions and proceedings substantial
money damages are asserted against the registrant and its subsidiaries and
certain of these actions and proceedings are based on alleged violations of
consumer protection, securities, banking and other laws. Management believes,
based upon the advice of counsel, that these actions and proceedings and losses,
if any, resulting from the final outcome thereof, will not be material in the
aggregate to the registrant's financial position or results of operations.
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.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to the Instructions to Form 10-K and Item 401(b) of Regulation
S-K, the name, age and position of each executive officer and the principal
accounting officer of the registrant are listed below along with such officer'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 any officer was
selected.
Fredric J. Figge, II, age 59, Chairman, Corporate Risk Policy of the
registrant and of the Banks. 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 in 1987.
James H. Hance, Jr., age 51, 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 in
1987. He also serves as a director of NationsBank, N.A., NationsBank Tennessee
and various other subsidiaries of the registrant.
Kenneth D. Lewis, age 48, 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. He first
became an officer in 1971. Mr. Lewis also serves as a director of NationsBank,
N.A., NationsBank South and NationsBank Texas.
Hugh L. McColl, Jr., age 60, Chairman of the Board and Chief Executive
Officer of the registrant and Chief Executive Officer of the Banks. He first
became an officer in 1962. Mr. McColl was Chairman of the registrant from
September, 1983 until December 31, 1991, and was re-appointed Chairman on
December 31, 1992. He also serves as a director of the registrant and
NationsBank Texas.
Marc D. Oken, age 49, Executive Vice President and Principal Accounting
Officer of the registrant. He first became an officer in 1989.
F. William Vandiver, Jr., age 54, President of NationsBank Global Finance,
which includes Corporate Finance, Capital Markets and Specialized Lending. Mr.
Vandiver was named President of NationsBank Global Finance in January, 1996. In
1984, he was named Investment Banking Company executive and president in 1988.
He has been an officer since 1968.
8
<PAGE>
PART II
ITEM 5. MARKET FOR 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 New York Stock Exchange Composite Transactions List, as reported in
published financial sources, for each quarterly period indicated below are as
follows:
<TABLE>
<CAPTION>
QUARTER HIGH LOW
<S> <C> <C> <C>
1994 first $ 50 7/8 $ 44 3/8
second 57 3/8 44 1/2
third 56 47 1/8
fourth 50 3/4 43 3/8
1995 first 51 3/4 44 5/8
second 57 3/4 49 5/8
third 68 7/8 53 3/4
fourth 74 3/4 64
</TABLE>
As of December 31, 1995, there were 103,137 record holders of Common Stock.
During 1994 and 1995, the registrant paid dividends on the Common Stock on a
quarterly basis, which aggregated $1.88 per share in 1994 and $2.08 per share in
1995. For additional information regarding the registrant's ability to pay
dividends, see "Government Supervision and Regulation -- Distributions." The
eighth paragraph of Note Six (page 59) and Note Nine (page 60) of the Notes To
Consolidated Financial Statements in the registrant's 1995 Annual Report to
Shareholders are hereby incorporated by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth in Table One (page 15) in the registrant's 1995
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 -- 1995 Compared to 1994" (pages 14 through 41),
"Management's Discussion and Analysis -- 1994 Compared to 1993" (pages 41
through 45), "Report of Management" (page 46) and all tables, graphs and charts
presented under the foregoing captions in the 1995 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 1995 Annual Report to
Shareholders of the registrant is hereby incorporated by reference:
The Consolidated Financial Statements and Notes To Consolidated Financial
Statements of NationsBank Corporation and Subsidiaries, together with the report
thereon of Price Waterhouse LLP dated January 12, 1996 (pages 46 through 67);
the unaudited information presented in Table Twenty-One (page 42); and the
narrative comments under the caption "Fourth Quarter Review" (page 41).
9
<PAGE>
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.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information set forth under the caption "Election of Directors" on pages 3
through 10 of the definitive 1996 Proxy Statement of the registrant furnished to
shareholders in connection with its Annual Meeting to be held on April 24, 1996
(the "1996 Proxy Statement") with respect to the name of each nominee or
director, that person's age, positions and offices with the registrant, business
experience, directorships in other public companies, service on the registrant's
Board and certain family relationships, and information set forth under the
caption "Compliance with Section 16(a) of the Securities Exchange Act of 1934"
on page 13 of the 1996 Proxy Statement with respect to Section 16 matters, is
hereby incorporated by reference. The information required by Item 10 with
respect to executive officers is set forth in Part I, Item 4A hereof.
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 1996 Proxy Statement (i) under the
caption "Board of Directors' Compensation" on pages 14 through 16 thereof, (ii)
under the caption "Executive Compensation" on pages 16 through 18 thereof, (iii)
under the caption "Retirement Plans" on pages 18 and 19 thereof, (iv) under the
caption "Deferred Compensation Plan" on pages 19 and 20 thereof, (v) under the
caption "Special Compensation Arrangements" on page 21 thereof, (vi) under the
caption "Compensation Committee Interlocks and Insider Participation" on page 28
thereof, and (vii) under the caption "Certain Transactions" on pages 28 and 29
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
relating to persons who beneficially own more than 5% of the outstanding shares
of Common Stock or ESOP Preferred Stock, as well as security 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 ownership information set forth under the
caption "Security Ownership of Certain Beneficial Owners and Management" on
pages 10 through 13 of the 1996 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 1996
Proxy Statement under the caption "Compensation Committee Interlocks and Insider
Participation" on page 28 and under the caption "Certain Transactions" on pages
28 and 29 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....................................................... 46
Consolidated Statement of Income for each of the three years ended
December 31, 1995..................................................................... 47
Consolidated Balance Sheet at December 31, 1995 and 1994................................ 48
Consolidated Statement of Cash Flows for each of the three years ended
December 31, 1995..................................................................... 49
Consolidated Statement of Changes in Shareholders' Equity for each of the three years
ended December 31, 1995............................................................... 50
Notes to Consolidated Financial Statements.............................................. 51-67
* Incorporated by reference from the indicated pages of the 1995 Annual Report to
Shareholders.
(2) All 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, 1995:
Current Report on Form 8-K dated and filed October 20, 1995, Items
5 and 7. (Two reports filed on that date.)
Current Report on Form 8-K dated and filed November 9, 1995, Items
5 and 7.
Current Report on Form 8-K dated and filed December 15, 1995, Items
5 and 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-5,
including executive compensation plans and arrangements which are
identified separately by asterisk).
With the exception of the information herein expressly incorporated by
reference, the 1995 Annual Report to Shareholders and the 1996 Proxy Statement
are not to be deemed filed as part of this Annual Report on Form 10-K.
11
<PAGE>
SIGNATURES
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 29, 1996 By: */s/ HUGH L. MCCOLL, JR.
HUGH L. MCCOLL, JR.
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below 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>
*/s/ HUGH L. MCCOLL, JR. Chairman of the Board and March 29, 1996
Chief Executive Officer
(HUGH L. MCCOLL, JR.) (Principal Executive Officer)
*/s/ JAMES H. HANCE, JR. Vice Chairman and March 29, 1996
Chief Financial Officer
(JAMES H. HANCE, JR.) (Principal Financial Officer)
*/s/ MARC D. OKEN Executive Vice President March 29, 1996
(Principal Accounting Officer)
(MARC D. OKEN)
*/s/ RONALD W. ALLEN Director March 29, 1996
(RONALD W. ALLEN)
*/s/ WILLIAM M. BARNHARDT Director March 29, 1996
(WILLIAM M. BARNHARDT)
*/s/ THOMAS E. CAPPS Director March 29, 1996
(THOMAS E. CAPPS)
*/s/ CHARLES W. COKER Director March 29, 1996
(CHARLES W. COKER)
*/s/ THOMAS G. COUSINS Director March 29, 1996
(THOMAS G. COUSINS)
*/s/ ALAN T. DICKSON Director March 29, 1996
(ALAN T. DICKSON)
*/s/ W. FRANK DOWD, JR. Director March 29, 1996
(W. FRANK DOWD, JR.)
*/s/ PAUL FULTON Director March 29, 1996
(PAUL FULTON)
*/s/ L. L. GELLERSTEDT, JR. Director March 29, 1996
(L. L. GELLERSTEDT, JR.)
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>
*/s/ TIMOTHY L. GUZZLE Director March 29, 1996
(TIMOTHY L. GUZZLE)
*/s/ W. W. JOHNSON Director March 29, 1996
(W. W. JOHNSON)
*/s/ BUCK MICKEL Director March 29, 1996
(BUCK MICKEL)
Director March , 1996
(JOHN J. MURPHY)
*/s/ JOHN C. SLANE Director March 29, 1996
(JOHN C. SLANE)
*/s/ JOHN W. SNOW Director March 29, 1996
(JOHN W. SNOW)
*/s/ MEREDITH R. SPANGLER Director March 29, 1996
(MEREDITH R. SPANGLER)
*/s/ ROBERT H. SPILMAN Director March 29, 1996
(ROBERT H. SPILMAN)
*/s/ RONALD TOWNSEND Director March 29, 1996
(RONALD TOWNSEND)
*/s/ E. CRAIG WALL, JR. Director March 29, 1996
(E. CRAIG WALL, JR.)
*/s/ JACKIE M. WARD Director March 29, 1996
(JACKIE M. WARD)
*By: /s/ CHARLES M. BERGER
CHARLES M. BERGER, ATTORNEY-IN-FACT
</TABLE>
II-2
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S> <C> <C>
1. Not Applicable.
2. Not Applicable.
3. (a) Restated Articles of Incorporation of registrant, as in effect on the date hereof,
incorporated by reference to Exhibit 3(i) of registrant's Quarterly Report on Form
10-Q dated August 12, 1994.
(b) Amended and Restated Bylaws of registrant, as in effect on the date hereof.
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 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.
(d) 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.
(e) 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.
(f) 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, incorporated by reference to Exhibit 4.1 of registrant's Registration No.
33-54784.
(g) 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.
(h) 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, B and C; its 4 3/4% Senior Notes, due 1996; its
5 1/8% Senior Notes, due 1998; its 5 3/8% Senior Notes, due 2000; and its 7 1/2%
Senior Notes, due 1997, incorporated by reference to Exhibit 4.1 of registrant's
Report on Form 8-K dated July 6, 1993.
(i) 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; its 6 1/2%
Subordinated Notes, due 2003; and its 7 3/4% Subordinated Notes, due 2004,
incorporated by reference to Exhibit 4.4 of registrant's Report on Form 8-K dated
July 6, 1993.
(j) Indenture dated as of January 1, 1995 between registrant and BankAmerica National
Trust Company, pursuant to which registrant issued its Floating Rate Senior Notes,
due 1998, and its Senior Medium-Term Notes, Series D and E, incorporated by reference
to Exhibit 4.1 of registrant's Registration No. 33-57533.
(k) Indenture dated as of January 1, 1995 between registrant and The Bank of New York,
pursuant to which registrant issued its 7 5/8% Subordinated Notes, due 2005; its
7 3/4% Subordinated Notes, due 2015; its 7 1/4% Subordinated Notes, due 2025; and its
Subordinated Medium-Term Notes, Series D and E, incorporated by reference to Exhibit
4.1 of registrant's Registration No. 33-57533.
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S> <C> <C>
(l) Fiscal and Paying Agency Agreement dated as of July 5, 1995, between registrant and
The Chase Manhattan Bank, N.A. (London Branch), pursuant to which registrant issued
its Floating Rate Senior Notes, due 2000.
(m) Agency Agreement dated as of November 8, 1995 between registrant and The Chase
Manhattan Bank, N.A. (London Branch), pursuant to which registrant issued its Senior
Euro Medium-Term Notes.
(n) Issuing and Paying Agency Agreement dated as of April 10, 1995 between NationsBank,
N.A. (as successor to NationsBank, N.A. (Carolinas)), NationsBank of Texas, N.A. and
NationsBank, N.A. (South) (as successor to NationsBank of Georgia, N.A.), as Issuers,
and Bankers Trust Company, as Issuing and Paying Agent.
(o) Articles of Association of NationsBank, N.A. (South).
(p) Statement of Designation relating to the NationsBank, N.A. (South) Series H Preferred
Stock.
(q) Statement of Designation relating to the NationsBank, N.A. (South) Series 1993A
Preferred Stock.
(r) 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) 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, both of which are
incorporated by reference to Exhibit 10(ss) of registrant's Annual Report on Form
10-K dated March 25, 1992; and Second Amendment thereto dated as of December 31,
1990, incorporated by reference to Exhibit 10(a) of registrant's Annual Report on
Form 10-K dated March 30, 1995.
(b) The NationsBank Retirement Savings Plan, as effective January 1, 1993, incorporated *
by reference to Exhibit 10(d) of registrant's Annual Report on Form 10-K dated March
30, 1994; Amendment thereto dated as of December 31, 1993, incorporated by reference
to Exhibit 10(c) of registrant's Annual Report on Form 10-K dated March 30, 1995; and
Amendments thereto dated as of December 31, 1994 and August 1, 1995.
(c) Investment Trust Agreement Under The NationsBank Retirement Savings Plan, as *
effective January 1, 1993, incorporated by reference to Exhibit 10(e) of registrant's
Annual Report on Form 10-K dated March 30, 1994.
(d) ESOP Trust Agreement Under The NationsBank Retirement Savings Plan, as effective *
January 1, 1993, incorporated by reference to Exhibit 10(f) of registrant's Annual
Report on Form 10-K dated March 30, 1994.
(e) Ancillary Trust Agreement for the Investment Trust of The NationsBank Retirement *
Savings Plan, as effective January 1, 1993, incorporated by reference to Exhibit
10(g) of registrant's Annual Report on Form 10-K dated March 30, 1994.
(f) Independent Agency Agreement for the Investment Trust of The NationsBank Retirement *
Savings Plan, as effective January 1, 1993, incorporated by reference to Exhibit
10(h) of registrant's Annual Report on Form 10-K dated March 30, 1994.
(g) 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; and Amendment thereto dated as of September 28, 1994,
incorporated by reference to Exhibit 10(i) of registrant's Annual Report on Form 10-K
dated March 30, 1995.
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S> <C> <C>
(h) NationsBank Corporation and Designated Subsidiaries Supplemental Executive Retirement *
Plan, incorporated by reference to Exhibit 10(j) of registrant's Annual Report on
Form 10-K dated March 30, 1995; 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; and Amendment thereto
dated as of September 28, 1994, incorporated by reference to Exhibit 10(j) of
registrant's Annual Report on Form 10-K dated March 30, 1995.
(i) NationsBank Corporation and Designated Subsidiaries Deferred Compensation Plan for *
Key Employees, incorporated by reference to Exhibit 10(k) of registrant's Annual
Report on Form 10-K dated March 30, 1995; 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, 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; 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.
(j) 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.
(k) The NationsBank Pension Plan, as effective January 1, 1993, incorporated by reference *
to Exhibit 10(n) of registrant's Annual Report on Form 10-K dated March 30, 1994;
Amendments thereto dated as of September 28, 1994, December 15, 1994 and December 28,
1994, incorporated by reference to Exhibit 10(m) of registrant's Annual Report on
Form 10-K dated March 30, 1995; and Amendments thereto dated as of June 28, 1995,
July 5, 1995, August 24, 1995 and September 28, 1995.
(l) NationsBank Corporation and Designated Subsidiaries Supplemental Retirement Plan, *
incorporated by reference to Exhibit 10(o) of registrant's Annual Report on Form 10-K
dated March 30, 1994; 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; and Amendment thereto dated as of
July 5, 1995.
</TABLE>
E-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S> <C> <C>
(m) NationsBank Corporation and Designated Subsidiaries Supplemental Executive Retirement *
Plan for Senior Management Employees, incorporated by reference to Exhibit 10(o) of
registrant's Annual Report on Form 10-K dated March 30, 1995; Amendment thereto dated
as of June 28, 1989, incorporated by reference to Exhibit 10(l) 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; and Amendment thereto dated as of September 28, 1994, incorporated by reference
to Exhibit 10(o) of registrant's Annual Report on Form 10-K dated March 30, 1995.
(n) 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.
(o) 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; 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; and Trustee Removal/Appointment Agreement dated as of December
19, 1995.
(p) The NationsBank Retirement Savings Restoration Plan, as effective January 1, 1994, *
incorporated by reference to Exhibit 10(t) of registrant's Annual Report on Form 10-K
dated March 30, 1994.
(q) 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.
(r) NationsBank Corporation Executive Incentive Compensation Plan, as effective January *
1, 1994 and Amendment thereto dated as of September 28, 1994, both of which are
incorporated by reference to Exhibit 10(v) of registrant's Annual Report on Form 10-K
dated March 30, 1995.
(s) NationsBank Corporation Key Employee Deferral Plan, as effective October 1, 1994, *
incorporated by reference to Exhibit 10(w) of registrant's Annual Report on Form 10-K
dated March 30, 1995.
(t) NationsBank Corporation Director Deferral Plan, as effective January 1, 1995, *
incorporated by reference to Exhibit 10(x) of registrant's Annual Report on Form 10-K
dated March 30, 1995.
(u) Special Trust Agreement under The NationsBank Pension Plan, as effective December 31, *
1994, incorporated by reference to Exhibit 10(y) of registrant's Annual Report on
Form 10-K dated March 30, 1995.
(v) NationsBank Corporation Key Employee Stock Plan, incorporated by reference to Exhibit *
10 of registrant's Quarterly Report on Form 10-Q dated May 15, 1995.
(w) Noncompetition Agreement with James W. Thompson dated January 31, 1996. *
(x) Supplemental Retirement Agreement with James W. Thompson dated January 31, 1996. *
11. Earnings per share computation.
12. (a) Ratio of Earnings to Fixed Charges.
(b) Ratio of Earnings to Fixed Charges and Preferred Dividends.
13. 1995 Annual Report to Shareholders. This exhibit contains only those portions of the Annual
Report that are incorporated by reference.
14. Not Applicable.
15. Not Applicable.
16. None.
17. Not Applicable.
</TABLE>
E-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<C> <S> <C> <C>
18. None.
19. Not Applicable.
20. Not Applicable.
21. List of Subsidiaries of Registrant.
22. None.
23. Consent of Price Waterhouse LLP.
24. (a) Power of Attorney.
(b) Corporate Resolution.
25. Not Applicable.
26. Not Applicable.
27. Financial Data Schedule.
28. None.
99. None.
</TABLE>
* Denotes executive compensation plan or arrangements.
E-5
<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
NATIONSBANK CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I.
DEFINITIONS
Section 1. Definitions 1
Section 2. Cross-Reference to the Act 2
ARTICLE II.
OFFICES
Section 1. Principal Office 2
Section 2. Other Offices 2
Section 3. Registered Office 2
ARTICLE III.
SHAREHOLDERS
Section 1. Annual Meeting 2
Section 2. Substitute Annual Meeting 3
Section 3. Special Meetings 3
Section 4. Place of Meeting 3
Section 5. Notice of Meeting 3
Section 6. Fixing of Record Date 4
Section 7. Shareholders List 4
Section 8. Quorum 4
Section 9. Proxies 5
Section 10. Voting of Shares 5
Section 11. Voting for Directors 5
Section 12. Conduct of Meetings 6
Section 13. Inapplicability of the North Carolina 6
Shareholder Protection Act and the
North Carolina Control Share
Acquisition Act.
<PAGE>
ARTICLE IV.
BOARD OF DIRECTORS
Section 1. General Powers 6
Section 2. Number and Qualifications 6
Section 3. Terms of Directors 6
Section 4. Removal 7
Section 5. Vacancies 7
Section 6 Compensation 7
Section 7. Executive Committee 7
Section 8. Compensation Committee 8
Section 9. Management Compensation Committee 9
Section 10. Audit Committee 10
Section 11. Other Committees 10
ARTICLE V.
MEETINGS OF DIRECTORS
Section 1. Regular Meetings 11
Section 2. Special Meetings 11
Section 3. Notice 11
Section 4. Waiver of Notice 12
Section 5. Quorum 12
Section 6. Manner of Acting 12
Section 7. Presumption of Assent 12
Section 8. Conduct of Meetings 12
Section 9. Action Without a Meeting 13
Section 10. Participation Other Than in Person 13
ARTICLE VI.
OFFICERS
Section 1. Officers of the Corporation 13
Section 2. Appointment and Term 13
Section 3. Compensation 14
Section 4. Resignation and Removal of Officers 14
Section 5. Contract Rights of Officers 14
Section 6. Bonds 14
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Section 7. Chief Executive Officer 14
Section 8. Chairman of the Board 15
Section 9. President 15
Section 10. Vice Chairman 15
Section 11. Executive Vice Presidents 15
Section 12. Senior Vice President 15
Section 13. Vice Presidents 15
Section 14. Secretary 16
Section 15. Treasurer 16
Section 16. Assistant Vice Presidents, Secretaries
and Assistant Treasurers 16
ARTICLE VII.
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts 16
Section 2. Loans 17
Section 3. Checks and Drafts 17
Section 4. Deposits 17
ARTICLE VIII.
SHARES AND THEIR TRANSFER
Section 1. Shares 17
Section 2. Stock Transfer Books and Transfer of
Shares 18
Section 3. Lost Certificates 19
Section 4. Holder of Record 19
Section 5. Transfer Agent and Registrar; Regulations 19
ARTICLE IX.
INDEMNIFICATION
Section 1. Definitions 19
Section 2. Indemnification 20
Section 3. Determination 21
Section 4. Advance for Expenses 21
Section 5. Reliance and Consideration 22
Section 6 Insurance 22
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ARTICLE X.
GENERAL PROVISIONS
Section 1. Voting of Shares 22
Section 2. Distributions 22
Section 3. Seal 23
Section 4. Amendments 23
</TABLE>
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ARTICLE I.
DEFINITIONS
Section 1. Definitions. In these Bylaws, unless otherwise specifically
provided:
(a) "Act" means the North Carolina Business Corporation
Act, as contained in Chapter 55 of the North Carolina
General Statutes, as the same now exists or may
hereafter be amended.
(b) "Articles of Incorporation" means the Articles of
Incorporation of the Corporation, as amended and
restated from time to time, including any amendments or
statements of classification adopted in connection with
the Corporation's outstanding shares of preferred
stock.
(c) "Common Stock" means the common stock of the
Corporation.
(d) "Corporation" means NationsBank Corporation, a North
Carolina corporation, and any successor thereto.
(e) "Principal office" means the office (in or out of the
State of North Carolina) so designated in the
Corporation's annual report filed pursuant to the Act
where the principal executive offices of the
Corporation are located.
(f) "Public corporation" means any corporation that has a
class of shares registered under Section 12 of the
Securities Exchange Act of 1934, as amended (15 U.S.C.
ss.781).
(g) "Shares" means the Common Stock and other units into
which the proprietary interests in the Corporation are
divided.
(h) "Shareholder" means the person in whose name shares are
registered in the records of the Corporation or the
beneficial owner of shares to the extent of the rights
granted by a nominee certificate on file with the
Corporation.
<PAGE>
(i) "Voting group" means all shares of one or more classes
or series that under the Articles of Incorporation or
the Act are entitled to vote and be counted together
collectively on a matter at a meeting of shareholders.
All shares entitled by the Articles of Incorporation or
the Act to vote generally on a matter are for that
purpose a single voting group.
Section 2. Cross-Reference to the Act. If any term used in these Bylaws
and not otherwise defined herein is defined for purposes of the Act, such
definition shall apply for purposes of these Bylaws, unless the context shall
otherwise clearly require.
ARTICLE II.
OFFICES
Section 1. Principal Office. The principal office of the Corporation
shall be located in the City of Charlotte, County of Mecklenburg, State of North
Carolina.
Section 2. Other Offices. The Corporation may have offices at such other
places, either within or without the State of North Carolina, as the Board of
Directors may from time to time determine or as the affairs of the Corporation
may require from time to time.
Section 3. Registered Office. The registered office of the Corporation
required by the Act to be maintained in the State of North Carolina may be, but
need not be, identical with the principal office of the Corporation, and the
address of the registered office may be changed from time to time as provided in
the Act.
ARTICLE III.
SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders shall
be held during the month of April of each year at a date and an hour fixed by
the Board of Directors for the purpose of electing directors and for the
transaction of such other business as may come before the meeting.
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Section 2. Substitute Annual Meeting. If the annual meeting shall not be
held within the period designated by these Bylaws, a substitute annual meeting
may be called in accordance with the provisions of Section 3 of this Article
III. A meeting so called shall be designated and treated for all purposes as the
annual meeting.
Section 3. Special Meetings. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by the Act, may be called
by the Chairman of the Board, the Chief Executive Officer, the President or by
the Secretary acting under instructions of the Chairman of the Board or the
Chief Executive Officer, or by the Board of Directors.
Section 4. Place of Meeting. The Board of Directors or the Chairman of
the Board, the Chief Executive Officer or President of the Corporation, or the
Secretary acting under instructions of the Chairman of the Board, the Chief
Executive Officer or President may designate any place, either within or without
the State of North Carolina, as the place of meeting for any annual meeting of
shareholders or for any special meeting of shareholders called by the Board of
Directors or the Chairman of the Board, the Chief Executive Officer or President
or Secretary. If no designation is made, or if a special meeting of shareholders
is otherwise called, the place of meeting shall be the principal office of the
Corporation in the State of North Carolina.
Section 5. Notice of Meeting. Written or printed notice stating the
date, time and place of the meeting shall be delivered not less than 10 nor more
than 60 days before the date of the meeting, either personally or by mail, to
each shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be effective when deposited in the United States mail
with postage thereon prepaid and correctly addressed to the shareholder at such
shareholder's address as shown in the Corporation's current record of
shareholders.
In the case of an annual or substitute annual meeting, the notice of
meeting need not specifically state the business to be transacted thereat unless
it is a matter, other than election of directors, on which the vote of
shareholders is expressly required by the provisions of the Act. In the case of
a special meeting, the notice of meeting shall state the purpose or purposes for
which the meeting is called.
If a meeting is adjourned to a date more than 120 days after the date
fixed for the original meeting, or if a new record date is fixed for the
adjourned meeting, or if the new date, time or place for an adjourned meeting is
not announced at the meeting before adjournment, notice of the adjourned meeting
shall be given as in the case of an original meeting. Otherwise, it is
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not necessary to give any notice of the adjourned meeting other than by
announcement at the meeting at which the adjournment is taken.
Section 6. Fixing of Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or shareholders entitled to receive payment of any
dividend or other distribution, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may fix in
advance a date for any such determination of shareholders, such date in any case
to be not more than 60 days and, in case of a meeting of shareholders, not less
than 10 days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or for determination of the shareholders entitled to receive
payment of a dividend or other distribution, the close of business on the day
before the first notice is delivered to shareholders or the date on which the
resolution of the Board of Directors declaring or authorizing such dividend or
distribution is adopted, as the case may be, shall be the record date for such
determination. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof unless the Board of
Directors fixes a new record date, which it must do if the meeting is adjourned
to a date more than 120 days after the date fixed for the original meeting.
Section 7. Shareholders List. After the record date for a meeting of
shareholders is fixed or determined, the officer or agent having charge of the
stock transfer books for shares of the Corporation shall prepare an alphabetical
list of the names of all shareholders of the Corporation who are entitled to
notice of such shareholders meeting. The list will be arranged by voting group
(and within each voting group by class or series of shares) and show the address
of and number of shares held by each shareholder. Such shareholders list will be
available for inspection by any shareholder, beginning two business days after
notice of the meeting is given for which the list was prepared and continuing
through the meeting, at the Corporation's principal office or at a place
identified in the meeting notice in the city where the meeting will be held. A
shareholder, or a shareholder's agent or attorney, is entitled on written demand
to inspect and, subject to compliance with the applicable provisions of the Act,
to copy the list, during regular business hours and at the shareholder's
expense, during the period it is available for inspection. Such list shall also
be available at the meeting of shareholders, and any shareholder, or such
shareholder's agent or attorney, is entitled to inspect the list at any time
during the meeting or any adjournment thereof.
Section 8. Quorum. A majority of the votes entitled to be cast on a
particular matter by a voting group constitutes a quorum of that voting group
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for action on that matter unless the Act provides otherwise. Shares entitled to
vote as a separate voting group may take action on a matter at a meeting of
shareholders only if a quorum of those shares exists with respect to that
matter, except that, in the absence of a quorum at the opening of any meeting of
shareholders, such meeting may be adjourned from time to time by the vote of a
majority of the shares voting on the motion to adjourn.
Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
Section 9. Proxies. A shareholder may vote his or her shares in person
or by proxy. A shareholder may appoint a proxy to vote or otherwise act for the
shareholder by signing an appointment form, either personally or by such
shareholder's attorney-in-fact. A telegram, telex, facsimile or other form of
wire or wireless communication appearing to have been transmitted by a
shareholder, or a photocopy or equivalent reproduction of a writing appointing
one or more proxies, shall be deemed a valid appointment form within the meaning
of these Bylaws.
An appointment of a proxy is effective when received by the Secretary or
other officer or agent authorized to tabulate votes. An appointment is valid for
11 months unless a different period is expressly provided in the appointment
form. An appointment of a proxy is revocable by the shareholder unless the
appointment form conspicuously states that it is irrevocable and the appointment
is coupled with an interest, which may include any such interest specified in
the Act.
Section 10. Voting of Shares. Each outstanding share of Common Stock is
entitled to one vote on each matter voted on at a shareholders meeting. Other
shares are entitled to vote only as provided in the Articles of Incorporation or
the Act. If a quorum exists, action on a matter (other than election of
directors) by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
Articles of Incorporation or the Act requires a greater number of affirmative
votes. Classes or series of shares shall not be entitled to vote separately by
voting group unless expressly required by the Articles of Incorporation or as
otherwise provided in the Act.
Section 11. Voting for Directors. The directors of the Corporation shall
be elected by a plurality of the votes cast by the shares entitled to vote in
the election at a meeting at which a quorum is present unless otherwise provided
in the Articles of Incorporation. The shareholders do not have a right to
cumulate their votes for directors.
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Section 12. Conduct of Meetings. The Chairman of the Board shall preside
at each meeting of shareholders or, in the Chairman's absence, the Chief
Executive Officer shall preside. At the request of the Chairman of the Board or
the Chief Executive Officer, in both their absences, such other officer as the
Board of Directors shall designate shall preside at any such meeting. In the
absence of a presiding officer determined in accordance with the preceding
sentence, any person may be designated to preside at a shareholders meeting by a
plurality vote of the shares represented and entitled to vote at the meeting.
The Secretary or, in the absence or at the request of the Secretary, any person
designated by the person presiding at a shareholders meeting shall act as
secretary of such meeting.
Section 13. Inapplicability of the North Carolina Shareholder Protection
Act and the North Carolina Control Share Acquisition Act. The provisions of
Article 9 of Chapter 55 of the General Statutes of North Carolina, or such other
successor statute, entitled "The North Carolina Shareholder Protection Act,"
shall not apply to the Corporation. The provisions of Article 9A of Chapter 55
of the General Statutes of North Carolina, or such other successor statute,
entitled "The North Carolina Control Share Acquisition Act," shall not apply to
the Corporation.
ARTICLE IV.
BOARD OF DIRECTORS
Section 1. General Powers. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the Corporation shall be
managed under the direction of, its Board of Directors, except as otherwise
provided in the Articles of Incorporation or permitted under the Act.
Section 2. Number and Qualifications. The number of directors of the
Corporation shall be not less than 5 nor more than 30, which number may be fixed
or changed from time to time, within the minimum and maximum, by the Board of
Directors. Directors need not be residents of the State of North Carolina or
shareholders of the Corporation. A director of the Corporation shall at all
times meet all statutory and regulatory qualifications for a director of a
publicly held bank holding company.
Section 3. Terms of Directors. The terms of all directors shall expire
at the next annual shareholders meeting following their election. A decrease in
the number of directors does not shorten an incumbent director's term. The term
of a director elected to fill a vacancy shall expire at the next shareholders
meeting at which directors are elected. Despite the expiration of a director's
term, however, such director shall continue to serve until the director's
successor is elected and qualified.
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Section 4. Removal. Any director may be removed at any time with or
without cause by a vote of the shareholders if the number of votes cast to
remove such director exceeds the number of votes cast not to remove him or her
unless otherwise provided in the Articles of Incorporation. A director may not
be removed by the shareholders at a meeting unless the notice of the meeting
states that the purpose, or one of the purposes, of the meeting is removal of
the director. If any directors are so removed, new directors may be elected at
the same meeting.
Any director may be removed by the Board of Directors if a director no
longer meets the qualification requirements of Section 2 of this Article IV or
as otherwise prescribed by law.
Section 5. Vacancies. Except in those instances where the Articles of
Incorporation provide otherwise, the Board of Directors may fill a vacancy on
the Board of Directors. A vacancy that will occur at a specific later date (by
reason of a resignation effective at a later date or otherwise) may be filled
before the vacancy occurs, but the new director may not take office until the
vacancy occurs.
Section 6. Compensation. The Board of Directors may provide for the
compensation of directors for their services as such and may provide for the
payment or reimbursement of any or all expenses reasonably incurred by them in
attending meetings of the Board or of any committee of the Board or in the
performance of their other duties as directors. Nothing herein contained,
however, shall prevent any director from serving the Corporation in any other
capacity or receiving compensation therefor.
Section 7. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the number of directors fixed in the manner provided in
Section 2 of this Article IV, may designate five or more directors who shall
constitute the Executive Committee of the Corporation. The Executive Committee,
between meetings of the Board of Directors and subject to such limitations as
may be required by law or imposed by resolution of the Board of Directors, shall
have and may exercise all of the authority of the Board of Directors in the
management of the Corporation. The designation of the Executive Committee and
the delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility or liability imposed
upon it or such director by law.
Meetings of the Executive Committee may be held at any time on call of
its Chairman or any two members of the Committee. A majority of the members
shall constitute a quorum at all meetings. The Executive Committee shall keep
minutes of its proceedings and shall report its actions to the next succeeding
meeting of the Board of Directors.
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Section 8. Compensation Committee. The Board of Directors, by resolution
adopted by a majority of the number of Directors fixed in the manner provided in
Section 2 of this Article IV, may designate three or more directors who shall
not be otherwise employed by the Corporation or its subsidiaries who shall
constitute the Compensation Committee of the Corporation.
The Compensation Committee shall provide overall guidance with respect
to the establishment, maintenance and administration of the Corporation's
compensation programs and employee benefit plans.
The Compensation Committee shall review and approve the annual
compensation, including salary, incentive compensation and other benefits,
direct and indirect, for officers who serve as executive officers of the
Corporation. The Compensation Committee shall also approve and adopt proposals
related to any employee benefit plan of the Corporation or its subsidiaries in
which any officer participates who also serves as an executive officer of the
Corporation, including proposals for the adoption, amendment, modification or
termination of such plans. As to the salary, incentive compensation and other
benefits, direct and indirect, for the Chief Executive Officer of the
Corporation and of all other officers of the Corporation who are also Directors
of the Corporation, the Compensation Committee shall submit recommendations to
the Executive Committee for review and concurrence prior to their submission to
the Board of Directors for approval.
The Compensation Committee shall have such other purposes and such other
powers as the Board of Directors may from time to time determine.
Meetings of the Compensation Committee shall be held quarterly or at any
time on call of the Chairman of the Compensation Committee. A majority of the
members shall constitute a quorum at all meetings. The Compensation Committee
shall keep minutes of its proceedings and shall report its actions in writing to
the next succeeding meeting of the Board of Directors.
As used herein, the term "executive officer" means those officers of the
Corporation who are designated as such from time to time.
The Compensation Committee may in its discretion delegate to the
Management Compensation Committee any of its powers and authority set forth in
this Section 8 with respect to any executive officer of the Corporation who is
not a "named executive officer" of the Corporation within the meaning of Item
402 of Regulation S-K promulgated under the Securities Act of 1933 and the
Securities Exchange Act of 1934.
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Section 9. Management Compensation Committee. The Board of Directors, by
resolution adopted by a majority of the Directors fixed in the manner provided
in Section 2 of this Article IV, may designate the Chief Executive Officer and
such other officers as it deems appropriate to constitute the members of a
Management Compensation Committee. The Chief Executive Officer shall be the
Chairman of the Management Compensation Committee.
The Management Compensation Committee shall have the authority to
establish the titles and the compensation, including salaries, incentive
compensation and other benefits, direct and indirect, for all employees of the
Corporation and its subsidiaries who are not officers and for all officers of
the Corporation and its subsidiaries who do not serve as executive officers of
the Corporation. In connection with its duties, the Management Compensation
Committee shall approve all annual compensation budgets, all employee benefits
plans, the salary guidelines for positions and all incentive compensation plans
for such employees and officers of the Corporation and its subsidiaries.
The Management Compensation Committee may delegate to one or more
officers of the Corporation the authority to establish titles and the
compensation, including salaries, incentive compensation awards pursuant to
incentive compensation plans previously approved by the Management Compensation
Committee, and other benefits for all personnel within such officer's area of
functional responsibility at the level of Senior Vice President or below. Any
action taken by an officer to whom such authority has been delegated shall be
subject to ratification by the Management Compensation Committee.
The Management Compensation Committee shall make recommendations from
time to time to the Compensation Committee regarding the establishment,
amendment, modification and termination of any employee benefit plans sponsored
by the Corporation and its subsidiaries in which any officer of the Corporation
or its subsidiaries participates who also serves as an executive officer of the
Corporation.
The Management Compensation Committee shall have such other purposes and
such other powers as the Board of Directors may from time to time determine.
Meetings of the Management Compensation Committee shall be held
quarterly or any time on call of the Chairman of the Management Compensation
Committee. A majority of the members shall constitute a quorum at all meetings.
The Management Compensation Committee shall
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keep minutes of its proceedings and shall report its actions to the Compensation
Committee.
As used herein, the term "executive officer" means those officers of the
Corporation who are designated as such from time to time.
In accordance with Section 8, the Management Compensation Committee may
be delegated by the Compensation Committee certain of the powers and authority
of the Compensation Committee set forth in Section 8 with respect to any
executive officer of the Corporation who is not a "named executive officer" of
the Corporation within the meaning of Item 402 of Regulation S-K promulgated
under the Securities Act of 1933 and the Securities Exchange Act of 1934.
Section 10. Audit Committee. The Board of Directors, by resolution
adopted by a majority of the number of directors fixed in the manner provided in
Section 2 of this Article IV, shall designate three or more directors who shall
not be otherwise employed by Corporation or its subsidiaries to constitute the
Audit Committee of the Board.
The Audit Committee shall have such powers and duties as described from
time to time by resolutions of the Board of Directors. The Audit Committee shall
keep minutes of its proceedings and shall report its actions to the next
succeeding meeting of the Board of Directors.
Section 11. Other Committees. The Board of Directors may create one or
more other committees and appoint members of the Board of Directors to serve on
them. Each committee must have two or more members, who serve at the pleasure of
the Board of Directors. The creation of a committee and appointment of members
of the Board of Directors to it must be approved by the greater of a majority of
all of the directors in office when the action is taken or the number of
directors required by the Articles of Incorporation for the taking of action by
the Board of Directors. The provisions of the Act and these Bylaws that govern
meetings, action without meetings, notice and waiver of notice, and quorum and
voting requirements of the Board of Directors, shall apply to committees and
their members as well. To the extent specified by the Board of Directors, each
committee may exercise the authority of the Board of Directors, except as to the
matters which the Act specifically excepts from the authority of such
committees. Nothing contained in this Section shall preclude the Board of
Directors from establishing and appointing any committee, whether of directors
or otherwise, not having or exercising the authority of the Board of Directors.
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ARTICLE V
MEETINGS OF DIRECTORS
Section 1. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw provision immediately after,
and at the same place as, the annual meeting of the shareholders. In addition,
the Board of Directors may provide, by resolution, the date, time and place,
either within or without the State of North Carolina, for the holding of
additional regular meetings.
Section 2. Special Meetings. Special meetings of the Board of Directors
may be held at any date, time and place upon the call of the Chairman of the
Board, the Chief Executive Officer or the President or of the Secretary acting
under instructions from the Chairman of the Board or the Chief Executive Officer
or the President, or upon the call of any three directors. Special meetings may
be held at any date, time and place and without special notice by unanimous
consent of the directors.
Section 3. Notice. The person or persons calling a special meeting of
the Board of Directors shall, at least two days before the meeting, give notice
thereof by any usual means of communication. Such notice may be communicated,
without limitation, in person; by telephone, telegraph, teletype or other form
of wire or wireless communication, or by facsimile transmission; or by mail or
private carrier. Written notice of a directors meeting is effective at the
earliest of the following:
(a) When received;
(b) Upon its deposit in the United States mail, as evidenced by the
postmark, if mailed with postage thereon prepaid and correctly
addressed;
(c) If by facsimile, by acknowledgment of the facsimile; or
(d) On the date shown on the confirmation of delivery issued by a
private carrier, if sent by private carrier to the address of
the director last known to the Corporation.
Oral notice is effective when actually communicated to the director. Notice of
an adjourned meeting of directors need not be given if the time and place are
fixed at the meeting adjourning and if the period of adjournment does not exceed
ten days in any one adjournment. The notice of any meeting of directors need not
describe the purpose of the meeting unless otherwise required by the Act.
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Section 4. Waiver of Notice. A director may waive any notice required by
the Act, the Articles of Incorporation or these Bylaws before or after the date
and time stated in the notice. The waiver must be in writing, signed by the
director entitled to the notice, and filed with the minutes or corporate
records, except that, notwithstanding the foregoing requirement of written
notice, a director's attendance at or participation in a meeting waives any
required notice to the director of the meeting unless the director at the
beginning of the meeting (or promptly upon the director's arrival) expressly
objects to holding the meeting or transacting business at the meeting and does
not thereafter vote for or assent to action taken at the meeting.
Section 5. Quorum. A majority of the number of directors in office
immediately before the meeting begins, shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but if less
than such majority is present at a meeting, a majority of directors present may
adjourn the meeting from time to time without further notice.
Section 6. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, except as otherwise provided by the Act. The vote of a majority of
all of the directors in office when the action is taken shall be required for
the creation of a committee and the appointment of members of the Board of
Directors to it.
Section 7. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors or a committee of the Board of
Directors when corporate action is taken shall be deemed to have assented to the
action taken unless the director expressly objects at the beginning of the
meeting (or promptly upon the director's arrival) to holding it or transacting
business at the meeting, unless the director's contrary vote is recorded or such
director's dissent or abstention from the action shall be entered in the minutes
of the meeting or unless the director shall file written notice of dissent or
abstention to such action with the person acting as secretary of the meeting
before the adjournment thereof or shall forward such dissent by registered mail
to the Secretary of the Corporation immediately after adjournment of the
meeting. Such right of dissent or abstention shall not apply to a director who
voted in favor of the action taken.
Section 8. Conduct of Meetings. The Chairman or the Chief Executive
Officer shall preside at all meetings of the Board of Directors; provided,
however, that in the absence or at the request of the Chairman of the Board, or
if there shall not be a person holding such offices, the person selected to
preside at a meeting of directors by a vote of a majority of the directors
present shall preside at such meeting. The Secretary, or in the absence or at
the
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request of the Secretary, any person designated by the person presiding at a
meeting of the Board of Directors, shall act as secretary of such meeting.
Section 9. Action Without a Meeting. Any action required or permitted to
be taken at a Board of Directors meeting may be taken without a meeting if the
action is taken by all members of the Board. The action must be evidenced by one
or more written consents signed by each director before or after such action,
describing the action taken, which consent or consents shall be included in the
minutes or filed with the corporate records. Action taken as provided in this
Section is effective when the last director signs the consent, unless the
consent specifies a different effective date. A consent signed pursuant to this
Section has the effect of a meeting vote and may be described as such in any
document.
Section 10. Participation Other Than in Person. The Board of Directors
may permit any or all directors to participate in a regular or special meeting
by, or conduct the meeting through the use of, any means of communication by
which all directors participating may simultaneously hear each other during the
meeting. A director participating in a meeting by this means is deemed to be
present in person at such meeting.
ARTICLE VI.
OFFICERS
Section 1. Officers of the Corporation. The officers of the Corporation
may include a Chairman of the Board, a Chief Executive Officer, one or more Vice
Chairmen, a President, one or more Executive Vice Presidents, one or more Senior
Vice Presidents, one or more Vice Presidents, a Secretary, a Treasurer, and such
other officers, assistant officers and agents, as may be appointed from time to
time by or under the authority of the Board of Directors including that
authority vested under Sections 8 or 9 of Article IV hereof. The same individual
may simultaneously hold more than one office in the Corporation, but no
individual may act in more than one capacity where action of two or more
officers is required. The title of any officer may include any additional
designation descriptive of such officer's duties as the Board of Directors may
prescribe.
Section 2. Appointment and Term. The officers of the Corporation shall
be appointed by the Board of Directors or by a committee or an officer
authorized by the Board of Directors to appoint one or more officers or
assistant officers; provided, however, that no officer may be authorized to
appoint the Chairman of the Board, the Chief Executive Officer or the President.
Each officer shall hold office until his or her death, resignation,
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retirement, removal or disqualification or until such officer's successor is
elected and qualified.
Section 3. Compensation. The compensation of all officers of the
Corporation shall be fixed by or under the authority of the Board of Directors
or in accordance with Sections 8 and 9 of Article IV hereof. No officer shall be
prevented from receiving such salary by reason of the fact that such officer is
also a director.
Section 4. Resignation and Removal of Officers. An officer may resign at
any time by communicating such officer's resignation to the Corporation. A
resignation is effective when it is communicated unless it specifies in writing
a later effective date. If a resignation is made effective at a later date and
the Corporation accepts the future effective date, the Board of Directors may
fill the pending vacancy before the effective date if the Board of Directors
provides that the successor does not take office until the effective date. The
Board of Directors, by the affirmative vote of a majority of its members, may
remove the Chairman of the Board, the Chief Executive Officer or the President
whenever in its judgment the best interests of the Corporation would be served
thereby. In addition, the Board of Directors or a committee or an officer
authorized by the Board of Directors may remove any other officer at any time
with or without cause. A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by the directors or in
accordance with Sections 8 or 9 of Article IV hereof for the unexpired portion
of the term.
Section 5. Contract Rights of Officers. The appointment of an officer
does not itself create contract rights. An officer's removal does not itself
affect the officer's contract rights, if any, with the Corporation, and an
officer's resignation does not itself affect the Corporation's contract rights,
if any, with the officer.
Section 6. Bonds. The Board of Directors may by resolution require any
officer, agent or employee of the Corporation to give bond to the Corporation,
with sufficient sureties, conditioned on the faithful performance of the duties
of the applicable office or position, and to comply with such other conditions
as may from time to time be required by the Board of Directors. Such bonds may
be scheduled or blanket form and the premiums shall be paid by the Corporation.
Section 7. Chief Executive Officer. The Board of Directors may appoint a
Chief Executive Officer. The Chief Executive Officer shall, subject to the
direction and control of the Board of Directors, supervise and control the
business and affairs of the Corporation. In general the Chief Executive Officer
shall perform all duties incident to the position of chief executive officer or
as may be prescribed by the Board of Directors or these Bylaws from time to
time.
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<PAGE>
Section 8. Chairman of the Board. The Board of Directors may appoint
from among its members an officer designated as the Chairman of the Board, but
the appointment of a Chairman of the Board shall not be required. If a Chairman
of the Board shall be appointed, then the Chairman of the Board shall have such
other duties and authority as may be prescribed by the Board of Directors from
time to time. In general the Chairman of the Board shall perform all duties
incident to the position of chairman of the board or as may be prescribed by the
Board of Directors or these Bylaws from time to time.
Section 9. President. The Board of Directors may appoint a President.
The President, in the absence of the Chairman of the Board or in the event of
the Chairman's death or inability or refusal to act, shall perform the duties
and exercise the powers of that office and, in addition, the President shall
perform such other duties and shall have such other authority as the Board of
Directors shall prescribe. In general the President shall perform all duties
incident to the position of president and or as may be prescribed by the Board
of Directors or these Bylaws from time to time. The Board of Directors shall, if
it deems such action necessary or desirable, designate the officer of the
Corporation who is to perform the duties of the President in the event of such
officer's absence or inability to act.
Section 10. Vice Chairman. The Board of Directors may appoint one or
more officers designated as the Vice Chairman, but the appointment of one or
more Vice Chairmen shall not be required. If one or more Vice Chairmen shall be
appointed, then one or more Vice Chairmen shall have such duties and authority
as may be prescribed by the Board of Directors from time to time.
Section 11. Executive Vice Presidents. Each Executive Vice President
shall perform duties and shall have such powers as are normally incident to such
office or as shall otherwise be prescribed by the Chief Executive Officer, the
Board of Directors or a committee established under these Bylaws.
Section 12. Senior Vice President. Each Senior Vice President shall
perform duties and shall have such powers as are normally incident to such
office or as shall otherwise be prescribed by the Chief Executive Officer, the
Board of Directors or a committee under these Bylaws.
Section 13. Vice Presidents. Each Vice President shall perform duties
and shall have such powers as are normally incident to such office or as shall
otherwise be prescribed by the Chief Executive Officer, the Board of Directors
or a committee under these Bylaws.
Section 14. Secretary. The Secretary shall: (a) keep the minutes of
meetings of the shareholders and of the Board of Directors in one or more
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books provided for that purpose; (b) have the responsibility and authority to
maintain and authenticate the records of the Corporation; (c) see that all
notices are duly given in accordance with the provisions of these Bylaws or as
required by law; (d) be custodian of the corporate records and of the seal of
the Corporation and see that the seal of the Corporation is affixed to all
documents the execution of which on behalf of the Corporation under its seal is
duly authorized; (e) keep a register of the post office address of each
shareholder which shall be furnished to the Secretary by such shareholder; (f)
sign with the Chairman of the Board, Chief Executive Officer or President,
certificates for shares of the Corporation, the issuance of which shall have
been authorized by resolution of the Board of Directors; (g) have general charge
of the stock transfer books of the Corporation; and (h) in general perform all
duties incident to the office of the Secretary and such other duties as from
time to time may be assigned to the Secretary by the Chief Executive Officer of
the Corporation, the Board of Directors or a committee under these Bylaws.
Section 15. Treasurer. The Treasurer shall: (a) have charge and custody
of all funds and securities of the Corporation; receive and give receipts for
moneys due and payable to the Corporation from any source whatsoever, and
deposit all such moneys in the name of the Corporation in such banks, trust
companies or other depositaries as shall be selected in accordance with the
provisions of Section 4 of Article VII; and (b) in general perform all of the
duties incident to the office of Treasurer and such other duties as from time to
time may be assigned to the Treasurer by the Chief Executive Officer of the
Corporation, the Board of Directors or a committee under these Bylaws.
Section 16. Assistant Vice Presidents, Secretaries and Assistant
Treasurers. The Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers, if any, shall, in the event of the death or inability or refusal to
act of the Secretary or the Treasurer, respectively, have all the powers and
perform all of the duties of those offices, and they shall, in general, perform
such duties as shall be assigned to them by the Secretary or the Treasurer,
respectively, or by the Chief Executive Officer of the Corporation or the Board
of Directors. The Assistant Secretaries when authorized by the Board of
Directors, may sign with the Chairman of the Board.
ARTICLE VII
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instruments in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances. The Chief
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Executive Officer, the Chairman of the Board, the President and any Vice
Chairman shall have the authority to execute deeds, mortgages, bonds, contracts
or other instruments in the name and on behalf of the Corporation except in
those cases where execution has been expressly delegated by the Board of
Directors to some other officer or agent of the Corporation. Any resolution of
the Board of Directors authorizing the execution of any deed, mortgage, bond,
contract or other document by the proper officers of the Corporation or by the
officers of the Corporation generally and not specifying particular officers
shall be deemed to authorize such execution by the Chairman of the Board, the
Chief Executive Officer, the President, any Vice Chairman or any Executive or
Senior Vice President, or any other officer if such execution is within the
scope of the duties of such other officer.
Section 2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
Section 3. Checks and Drafts. All checks, drafts or other orders for the
payment of money and notes or other evidences of indebtedness issued in the name
of the Corporation shall be signed by such officer or officers, agent or agents
of the Corporation and in such manner as shall from time to time be determined
by resolution of the Board of Directors.
Section 4. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositaries as may be selected by or under the
authority of the Board of Directors.
ARTICLE VIII
SHARES AND THEIR TRANSFER
Section 1. Shares. Shares of the Corporation may but need not be
represented by certificates.
When shares are represented by certificates, the Corporation shall issue
such certificates in such form as shall be required by the Act and as determined
by the Board of Directors, to every shareholder for the fully paid shares owned
by such shareholder. Each certificate shall be signed by, or shall bear the
facsimile signature of, the Chairman of the Board, the Chief Executive Officer
or the President and the Secretary or an Assistant Secretary of the Corporation
and may bear the corporate seal of the Corporation or its facsimile. All
certificates for the Corporation's shares shall be consecutively numbered or
otherwise identified. The name and address of the person to
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<PAGE>
whom the shares represented by a certificate are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books of the
Corporation. Such information may be stored or retained on discs, tapes, cards
or any other approved storage device relating to data processing equipment;
provided that such device is capable of reproducing all information contained
therein in legible and understandable form, for inspection by shareholders or
for any other corporate purpose.
When shares are not represented by certificates, then within a
reasonable time after the issuance or transfer of such shares, the Corporation
shall send the shareholder to whom such shares have been issued or transferred a
written statement of the information required by the Act to be on certificates.
Section 2. Stock Transfer Books and Transfer of Shares. The Corporation,
or its agent, shall keep a book or set of books to be known as the stock
transfer books of the Corporation, containing the name of each shareholder of
record, together with such shareholder's address and the number and class or
series of shares held by such shareholder. Transfer of shares of the Corporation
represented by certificates shall be made on the stock transfer books of the
Corporation only upon surrender of the certificates for the shares sought to be
transferred by the holder of record thereof or by such holder's duly authorized
agent, transferee or legal representative, who shall furnish proper evidence of
authority to transfer with the Secretary. All certificates surrendered for
transfer shall be cancelled before new certificates for the transferred shares
shall be issued.
If shares of the Corporation
(1) are in the custody of a clearing corporation or of a
custodian bank or a nominee of either subject to the
instructions of the clearing corporation; and
(2) are in bearer form or endorsed in blank by an
appropriate person or registered in the name of the
clearing corporation or custodian bank or a nominee of
either; and
(3) are shown on the account of a transferor or pledgor on
the books of the clearing corporation;
then in addition to other methods, a transfer or pledge of the shares or any
interest therein may be effected by the making of appropriate entries on the
books of the clearing corporation reducing the account of the transferor or
pledgor and increasing the account of the transferee or pledgee by the number of
shares transferred or pledged.
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Section 3. Lost Certificates. The Board of Directors or an officer so
authorized by the Board may authorize the issuance of a new certificate in place
of a certificate claimed to have been lost, destroyed or mutilated, upon receipt
of an affidavit of such fact from the persons claiming the loss or destruction
and any other documentation satisfactory to the Board of Directors or such
officer. At the discretion of the party reviewing such claim, any such claimant
may be required to give the Corporation a bond in such sum as it may direct to
indemnify the Corporation against loss from any claim with respect to the
certificate claimed to have been lost or destroyed.
Section 4. Holder of Record. Except as otherwise required by the Act,
the Corporation may treat the person in whose name the shares stand of record on
its books as the absolute owner of the shares and the person exclusively
entitled to receive notification and distributions, to vote, and to otherwise
exercise the rights, powers and privileges of ownership of such shares.
Section 5. Transfer Agent and Registrar; Regulations. The Corporation
may, if and whenever the Board of Directors so determines, maintain in the State
of North Carolina or any other state of the United States, one or more transfer
offices or agencies and also one or more registry offices which officers and
agencies may establish rules and regulations for the issue, transfer and
registration of certificates. No certificates for shares of stock of the
Corporation in respect of which a Transfer Agent and Registrar shall have been
designated shall be valid unless countersigned by such Transfer Agent and
registered by such Registrar. The Board may also make such additional rules and
regulations as it may deem expedient concerning the issue, transfer and
registration of certificates.
ARTICLE IX
INDEMNIFICATION
Section 1. Definitions. For purposes of this Article IX, the following
definitions shall apply:
(a) "Director" means an individual who is or was a director of the
Corporation or an individual who, while a director of the
Corporation, is or was serving at the Corporation's request as a
director, officer, partner, trustee, employee or agent of
another foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise. A
director is considered to be serving an employee benefit plan at
the Corporation's request if such director's duties to the
Corporation also impose duties on, or otherwise involve services
by, the director to the plan or to participants in or
beneficiaries of the plan. "Director" includes,
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<PAGE>
unless the context requires otherwise, the estate or personal
representative of a director.
(b) "Expenses" means expenses of every kind incurred in defending a
proceeding, including counsel fees.
(c) "Indemnified Officer" shall mean each officer of the Corporation
who is also a director of the Corporation and each other officer
of the Corporation who is designated by the Board of Directors
from time to time as an Indemnified Officer. An Indemnified
Officer shall be entitled to indemnification hereunder to the
same extent as a director, including, without limitation,
indemnification with respect to service by the Indemnified
Officer at the Corporation's request as a director, officer,
partner, trustee, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise.
(d) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to
an employee benefit plan) or reasonable expenses incurred with
respect to a proceeding.
(e) "Proceeding" means any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative, whether formal or informal, and any appeal
therein (and any inquiry or investigation that could lead to
such a proceeding).
Section 2. Indemnification. In addition to the indemnification otherwise
provided by law, the Corporation shall indemnify and hold harmless its directors
and Indemnified Officers (as defined herein) against all liability and expenses,
including reasonable attorneys' fees, in any proceeding (including without
limitation a proceeding brought by or on behalf of the Corporation itself)
arising out of their status as directors or officers, or their service at the
Corporation's request as a director, officer, partner, trustee, employee or
agent of another foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, or their activities in any
such capacity; provided, however, that the Corporation shall not indemnify a
director or Indemnified Officer against liability or litigation expense that
such person may incur on account of activities of such person which at the time
taken were known or believed by him or her to be clearly in conflict with the
best interests of the Corporation. The Corporation shall also indemnify each
director and Indemnified Officer for reasonable costs, expenses and attorneys'
fees incurred in connection with the enforcement of the rights to
indemnification granted herein, if it is determined in accordance with Section
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3 of this Article IX that the director or Indemnified Officer is entitled to
indemnification hereunder.
Section 3. Determination. Any indemnification under Section 2 of this
Article IX shall be paid by the Corporation in a specific case only after a
determination that the director or Indemnified Officer has met the standard of
conduct set forth in such Section 2. Such determination shall be made:
(a) by the Board of Directors by a majority vote of a quorum
consisting of directors not at the time parties to the
proceeding;
(b) if a quorum cannot be obtained under subparagraph (a), by a
majority vote of a committee duly designated by the Board of
Directors (in which designation directors who are parties may
participate), consisting solely of two or more directors not at
the time parties to the proceeding;
(c) by special legal counsel (i) selected by the Board of Directors
or its committee in the manner prescribed in subparagraphs (a)
or (b); or (ii) if a quorum of the Board of Directors cannot be
obtained under subparagraph (a) and a committee cannot be
designated under subparagraph (b), selected by a majority vote
of the full Board of Directors (in which selection directors who
are parties may participate); or
(d) by the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the
proceeding may not be voted on the determination.
The Board of Directors shall take all such action as may be necessary
and appropriate to enable the Corporation to pay the indemnification required by
this Article IX.
Section 4. Advance for Expenses. The expenses incurred by a director or
Indemnified Officer in defending a proceeding may be paid by the Corporation in
advance of the final disposition of such proceeding as authorized by the Board
of Directors in the specific case upon receipt of an undertaking by or on behalf
of the director or Indemnified Officer to repay such amount unless it shall
ultimately be determined that such person is entitled to be indemnified by the
Corporation against such expenses. Subject to receipt of such undertaking, the
Corporation shall make reasonable periodic advances for expenses pursuant to
this Section, unless the Board of Directors shall determine, in the manner
provided in Section 3 of this Article IX and based on the facts then known, that
indemnification under this Article is or will be precluded.
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Section 5. Reliance and Consideration. Any director or Indemnified
Officer who at any time after the adoption of this Article IX serves or has
served in any of the aforesaid capacities for or on behalf of the Corporation
shall be deemed to be doing or to have done so in reliance upon, and as
consideration for, the right of indemnification provided herein. Such right,
however, shall not be exclusive of any other rights to which such person may be
entitled apart from the provisions of this Article IX. No amendment,
modification or repeal of this Article IX shall adversely affect the right of
any director or Indemnified Officer to indemnification hereunder with respect to
any activities occurring prior to the time of such amendment, modification or
repeal.
Section 6. Insurance. The Corporation may purchase and maintain
insurance on behalf of its directors, officers, employees and agents and those
persons who were serving at the request of the Corporation in any capacity in
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise against any liability asserted against or incurred by such
person in any such capacity, or arising out of his or her status as such,
whether or not the Corporation would have the power to indemnify such person
against such liability under the provisions of this Article IX or otherwise. Any
full or partial payment made by an insurance company under any insurance policy
covering any director, officer, employee or agent made to or on behalf of a
person entitled to indemnification under this Article IX shall relieve the
Corporation of its liability for indemnification provided for in this Article or
otherwise to the extent of such payment, and no insurer shall have a right of
subrogation against the Corporation with respect to such payment.
ARTICLE X.
GENERAL PROVISIONS
Section 1. Voting of Shares. Authority to vote shares of another
corporation or of any association held by the Corporation, and to execute
proxies and written waivers and consents in relation thereto, shall be vested
exclusively in such officers and employees of this Corporation as shall be
expressly named from time to time by the Board of Directors of this Corporation
in resolutions formally adopted for that purpose.
Section 2. Distributions. The Board of Directors may from time to time
authorize, and the Corporation may pay or distribute, dividends or other
distributions on its outstanding shares in such manner and upon such terms and
conditions as are permitted by the Articles of Incorporation or the Act.
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Section 3. Seal. The Board of Directors shall provide a corporate seal
which shall be circular in form and shall have inscribed thereon the name of the
Corporation and the words "corporate seal".
Section 4. Amendments. The Board of Directors may amend or repeal these
Bylaws and may adopt new Bylaws by the affirmative vote of a majority of the
directors then holding office at any regular or special meeting of the Board of
Directors. The shareholders of the Corporation may also amend or repeal these
Bylaws and may adopt new Bylaws.
Adopted September 25, 1991
Amended January 22, 1992
Amended April 26, 1995
<PAGE>
<PAGE>
EXHIBIT NO. 4(l)
FISCAL AND PAYING AGENCY AGREEMENT
dated as of
July 5, 1995
between
NATIONSBANK CORPORATION
and
The Chase Manhattan Bank, N.A.,
as Fiscal and Principal Paying Agent
US $500,000,000
Floating Rate Senior Notes, due 2000
<PAGE>
TABLE OF CONTENTS
1. The Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Appointment of Agents . . . . . . . . . . . . . . . . . . . . . 3
3. Closing Date, Exchange of Temporary Global Note . . . . . . . . 4
4. Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5. Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6. Surrendered Notes . . . . . . . . . . . . . . . . . . . . . . . 10
7. Mutilated, Destroyed, Stolen or Lost Notes. . . . . . . . . . . 10
8. Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9. Agreements Concerning Agents. . . . . . . . . . . . . . . . . . 11
10. Offices, Resignation, Successors, Etc. of Agents. . . . . . . . 14
11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12. Meetings and Votes of Holders . . . . . . . . . . . . . . . . . 16
13. Modifications, Etc. . . . . . . . . . . . . . . . . . . . . . . 20
14. Further Issuances . . . . . . . . . . . . . . . . . . . . . . . 21
15. Merger, Consolidation or Sales of Assets. . . . . . . . . . . . 21
16. Stockholders, Officers and Directors of the
Corporation Exempt from Individual Liability. . . . . . . . . . 22
17. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . 23
18. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
19. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
20. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 24
21. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
EXHIBIT A
EXHIBIT B
SCHEDULE I
SCHEDULE II
EXHIBIT C
EXHIBIT D
EXHIBIT E
<PAGE>
FISCAL AND PAYING AGENCY AGREEMENT, dated as of July 5, 1995 (this
"Agreement"), by and among NATIONSBANK CORPORATION, a corporation duly
organized and validly existing under the laws of the State of North Carolina
(the "Corporation"), and The Chase Manhattan Bank, N.A., London Branch, as
Fiscal and Principal Paying Agent (the "Fiscal and Principal Paying Agent"),
and The Chase Manhattan Bank Luxembourg, S.A., as paying agent (a duly
appointed "Paying Agent"), relating to the Corporation's U.S. $500,000,000
aggregate principal amount of Floating Rate Senior Notes, due 2000 (the
"Notes").
1. The Notes. (a) The Corporation has, by a Subscription Agreement,
dated July 3, 1995 (the "Subscription Agreement"), among the Corporation
and the several managers named in Schedule I thereto (the "Managers"), agreed
to issue the Notes. The Notes will constitute direct and unsecured senior
obligations of the Corporation, ranking pari passu with each other and with
all present and future unsecured and unsubordinated indebtedness of the
Corporation. Pursuant to the Subscription Agreement, the Managers may resell
the Notes to persons who are not "U.S. Persons" (as such term is defined in
Regulation S promulgated by the United States Securities and Exchange
Commission (the "SEC") pursuant to the Securities Act of 1933, as amended
(the "Securities Act") in transactions that meet the requirements of Regulation
S (the "Offering").
(b) The Notes will initially be issued in the form of a temporary global
note, in bearer form without interest coupons, substantially in the form of
Exhibit A hereto (the "Temporary Global Note"), in a principal amount equal
to the initial aggregate principal amount of the Notes. As hereinafter
provided, interests in the Temporary Global Note will be exchangeable for
interests in a permanent global note (the "Permanent Global Note") in
bearer form without interest coupons, substantially in the form of Exhibit
B hereto, held by the Common Depositary (as defined below). In certain limited
circumstances interests in the Permanent Global Note will be exchangeable for
definitive notes (the "Definitive Notes"), in bearer form, with interest
coupons (the "Coupons") attached, substantially in the form of Exhibit C
hereto, as provided in Section 3(g), and in the denominations specified on the
reverse of the Definitive Note set forth in Exhibit C.
(c) The Corporation shall obtain an ISIN number and a Common Code
number for the Notes.
(d) The term "Notes" as used in this Agreement shall include the
Permanent Global Note, the Definitive Notes and the Coupons and, as the case
may be, the Temporary Global Note. The term "Global Note" as used in this
Agreement shall include both the Temporary Global Note and the Permanent Global
Note, each of
<PAGE>
which is a "Global Note." The term "Holders" or "Noteholders" as used in this
Agreement shall mean the several persons who are for the time being the holders
of the Notes, which expression shall, while the Notes are represented by a
Global Note, mean (other than with respect to the payment of principal and
interest on the Notes, the right to which shall be vested as against the
Corporation solely in the bearer of such Global Note in accordance with and
subject to its terms) the persons for the time being shown in the records of
Euroclear (as defined below) or Cedel (as defined below) (other than Cedel, if
Cedel shall be an accountholder of Euroclear, and Euroclear, if Euroclear shall
be an accountholder of Cedel) as the Holders of particular principal amounts of
Notes (in which regard any certificate or other document issued by Euroclear or
Cedel as to the principal amount of Notes standing to the credit of the account
of any person shall be conclusive and binding for all purposes).
(e) In compliance with United States tax laws and regulations, the Notes
may not be offered or sold during the 40-day period beginning on the
Closing Date (as hereinafter defined) or at any time if part of a
Manager's unsold allotment (the "Restricted Period") to a person who is
within the United States or to a United States Person other than (a)
foreign branches of United States financial institutions if such
institutions agree in writing to comply with the requirements of Section
165(j)(3)(A), (B), or (C) of the Internal Revenue Code of 1986, as amended,
and the regulations thereunder, (b) United States offices of exempt
distributors, or (c) United States offices of international organizations or
foreign central banks. United States tax laws and regulations also require
that the Notes in bearer form not be delivered within the United States. For
purposes of this paragraph (e), terms are defined as such terms are defined
for purposes of United States Treasury Regulation Section 1.163-5(c)(2)(i)(D)
(the "D Rules").
(f) The Notes may be redeemed by the Corporation as provided in Section
5 of the Conditions (as defined below) and Section 5 hereof. The Permanent
Global Note and the Temporary Global Note shall contain such appropriate
insertions, omissions, substitutions and other variations as are required
or permitted by this Agreement and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as
may, consistent herewith, be determined by the officer of the Corporation
executing such Notes, as evidenced by his execution of such Note.
(g) References in this Agreement to the "Conditions" are to the
terms and conditions of the Notes as set out on the reverse side of the
form of Definitive Note included as Exhibit C hereto.
-2-
<PAGE>
2. Appointment of Agents.
(a) The Corporation hereby appoints The Chase Manhattan Bank, N.A.,
at its principal corporate trust office in London at Woolgate House,
Coleman Street, London EC2P 2HD, United Kingdom, as its fiscal and
principal paying agent in respect of the Notes upon the terms and subject
to the conditions herein set forth. The Chase Manhattan Bank, N.A. and its
successor or successors as such fiscal and paying agent qualified and
appointed in accordance with this section are herein called the "Fiscal
and Principal Paying Agent." The Fiscal and Principal Paying Agent shall
have the powers and authority granted to and conferred upon it herein and
in the Notes, and such further powers and authority, acceptable to it,
to act on behalf of the Corporation as the Corporation may hereafter grant
to or confer upon it in writing.
(b) The Corporation may, in its discretion, appoint one or more agents
outside the United States and its possessions (each a "Paying Agent") for the
payment (subject to applicable laws and regulations) of the principal of and any
interest and Additional Amounts, if any, (as defined in Section 4 of the
Conditions) on the Notes. The Corporation hereby appoints The Chase Manhattan
Bank Luxembourg, S.A., at its office in Luxembourg at 5 rue Plaetis, L-2338
Luxembourg-Grund, as its Paying Agent in Luxembourg. Each Paying Agent shall
have the powers and authority granted to and conferred upon it herein and
in the Notes, and such further powers and authority, acceptable to it,
to act on behalf of the Corporation as the Corporation may hereafter grant
to or confer upon it in writing. As used herein, "paying agencies" shall mean
paying agencies maintained by a Paying Agent on behalf of the Corporation
as provided elsewhere herein.
(c) The Fiscal and Principal Paying Agent may, with the written
consent of the Corporation, appoint by an instrument or instruments in
writing (in form and substance satisfactory to the Corporation) one or more
agents for the authentication of Notes on its behalf (each, an "Authenticating
Agent") and may, with such written consent, vary or terminate any such
appointment upon written notice and approve any change in the office
through which any such Authenticating Agent may act. The Corporation may
also terminate any such appointment at any time by written notice to the
Fiscal and Principal Paying Agent and the Authenticating Agent whose
appointment is to be terminated. Each such Authenticating Agent shall
accept such appointment pursuant to an instrument or instruments in
writing (in form and substance satisfactory to the Corporation) and shall
agree to act as an Authenticating Agent pursuant to the terms and conditions
of this Agreement.
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(d) The Corporation may, in its discretion, appoint one or more agents to
calculate and determine the rate and amount of interest payable in connection
with the Notes (each, an "Agent Bank"). Initially, The Chase Manhattan Bank,
N.A., London Branch, is appointed to serve in such capacity. An Agent Bank
Agreement, entered into between the Corporation and the Agent Bank, will
set forth the terms of such appointment.
3. CLOSING DATE; EXCHANGE OF TEMPORARY GLOBAL NOTE.
(a) At any time and from time to time after the execution and delivery of
this Agreement, the Corporation may deliver outside the United States Notes
executed by the Corporation in accordance with this Agreement to the Fiscal
and Principal Paying Agent for authentication (or cause an Authenticating Agent
to authenticate on its behalf) together with an officer's certificate of the
Corporation directing such authentication, and the Fiscal and Principal
Paying Agent shall thereupon authenticate (or cause to be authenticated) and
make such Notes available for delivery upon and in accordance with the written
order of the Corporation. No Note shall be valid or enforceable for any
purpose unless and until the certificate of authentication thereon shall have
been manually signed by a duly authorized signatory of the Fiscal and Principal
Paying Agent or Authenticating Agent or an attorney-in-fact duly appointed
pursuant to a valid power of attorney and such duly executed certificate of
authentication on any Note shall be conclusive evidence that the Note has been
duly authenticated and delivered hereunder.
The Corporation shall initially execute and deliver on July 5, 1995 (the
"Closing Date"), the Temporary Global Note and the Permanent Global Note to the
Fiscal and Principal Paying Agent outside the United States, and the Fiscal
and Principal Paying Agent, shall, upon the written order of the Corporation,
authenticate or cause to be authenticated the Temporary Global Note and the
Permanent Global Note and deliver the Temporary Global Note to a common
depositary outside the United States (the "Common Depositary") for the benefit
of Morgan Guaranty Trust Corporation of New York, Brussels office, as operator
of the Euroclear System ("Euroclear"), and for Cedel Bank, societe anonyme
("Cedel"). Euroclear or Cedel, as the case may be, will credit each subscriber
of Notes with a principal amount of Notes equal to the principal amount thereof
for which it has subscribed and paid. The Fiscal and Principal Paying Agent
shall retain the Permanent Global Note for the account of the Corporation until
instructed with the Common Depositary in accordance with paragraph (b) of this
Section 3, to exchange such Permanent Global Note for the Temporary Global Note
held by the Common Depositary.
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(b) On or after a date which is 40 days after the later to occur of the
commencement of the Offering or the Closing Date (the "Exchange Date"), the
Corporation shall instruct the Fiscal and Principal Paying Agent to make the
Permanent Global Note available to be exchanged for the Temporary Global Note.
If Notes are issued pursuant to Section 14 hereof (any such Notes being
referred to herein as "Additional Notes") prior to the Exchange Date, the
Exchange Date shall be deferred to a date not earlier than 40 days after the
later of the commencement of the offering of such Additional Notes and the
closing date for such Additional Notes. No interest in the Temporary Global
Note or the Permanent Global Note shall be exchangeable for definitive notes
except as provided herein.
(c) On or after the Exchange Date, the interest of a beneficial owner of
Notes represented by the Temporary Global Note shall be exchanged for an
interest in the Permanent Global Note when such beneficial owner, or, if
other than such beneficial owner, the holder of the account through which such
beneficial owner's interest is held, instructs Euroclear or Cedel, as the case
may be, to request such exchange on his behalf and (i) upon delivery by the
account holder to Euroclear or Cedel, as the case may be, of a certificate
substantially in the form set forth in Exhibit E hereto, copies of which
certificate shall be available at the offices of Euroclear and Cedel and the
Fiscal and Principal Paying Agent, and (ii) upon delivery by Euroclear or
Cedel, as the case may be, to the Fiscal and Paying Agent of a certificate
or certificates substantially in the form set forth in Exhibit D hereto.
Upon receipt of the certificate or certificates provided for in the preceding
sentence and upon presentation to it of the Temporary Global Note by the
Common Depository, the Fiscal and Principal Paying Agent shall exchange
the interest in the Temporary Global Note covered by such certification for
an interest in the Permanent Global Note. No interest shall be paid with
respect to any Note represented by the Temporary Global Note to any Holder
until the foregoing certification has been provided to Euroclear or Cedel, as
the case may be, and no interest shall be paid to Euroclear or Cedel until
the foregoing certification has been provided to the Fiscal and Principal
Paying Agent. No interest in the Temporary Global Note shall be exchanged for
an interest in the Permanent Global Note prior to the Exchange Date. The
Temporary Global Note, Permanent Global Note and any Notes in definitive form
with coupons attached will be delivered only outside the United States
(including any state of the United States and the District of Columbia),
its territories or its possessions (including Puerto Rico, the U.S. Virgin
Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands).
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(d) Upon any such exchange of a portion of the Temporary Global Note for
an interest in the Permanent Global Note, the Temporary Global Note shall be
endorsed by the Fiscal and Principal Paying Agent to reflect the reduction of
its principal amount by an amount equal to the amount so exchanged and the
Permanent Global Note shall be similarly endorsed to reflect the increase of
the principal amount evidenced thereby, whereupon its principal amount shall
be increased for all purposes by the amount so exchanged. Until so exchanged in
full, the Temporary Global Note shall in all respects be entitled to the same
benefits under this agreement as the Permanent Global Note authenticated and
delivered hereunder, except that neither the holder thereof nor the beneficial
owners of the Notes represented thereby shall be entitled to receive payment of
interest thereon. Any exchange of an interest in the Temporary Global Note for
an interest in the Permanent Global Note pursuant to this Section shall be
free of charge.
(e) The delivery to the Fiscal and Principal Paying Agent by the Euroclear
Operator or Cedel of any certificate referred to above may be relied upon by the
Corporation and the Fiscal and Principal Paying Agent as conclusive evidence
that a corresponding certificate or certificates has or have been delivered to
the Euroclear Operator or Cedel pursuant to the terms of this Agreement.
(f) Promptly after the Temporary Global Note has been exchanged in full,
it shall be surrendered by the Common Depositary to the Fiscal and Principal
Paying Agent, as the Corporation's agent.
(g) Interests in the Permanent Global Note will be exchangeable for
Definitive Notes with Coupons attached only if: (i) an Event of Default (as
defined in the Conditions) occurs and is continuing, or (ii) the Corporation is
notified that either Euroclear or Cedel has been closed for business for a
continuous period of 14 days (other than by reason of holiday, statutory or
otherwise) after the original issuance of the Notes or has announced an
intention permanently to cease business or has in fact done so and no
alternative clearance system approved by the Holders of the Notes is available,
or (iii) the Corporation, after notice to the Fiscal and Principal Paying
Agent, determines to issue Notes in definitive form.
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4. PAYMENT.
(a) In order to provide for the payment of the principal of and interest
on and any Additional Amounts on the Notes as the same shall become due and
payable, the Corporation shall pay to the Fiscal and Principal Paying Agent at
its office in London, in such coin or currency of the United States of America
as at the time of payment is legal tender for the payment of public and private
debts therein, and in same-day funds, the following amounts (and the
Corporation shall give notice to the Fiscal and Principal Paying Agent at least
one full Business Day, as defined herein, prior to the date payment is due to
the Fiscal and Principal Paying Agent as to the means of such payment, if other
than by wire transfer), to be held and applied by the Paying Agent as
hereinafter set forth:
(i) The Corporation shall pay to the Fiscal and Principal Paying Agent by
11:00 A.M., New York time, on each interest payment date in same-day funds an
amount sufficient to pay the interest due on (and Additional Amounts, if any,
on) all the Notes outstanding on such interest payment date, and the Fiscal and
Principal Paying Agent shall apply the amounts so paid to it to the payment
of such interest (and Additional Amounts, if any) on such interest payment date.
(ii) If the Corporation shall elect to redeem the Notes in accordance with
Section 5 hereof, the Corporation will pay to the Fiscal and Principal Paying
Agent on the Business Day immediately prior to the date fixed for redemption
thereof in same-day funds an amount sufficient (with any amount then held by the
Fiscal and Principal Paying Agent and available for that purpose) to pay the
redemption price of the Notes called for redemption on the redemption date or
entitled to be redeemed, together with accrued interest thereon (and Additional
Amounts, if any, thereon) to the date fixed for redemption if such redemption
date occurs on an interest payment date, and the Fiscal and Principal Paying
Agent shall apply such amount to the payment of the redemption price and accrued
interest (and Additional Amounts, if any) in accordance with the Conditions.
(iii) By no later than 11:00 A.M., New York time, on the maturity date of
the Notes, the Corporation shall pay to the Fiscal and Principal Paying Agent in
same-day funds an amount which, together with any amounts then held by the
Fiscal and Principal Paying Agent, and available for payment thereof, shall be
equal to the entire amount of principal and interest (and Additional Amounts, if
any) to be due on such maturity date on all the Notes then outstanding, and the
Fiscal and Principal Paying Agent
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shall apply such amount to the payment of the principal of and interest on (and
Additional Amounts, if any, on) the Notes in accordance with the Conditions.
(iv) In connection with any payments made pursuant to this clause (a), the
Corporation shall direct the bank through which such payment shall be made to
provide to the Fiscal and Principal Paying Agent by 10:00 a.m. (London time)
two Business Days prior to the due date for any such payment an irrevocable
confirmation, by tested telex or authenticated SWIFT MT100 message, of the
Corporation's intent to make such payment.
(b) The Fiscal and Principal Paying Agent shall arrange directly with any
Paying Agent who may have been appointed by the provisions of Section 2 hereof
for the payment from funds so paid by the Corporation of the principal of and
any interest on the Notes outside the United States as set forth herein and in
the Conditions. Notwithstanding the foregoing, if the Corporation so notifies
the Fiscal and Principal Paying Agent, the Corporation may provide directly
to a Paying Agent funds for the payment of the principal and interest payable
on any Notes under an agreement with respect to such funds containing
substantially the same terms and conditions set forth in this Section 4 and in
Section 9 hereof, and the Fiscal and Principal Paying Agent shall have no
responsibility whatsoever with respect to any funds so provided by the
Corporation to any such Paying Agent. If for any reason the amounts received
by the Fiscal and Principal Paying Agent or any funds provided directly to a
Paying Agent as set forth in the previous sentence shall be insufficient to
satisfy all claims for principal and interest then due and payable on the
Notes presented to it, the Fiscal and Principal Paying Agent or such Paying
Agent, as the case may be, shall not be bound to pay any such claim until (i)
it has received the full amount of the moneys then due and payable in
respect of such Notes or (ii) other arrangements satisfactory to it have
been made.
(c) At least 15 days prior to the date on which any payment of Additional
Amounts shall be required to be made pursuant to Section 4 of the Conditions,
the Corporation will furnish each Paying Agent of the Corporation and the
Fiscal and Principal Paying Agent with a certificate of one of its duly
authorized officers instructing the Fiscal and Principal Paying Agent and each
other paying agency of the Corporation as to the amounts required (i) to be
deducted or withheld for or on account of any taxes described in Section 4
of the Conditions from a payment to be made on that date and (ii) to be paid to
each Holder of Notes as Additional Amounts pursuant to that Section. If the
foregoing amounts are not uniform for all Holders, then the Corporation's
certificate shall specify by country of residence or other factor the amounts
required to be
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deducted or withheld and to be paid as Additional Amounts for each Holder or
class of Holders of the Notes. In the absence of its receipt of any such
certificate from the Corporation, the Paying Agent may make payment without
deduction or withholding. The Corporation hereby agrees to indemnify the Paying
Agent, each other paying agency of the Corporation and the Fiscal and Principal
Paying Agent for, and to hold them harmless against, any loss, liability or
expense reasonably incurred without gross negligence or bad faith on their part,
arising out of or in connection with actions taken or omitted by any of them in
reliance on any certificate furnished pursuant to this Section.
(d) Subject to the foregoing provisions of this Section 4, each Note
delivered under this Agreement, or in exchange for, or in lieu of any other
Note shall carry all the rights to interest accrued and unpaid, and to accrue,
which were carried by such other Note.
(e) Notwithstanding anything in this Section to the contrary, if any
payment of interest or principal (and Additional Amounts, if any) is due on
a day that is not a Business Day, payment shall be made on the next
succeeding Business Day, with the same effect as if made on the day such
payment was due and no interest will accrue for the period after such interest
or principal payment date. A "Business Day" shall mean any day on which
commercial banks and foreign exchange markets are open for business (including
dealings in foreign exchange and foreign currency deposits) in New York,
London and Luxembourg.
5. REDEMPTION. If, under the circumstances described in Section 5 of the
Conditions, the Corporation shall elect to redeem the outstanding Notes
(in whole or in part):
(a) The Corporation shall give notice to the Agents (as defined in Section
9 hereof) of its election to redeem the Notes; the Fiscal and Principal
Paying Agent shall cause to be published on behalf of and at the expense of
the Corporation any notice of redemption in accordance with the provisions of
Section 5 of the Conditions. The Fiscal and Principal Paying Agent shall send
a copy of such notice of redemption to the Corporation and each other paying
agency of the Corporation.
(b) Where partial redemptions are to be effected when there are Definitive
Notes outstanding, the Fiscal and Principal Paying Agent will select by lot the
Notes to be redeemed from the outstanding Notes in compliance with all
applicable laws and stock exchange requirements and deemed by the Fiscal and
Principal Paying Agent to be appropriate and fair; and where partial redemptions
are to be effected when there are no Definitive Notes outstanding, the rights of
Holders will be governed by the standard provisions of Euroclear and Cedel.
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Notice of any partial redemption and, when there are Definitive Notes
outstanding, of the serial numbers of the Notes so drawn will be given by the
Fiscal and Principal Paying Agent to the Holders of the Notes in accordance with
the terms of the Notes and this Agreement.
(c) Immediately prior to the date on which any notice of redemption is to
be given to the Holders of the Notes, the Corporation shall deliver to the
Fiscal and Principal Paying Agent a certificate stating that the Corporation is
entitled to effect such redemption and setting forth in reasonable detail a
statement of facts showing that all conditions precedent to such redemption have
occurred or been satisfied and shall comply with all notice requirements
provided for in the Conditions.
6. SURRENDERED NOTES. All Notes and Coupons surrendered for payment,
redemption, retirement or exchange shall be delivered outside the United States
to the Fiscal and Principal Paying Agent. In any such case, the Fiscal and
Principal Paying Agent shall cancel all Notes and Coupons not previously
canceled and shall dispose of such canceled Notes and Coupons (unless otherwise
previously requested by the Corporation). Upon such destruction, the Fiscal and
Principal Paying Agent shall provide the Corporation with a certificate to such
effect if so requested by the Corporation.
7. MUTILATED, DESTROYED, STOLEN OR LOST NOTES. The Fiscal and Principal
Paying Agent is hereby authorized, in accordance with the Conditions and this
Section, from time to time to authenticate and deliver outside the United States
Notes and Coupons in exchange for or in lieu of Notes and Coupons that
become mutilated, destroyed, stolen or lost, upon receipt of such indemnity
(including the posting of a bond at the expense of a claimant) and such other
documents or proof as may be required in form and substance satisfactory to the
Fiscal and Principal Paying Agent and the Corporation. Every Note or Coupon
authenticated and delivered in exchange for or in lieu of any such Note or
Coupons shall be considered the obligation of the Corporation and shall carry
all the rights to interest accrued and unpaid and to accrue which were carried
by such Note or Coupon. Upon the issuance of any substitute Notes or Coupons,
the Corporation may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Fiscal and Principal Paying
Agent) connected therewith.
8. SIGNATURES. Notes shall be executed on behalf of the Corporation by its
Chairman of the Board and Chief Executive Officer or Chief Financial Officer,
any Vice President or Associate General Counsel (and any of these being
hereinafter referred to as an "Authorized Officer"). Such signatures may be
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the manual or facsimile signatures of the current or any future such officers.
Any signature in facsimile may be imprinted or otherwise reproduced on the
Notes. The Corporation may adopt and use the signature or facsimile signature of
any Authorized Officer, notwithstanding the fact that at the time the Notes
shall be authenticated and delivered, or disposed of, such Authorized Officer
shall have ceased to have held such office by virtue of which such Authorized
Officer so executed such security.
9. AGREEMENTS CONCERNING AGENTS. Each of the Fiscal and Principal Paying
Agent and any other Paying Agent (each of which is referred to herein as an
"Agent") accepts its appointment and its obligations herein and in the Notes,
upon the terms and conditions hereof and thereof, including the following, to
all of which the Corporation agrees and to all of which the rights hereunder of
the Holders from time to time of the Notes shall be subject:
(a) Each of the Agents shall be entitled to reasonable compensation
for all services rendered by such Agent, as separately agreed to from time to
time by the Corporation and such Agent, and the Corporation agrees to pay
promptly such compensation and to reimburse each of the Agents for the
reasonable out-of-pocket expenses (including, but not limited to, reasonable
counsel fees and expenses) incurred by such Agent in connection with the
services rendered by it hereunder. The Corporation also agrees to indemnify each
of the Agents and its officers, employees and agents for, and to hold it
harmless against, any loss, liability or expense (including the costs and
expenses of defending against any claim of liability, including the reasonable
fees and expenses of its counsel) incurred without gross negligence or bad faith
on the part of such Agent or its officers, employees or agents, arising out of
or in connection with its acting as an Agent of the Corporation hereunder. The
obligations of the Corporation under this paragraph (a) shall survive payment of
the Notes or the resignation or removal of any Agent.
(b) In acting under this Agreement and in connection with the Notes,
each of the Agents of the Corporation is acting solely as agent of the
Corporation, and does not assume any obligation, or relationship of agency or
trust, for or with any of the owners or Holders of the Notes, except that all
funds held by the Agents for payment of principal of or interest on (and
Additional Amounts, if any, on) the Notes shall be held in trust but need not be
segregated from other funds except as required by law and as set forth herein
and in the Notes, and shall be applied as set forth herein and in the Notes;
provided, however, that monies paid by the Corporation to an Agent for the
payment of principal of or interest on (and Additional Amounts, if any, on)
Notes remaining unclaimed at the end of two years
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after such principal or interest (and Additional Amounts, if any) shall have
become due and payable shall be repaid to the Corporation without interest,
whereupon the aforesaid trust shall terminate and all liability of any Agent
with respect thereto shall cease. Thereafter, the Holder of such Note shall, as
an unsecured general creditor, look only to the Corporation for payment thereof.
(c) Each of the Agents may consult with one or more counsel
satisfactory to it (including counsel to the Corporation), and the written
opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the opinion of such counsel.
(d) Each of the Agents shall be protected and shall incur no liability
for or in respect of any action taken, omitted or suffered by it in reliance
upon any Note, notice, direction, consent, certificate, affidavit, statement or
other paper or document believed in good faith by such Agent to be genuine and
to have been signed by the proper party or parties.
(e) Each of the Agents, its officers, directors and employees may
become the owner of, or acquire any interest in, any Notes, with the same rights
that it would have if it were not an Agent hereunder, and may engage or be
interested in any financial or other transaction with the Corporation and its
affiliates and may act on, or as depositary, trustee or agent for, any
committee or body of Holders of Notes or other obligations of the Corporation,
as freely as if it were not an Agent.
(f) The Fiscal and Principal Paying Agent shall not be under any
liability for interest on, or have any responsibility to invest, any monies at
any time received by it pursuant to any of the provisions of this Agreement or
of the Notes.
(g) The recitals contained herein and in the Notes (except in the
Fiscal and Principal Paying Agent's certificates of authentication), shall be
taken as the statements of the Corporation, and the Agents assume no
responsibility for the correctness of the same. None of the Agents makes any
representation as to the validity or sufficiency of this Agreement or the Notes
or the Corporation's Offering Circular dated July 3, 1995, or any other offering
material, except for such Agent's due authorization to execute this Agreement.
The Agents shall not be accountable for the use or application by the
Corporation of the proceeds of any Notes.
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(h) The Agents shall be obligated to perform such duties and only such
duties as are herein and in the Notes specifically set forth and no implied
duties or obligations shall be read into this Agreement or the Notes against the
Agents. The Agents shall not be under any obligation to take any action
hereunder which may tend to involve it in any expense or liability, the payment
or reimbursement of which within a reasonable time is not, in its reasonable
opinion, assured to it through surety or other indemnity satisfactory to such
Agents.
(i) Unless herein or in the Notes otherwise specifically provided, any
order, certificate, notice, request, direction, or other communication, from the
Corporation made by or given by it under any provision of this Agreement shall
be in writing and shall be sufficient if signed by an Authorized Officer.
(j) Anything in this Agreement to the contrary notwithstanding, none
of the Agents shall incur any liability hereunder, except as a result of gross
negligence or bad faith attributable to them or their officers or employees, and
shall incur no liability for the gross negligence or bad faith of their agents
appointed by them with due care; provided that the Agents shall notify the
Corporation of the appointment of any such agents.
(k) Except as specifically provided herein or in the Notes, none of
the Agents shall have any duty or responsibility in case of any default by the
Corporation in the performance of their obligations (including, without limiting
the generality of the foregoing, any duty or responsibility to accelerate all or
any of the Notes or to initiate or to attempt to initiate any proceedings at law
or otherwise or to make any demand for the payment thereof upon the
Corporation).
(l) Any Agent may act hereunder through its officers, employees,
agents and attorneys. No Agent shall ever be required to post a bond in
connection with the providing of its services hereunder. No Agent shall be
responsible or liable in any manner whatever for the sufficiency, correctness,
genuineness or validity of the subject matter of this Agreement or any part
thereof, the form or execution thereof or the identity or authority of any
person executing or acting under it. In no event shall any Agent's liability
include any special, consequential, punitive or indirect loss or damage which
the Corporation may incur or suffer in connection with this Agreement. In no
event shall an Agent be responsible for the Corporation's attorneys' fees. Each
Agent shall be protected in this Agreement in acting upon any written notice,
request, waiver, consent, certificate, authorization, power of attorney or other
paper or documents that such Agent in good faith believes to be genuine and what
it purports to be and may
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assume any person purporting to give any written notice, advice or instruction
in connection with the provisions hereof has been duly authorized to do so.
10. OFFICES, RESIGNATION, SUCCESSORS, ETC. OF AGENTS.
(a) So long as there shall be a Fiscal and Principal Paying Agent
hereunder, the Corporation shall maintain agencies outside the United States
where interests in Notes may be surrendered for payment (and for the payment of
Additional Amounts, if any), which shall include an agency in Luxembourg so long
as the Notes are listed on the Luxembourg Stock Exchange (the "LSE") and the
rules of such exchange shall so require. The Corporation now intends to maintain
additional agencies (subject to applicable laws and regulations) where an
interest in the Permanent Global Note may be surrendered for payment (and for
the payment of Additional Amounts, if any), in London, England and Luxembourg,
and during such period to keep the Agents advised of the names and locations of
such agencies. Unless the Corporation shall otherwise notify each of the Agents
in writing, the sole such paying agencies shall be the agencies specified in the
Notes. If at any time the Corporation shall fail to maintain any such required
office or agency outside the United States and, so long as the Notes are listed
on the LSE, and the rules of the LSE so require, in Luxembourg, or shall fail to
furnish the Fiscal and Principal Paying Agent with the address thereof,
presentations and surrenders of the Notes for payment may be made at the
principal office of the Fiscal and Principal Paying Agent in London. The
Corporation agrees that it will maintain at all times an office or agency in New
York City for the purpose of receiving notices and demands (other than demands
for payment) from the Holders of the Notes, but not for the purpose of making
payments in respect of the Notes.
(b) The Fiscal and Principal Paying Agent or any other Paying Agents
may at any time resign by giving written notice to the Corporation of such
intention on its part, specifying the date on which its desired resignation
shall become effective; provided, however, that such date shall never be less
than 30 days after receipt of such notice by the Corporation unless the
Corporation agrees to accept less notice. The Fiscal and Principal Paying Agent
may be removed at any time by filing with it at least 30 days prior to the date
of such proposed removal, an instrument in writing signed by an Authorized
Officer on behalf of the Corporation and specifying such removal and the date
when it is intended to become effective. Such resignation or removal shall take
effect upon the date of the appointment by the Corporation, as hereinafter
provided, of a successor Fiscal and Principal Paying Agent or other Paying Agent
of the Corporation, as the case may be, and the acceptance of such appointment
by such successor Fiscal and Principal Paying Agent provided that if the Fiscal
and Principal
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Paying Agent or any other Paying Agent has attempted to resign and a successor
has not been appointed within 60 days, such Fiscal and Principal Paying Agent or
any other Paying Agent shall have the right to appoint a successor Fiscal and
Principal Paying Agent or any other Paying Agent provided that such successor
shall be of international repute. At the time of its resignation or removal, the
Fiscal and Principal Paying Agent shall be entitled to the payment by the
Corporation of its compensation for the services rendered hereunder and to the
reimbursement of all reasonable out-of-pocket expenses incurred in connection
with the services rendered hereunder. All protections and indemnities
benefitting the Fiscal and Principal Paying Agent (and any other indemnified
party hereunder) are cumulative of any other rights it (or they) may have by law
or otherwise, and shall survive the termination of this Agreement or the
resignation or removal of such Fiscal and Principal Paying Agent.
(c) In case at any time any of the Agents shall resign, or shall be
removed, or shall be incapable of acting, or shall file a voluntary petition as
a debtor under Chapter 7 or 11 of Title 11 of the United States Code or have an
order for relief entered against it as a debtor under Chapter 7 or 11 of Title
11 of the United States Code or make an assignment for the benefit of its
creditors or consent to the appointment of a receiver of all or any substantial
part of its property, or shall admit in writing its inability to pay or meet its
debts as they mature, or if an order of any court shall be entered approving any
petition filed by or against the Fiscal and Principal Paying Agent under any
legislation similar to the provisions of Title 11 of the United States Code or
against any of the Agents under the Provisions of any legislation similar to the
Provisions of Title 11 of the United States Code, or if a receiver of it or of
all or any substantial part of its property shall be appointed, or if any public
officer shall take charge or control of it or of its property or affairs, for
the purpose of rehabilitation, conservation or liquidation, a successor Agent,
qualified as aforesaid, shall be appointed by the Corporation by an instrument
in writing. Upon the appointment as aforesaid of a successor Agent and
acceptance by it of such appointment, the Agent so superseded shall cease to be
such Agent hereunder. If no successor Agent shall have been so appointed by the
Corporation and shall have accepted appointment as hereinafter provided, any
Holder of a Note, on behalf of itself and all others similarly situated, or any
Agent may petition any court of competent jurisdiction for the appointment of a
successor Agent and shall promptly notify the Corporation of such action.
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(d) Any successor Fiscal and Principal Paying Agent or Paying
Agent appointed hereunder shall execute, acknowledge and deliver to its
predecessor and to the Corporation an instrument accepting such appointment
hereunder, and thereupon such successor Agent, without any further act, deed
or conveyance, shall become vested with all the authority, rights,
powers, trusts,immunities, duties and obligations of such predecessor with
like effect as if originally named as such Agent hereunder, and such
predecessor, upon payment of its charges and disbursements then unpaid,
shall thereupon become obligated to transfer, deliver and pay over, and such
successor Agent shall be entitled to receive, all monies, securities or other
property on deposit with or held by such predecessor, as such Agent
hereunder.
(e) Any corporation or bank into which any of the Agents may be
merged or converted, or any corporation or bank with which such Agent may
be consolidated, or any corporation or bank resulting from any merger,
conversion or consolidation to which such Agent shall be a party, or any
corporation or bank to which such Agent shall sell or otherwise transfer
all or substantially all the assets and business of such Agent, or any
corporation to which the Fiscal and Principal Paying Agent shall sell or
otherwise transfer all or substantially all of its corporate trust
business, provided that it shall be qualified as aforesaid, shall be the
successor to such Agent under this Agreement without the execution or
filing of any document or any further act on the part of any of the
parties hereto.
11. TAXES. The Corporation will pay all stamp taxes and other similar
duties, if any, that may be imposed by the United States of America, the
United Kingdom or Luxembourg or Hong Kong, or any state or political
subdivision thereof or taxing authority therein, with respect to the
execution or delivery of this Agreement, or the issuance of the Temporary
Global Note, or the exchange from time to time of interests in the Temporary
Global Note for an interest in the Permanent Global Note, or the exchange
of an interest in the Permanent Global Note for a Definitive Note, if available.
12. MEETINGS AND VOTES OF HOLDERS
(A) A meeting of Holders of Notes may be called at any time and
from time to time pursuant to this Section 12 for any of the following
purposes: (i) to give any notice to the Corporation or to the Fiscal and
Principal Paying Agent, or to give any directions to the Fiscal and Principal
Paying Agent, or to consent to the waiving of
any default hereunder or under the Notes and its consequences, or to take
any other action authorized to be taken by Holders of Notes pursuant to
Section 9 of the Conditions; or (ii) to take any other action authorized
to be taken by or on behalf of the Holders of any specified
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aggregate principal amount of the Notes under any other provision of this
Agreement, the Conditions or under applicable law.
(b) Meetings of Holders of Notes may be held at such place or
places in the City of New York or London as the Fiscal and Principal Paying
Agent or, in case of its failure to act, the Corporation or the Holders
calling the meeting shall from time to time determine.
(c) The Fiscal and Principal Paying Agent may at any time call a
meeting of Holders of Notes to be held at such time and at such place in any
of the locations designated in Section 12(b) hereof as the Fiscal and
Principal Paying Agent shall determine. Notice of every meeting of Holders
shall be published on behalf and at the expense of the Corporation in
accordance with Section 14 of the Conditions. Such notice shall set forth
the time and the place of such meeting and in general terms the action
proposed to be taken at such meeting, and shall be published at least twice,
the first publication to be not less than 21 nor more than 180 days prior to
the date fixed for the meeting.
(d) In case at any time the Corporation or the Holders of at least
33% in aggregate principal amount of the Notes outstanding shall have requested
the Fiscal and Principal Paying Agent to call a meeting of Holders, by
written request setting forth in reasonable detail the action proposed to
be taken at the meeting, and the Fiscal and Principal Paying Agent shall not
have given the first notice of such meeting within 21 days after receipt
of such request or shall not thereafter proceed to cause the meeting to be
held as provided herein, then the Corporation or Holders of Notes in the
amount above specified may determine the time and the place in either of the
locations designated in Section 12(b) hereof for such meeting and may call
such meeting to take any action authorized in Section 12(a) hereof by giving
notice thereof as provided in Section 12(c) hereof.
(e) To be entitled to vote at any meeting of Holders of Notes,
a person shall be (i) a Holder of one or more Notes, or (ii) a person
appointed by an instrument in writing as proxy for a Holder or Holders of
Notes by such Holder or Holders, which proxy need not be a Holder of
Notes. The only persons who shall be entitled to be present or to speak
at any meeting of Holders shall be the persons entitled to vote at such
meeting and their counsel and any representatives of the Fiscal and
Principal Paying Agent and its counsel and any representatives of the
Corporation and its counsel.
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(f) The persons entitled to vote a majority in principal amount of
the outstanding Notes shall constitute a quorum for the transaction of all
business specified in Section 12(a) hereof. No business shall be transacted
in the absence of a quorum unless a quorum is represented when the meeting is
called to order. In the absence of a quorum within 30 minutes of the time
appointed for any such meeting, the meeting shall, if convened at the request
of the Holders of Notes (as provided in Section 12(d) hereof), be dissolved.
In any other case the meeting shall be adjourned for a period of not less than
10 days as determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided in Section 12(c) hereof except
that such notice need be published only once but must be given not less
than five days prior to the date on which the meeting is scheduled to be
reconvened. Subject to the foregoing, at the reconvening of any meeting
adjourned for a lack of a quorum the persons entitled to vote 33% in
principal amount of the Notes shall constitute a quorum for the taking of any
action set forth in the notice of the original meeting. Notice of the
reconvening of an adjourned meeting shall state expressly the percentage of
the aggregate principal amount of the Notes that shall constitute a quorum.
At a meeting or an adjourned meeting duly reconvened and at which a quorum
is present as aforesaid, any resolution and all matters (except as limited
by Section 9(b) of the Conditions) shall be effectively passed and decided
if passed or decided by the persons entitled to vote a majority in principal
amount of the Notes represented and voting at such meeting, provided that
such amount shall be not less than 33% in principal amount of the Notes
outstanding. Any Holder of a Note who has executed and delivered an
instrument in writing appointing a person as his proxy shall be deemed to be
present for the purposes of determining a quorum and be deemed to have voted;
provided, however, that such Holder shall be considered as present or voting
only with respect to the matters covered by such instrument in writing.
Any resolution effectively passed or decision taken at any meeting of the
Holders of Notes duly held in accordance with this Section 12 shall be
binding on all Holders of Notes whether or not present or represented at
the meeting and whether or not notation of such decision is made upon the
Notes.
(g) Notwithstanding any other provision of this Agreement, the
Fiscal and Principal Paying Agent may make such reasonable regulations as it
may deem advisable for any meeting of Holders of Notes in regard to proof of
the holding of Notes and of the appointment of proxies and in regard to the
appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to
vote, and such other matters concerning the conduct of the meeting as it
shall deem appropriate. Except as
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otherwise permitted or required by any such regulations, the holding of
Notes shall be proved by the production of the Notes or by a
certificate executed, as depositary, by, and the appointment of any proxy
shall be proved by having the signature of the person executing the proxy
witnessed or guaranteed by, in each case, any trust company, bank or banker
satisfactory to the Fiscal and Principal Paying Agent. Such regulations may
provide that written instruments appointing proxies, regular on their face,
may be presumed valid and genuine without the proof specified herein or other
proof.
(h) The Fiscal and Principal Paying Agent shall, by an instrument
in writing, appoint a temporary chairperson and a temporary secretary of
the meeting, unless the meeting shall have been called by the Corporation
or by the Holders of Notes as provided herein and in the Notes, in which
case the Corporation or the Holders calling the meeting, as the case may be,
shall in like manner appoint a temporary chairperson and a temporary
secretary. A permanent chairperson and a permanent secretary of the
meeting shall be elected by vote of the Holders of a majority in principal
amount of the Notes represented at the meeting and entitled to vote.
(i) At any meeting each Holder or proxy shall be entitled to one
vote for each U.S. $1,000 principal amount of Notes held or represented by
such Holder; provided, however, that no vote shall be cast or counted at any
meeting in respect of any Notes challenged as not outstanding and ruled by the
chairperson of the meeting to be not outstanding. The chairperson of the
meeting shall have no right to vote, except as a Holder or proxy.
(j) Any meeting of Holders of Notes duly called pursuant to
Section 12(c) or 12(d) hereof at which a quorum is present may be adjourned
from time to time by vote of Holders (or proxies for Holders) of a majority
in principal amount of the Notes represented at the meeting and entitled to
vote; and the meeting may be held as so adjourned without further notice.
(k) The vote upon any resolution submitted to any meeting of
Holders of Notes shall be by written ballots on which shall be subscribed
the signatures of Holders of Notes or of their representatives by proxy
(and the serial number or numbers of the Notes held or represented by them).
The permanent chairperson of the meeting shall appoint two inspectors of
votes who shall count all votes cast at the meeting for or against any
resolution and who shall make and file with the secretary of the meeting
their verified written reports in triplicate of all votes cast at the
meeting. A record, at least in triplicate, of the proceedings of each
meeting of Holders of Notes shall be prepared by the secretary of the
meeting and there shall be attached to said record the original reports of
the inspectors
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of votes on any vote by ballot taken thereat and affidavits by one or
more persons having knowledge of the facts setting forth a copy of the notice
of the meeting and showing that said notice was published as provided in
Section 12(c) or 12(d) hereof and, if applicable, Section 12(f) hereof.
Each copy shall be signed and verified by the affidavits of the chairperson
and secretary of the meeting, and one such copy shall be delivered to the
Corporation and another to the Fiscal and Principal Paying Agent to be
preserved by the Fiscal and Principal Paying Agent, the copy delivered
to the Fiscal and Principal Paying Agent to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
13. MODIFICATIONS, ETC.
(a) The Corporation and the Fiscal and Principal Paying Agent
may, without the approval of any Holders of Notes and Coupons, amend this
Agreement or the Notes and Coupons to (i) evidence the succession of another
corporation to the Corporation and the assumption by any such successor of
the covenants of the Corporation in this Agreement or the Notes and
Coupons, or (ii) add to the covenants of the Corporation for the benefit
of the Holders of the Notes and the Coupons, or surrender any right or power
conferred upon the Corporation, or (iii) relax or eliminate the restrictions
on payment of principal or interest in respect of Notes or Coupons in the
United States to the extent then permitted under applicable regulations of
the U.S. Department of the Treasury, and provided no adverse tax
consequences would result to the Holders of the Notes or Coupons, or
(iv) cure any ambiguity or correct or supplement any defective provision
herein or therein or any provision that may be inconsistent with another
provision herein or therein, or (v) permit further issuances of Notes in
accordance with Section 14 hereof, or (vi) make any other provisions with
respect to matters or questions arising under the Notes or this Agreement,
provided such action pursuant to this clause (vi) shall not be inconsistent
with the provisions of the Notes and shall not adversely affect the
interests of the Holders of the Notes or Coupons.
(b) It shall not be necessary for the vote or consent of Holders
of Notes to approve the particular form of any proposed modification,
amendment, supplement or action but it shall be sufficient if such consent
shall approve the substance thereof.
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<PAGE>
14. Further Issuances. The Corporation may from time to time without
the consent of Holders of Notes undertake further issuances of notes with
terms identical to the Notes except as to the issue date and the amount of the
first payment of interest thereon. In connection with such issuance, the
Corporation and the Fiscal and Principal Paying Agent shall enter into a
supplemental agreement hereto that, if applicable, shall provide for the
extension of the period during which interest in the Temporary Global Note
may not be exchanged for interests in the Permanent Global Note in order to
comply with Regulation S and applicable tax laws and regulations including
the D Rules; provided, however, that no such further notes may be issued
if to do so would extend the Exchange Date in respect of any Notes beyond
the first Interest Payment Date (as defined in the form of Permanent
Global Note included as Exhibit B hereto) for such Notes. Upon the issuance
of such notes in accordance herewith, such notes and the Notes shall form
part of a single class and shall have identical rights and all references
to the term "Notes" and "Coupons" hereunder shall be deemed to include such
notes and the coupons appertaining thereto.
15. Merger, Consolidation or Sale of Assets.
(a) If at any time there shall be a merger, consolidation, sale
or conveyance of assets or assumption of obligations to which any of the
covenants contained in Section 7 of the Conditions pertains, then in any such
event the successor or assuming corporation referred to therein will promptly
deliver to the Fiscal and Principal Paying Agent:
(i) a certificate signed by an Authorized Officer of such
successor or assuming corporation stating that as of the time
immediately after the effective date of any such transaction the
covenants of the Corporation contained in the Permanent Global Note
have been complied with and the successor or assuming corporation
is not in default under the provisions of this Agreement or the
Notes, as applicable; and
(ii) a written opinion of legal counsel stating that in such
such counsel's opinion the covenants of the Corporation contained in
Section 7 of the Conditions have been complied with and that any
instrument or instruments executed in the performance of such covenants
comply with the requirements thereof.
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In case of any such merger, consolidation, sale, conveyance or
assumption, such successor or assuming corporation shall succeed to and be
substituted for the Corporation with the same effect, subject to (in the case
of a merger to which the Corporation is a party) Section 7(b) of the Conditions,
as if it had been named herein and in the Permanent Global Note as the
Corporation; the Corporation shall thereupon be relieved of any further
obligation or liability hereunder or upon the Notes, and the Corporation,
as the predecessor corporation may thereupon or at any time thereafter be
dissolved, wound up or liquidated. Upon the order of such successor or
assuming corporation, instead of the Corporation, and subject to all the terms,
conditions and limitations in this Agreement prescribed, the Fiscal and
Principal Paying Agent shall authenticate and shall deliver any Notes which
previously shall have been signed and delivered by the officers of the
Corporation to the Fiscal and Principal Paying Agent for authentication, and
any Notes which such successor or assuming corporation thereafter shall
cause to be signed and delivered to the Fiscal and Principal Paying Agent
for that purpose. All the Notes so issued shall in all respects have the
same legal rank and benefit under this Agreement as the Notes theretofore or
thereafter issued in accordance with the terms of this Agreement as though
all of such Notes had been issued at the date of the execution hereof.
In case of any merger, consolidation, sale, conveyance or assumption,
such changes in phraseology and form (but not in substance) may be made in the
Notes thereafter to be issued as may be appropriate.
(b) The Fiscal and Principal Paying Agent may rely on the documents
delivered to it pursuant to this Agreement by any successor or assuming
corporation pursuant to this Section 15 as conclusive evidence that any such
merger, consolidation, sale, conveyance or assumption complies with the
provisions of this Section and the Notes.
16. Stockholders, Officers and Directors of the Corporation Exempt from
Individual Liability. No recourse under or upon any obligation, covenant or
agreement contained in this Agreement, or in any Note, or because of any
indebtedness evidenced thereby, shall be had against any past, present or
future stockholder, officer, director or employee, as such, of the
Corporation or of any successor, either directly or through the Corporation
or any successor, under any rule or law, statute or constitutional provision
or by the enforcement of any assessment or by any legal or equitable proceeding
or otherwise, all such liability being expressly waived and released by the
acceptance of the Notes by the Holders thereof and as part of the
consideration for the issue of the Notes.
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<PAGE>
17. GOVERNING LAW. THIS AGREEMENT, THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES
OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
18. Amendments. This Agreement may be amended by the parties hereto,
and certain provisions hereof may be waived, in the manner provided in Section
9 of the Conditions. This Agreement may also be amended by the parties hereto,
without the consent of the Holder of any Note, for the purposes set forth in
Section 8 of the Conditions.
19. Notices. All notices hereunder shall be deemed to have been given when
deposited in the mail as first class mail, registered or certified, return
receipt requested, postage prepaid, addressed to any party hereto as follows:
Address
The Corporation: NationsBank Corporation
NationsBank Corporate Center
NC 1007-23-1
Charlotte, North Carolina 28255
Attn: Treasurer
with a copy to:
NationsBank Corporation
NationsBank Corporate Center
Legal Department
NC 1007-20-1
Charlotte, North Carolina 28255
Attn: Paul J. Polking,
General Counsel
The Fiscal and Principal Paying Agent:
The Chase Manhattan Bank, N.A.
Woolgate House
Coleman Street
London EC2P 2HD
United Kingdom
Attn: Manager, Corporate Trust
Operations
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The Paying Agent:
The Chase Manhattan Bank
Luxembourg S.A.
5 rue Plaetis
L-2338 Luxembourg - Grund.
or at any other address of which any of the foregoing shall have notified the
others in writing.
So long as the Notes are represented by the Temporary Global Note or the
Permanent Global Note, notices to Holders of the Notes may be given by delivery
of the relevant notice to Euroclear and Cedel for communication by them to the
relevant account holders and a common depositary; provided, however, that
for so long as the Notes are listed on the LSE and the rules of such exchange
shall so require, the Corporation shall also give notice by publication in
a daily newspaper of general circulation in Luxembourg; and provided further
that for so long as the Notes are listed on the Stock Exchange of Hong Kong
(the "HKSE") and the rules of such exchange shall so require. The Corporation
shall also give notice by publication in a daily newspaper of general
circulation in Hong Kong. The corporation may, but need not, cause such
notice to be given by publication in the Luxembourger Wort and in the
South China Morning Post, for Luxembourg and Hong Kong, respectively.
20. Counterparts. This Agreement may be executed in separate
counterparts, and by each party separately in a separate counterpart, each
such counterpart, when so executed and delivered, to be an original. Such
counterparts shall together constitute but one and the same instrument.
21. Headings. The descriptive headings appearing herein are for
convenience of reference only and shall not alter, limit or define the
provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
NATIONSBANK CORPORATION
By: /s/ John E. Mack
Name: John E. Mack
Title: Senior Vice President
and Treasurer
By or on behalf of
THE CHASE MANHATTAN BANK, N.A.
as Fiscal and Principal Paying Agent
By: /s/
Name: S. Kaufmann
Title: Senior Vice President
THE CHASE MANHATTAN BANK LUXEMBOURG S.A.
as Paying Agent
By: /s/
Name: S. Kaufman
Title: Senior Vice President
10-K Exhibit 4.(m)
AGENCY AGREEMENT
relating to
NATIONSBANK CORPORATION,
U.S.$1,500,000,000
Euro Medium-Term Note Program
among
NATIONSBANK CORPORATION
as Issuer
and
THE CHASE MANHATTAN BANK, N.A., London Branch
as Issuing and Principal Paying Agent
and
CHASE MANHATTAN BANK LUXEMBOURG S.A.
as Paying Agent
Dated as of November 8, 1995
<PAGE>
INDEX
Clause Page
1. Definitions and Interpretation................................... 1
2. Appointments of Agent, Paying Agents
and Calculation Agents......................................... 3
3. Issue of Temporary Global Notes.................................. 4
4. Determination of Exchange Date, Issue of Permanent
Global Notes or Definitive Notes and
Determination of Restricted Period............................. 5
5. Issue of Definitive Notes........................................ 6
6. Terms of Issue................................................... 6
7. Payments......................................................... 7
8. Determination and Notifications in Respect of
Notes and Interest Determination............................... 9
9. Notice of any Withholding or Deduction........................... 12
10. Duties of the Agent in Connection with Early
Redemption..................................................... 12
11. Receipt and Publication of Notices; Receipt of
Certificates................................................... 13
12. Cancellation of Notes, Receipts, Coupons and Talons.............. 13
13. Issue of Replacement Notes, Receipts, Coupons and
Talons......................................................... 14
14. Copies of Documents Available for Inspection..................... 15
15. Meetings of Noteholders.......................................... 16
16. Repayment by the Agent........................................... 16
17. Conditions of Appointment........................................ 16
18. Communication Between the Parties................................ 17
19. Change in Agent and Paying Agents................................ 17
20. Merger and Consolidation......................................... 19
21. Notification of Changes to Paying Agents......................... 19
22. Change of Specified Office....................................... 19
23. Notices.......................................................... 20
24. Taxes and Stamp Duties........................................... 21
25. Commissions, Fees and Expenses................................... 21
26. Indemnity........................................................ 21
27. Reporting........................................................ 22
28. Governing Law.................................................... 22
29. Amendments....................................................... 23
30. Descriptive Headings............................................. 24
31. Counterparts..................................................... 24
Schedule 1 -- Form of Temporary Global Note
Schedule 2 -- Form of Permanent Global Note
Schedule 3 -- Form of Definitive Note, Coupon, Receipt and Talon
Schedule 4 -- Terms and Conditions
Schedule 5 -- Form of Certificate to be Presented by Euroclear or Cedel
Schedule 6 -- Form of Certificate of Beneficial Owner
Schedule 7 -- Provision for Meetings of Noteholders
Schedule 8 -- Form of Put Notice
Schedule 9 -- Form of Calculation Agency Agreement
<PAGE>
THIS AGREEMENT is made as of November 8, 1995 among:
(i) NationsBank Corporation (the "Corporation");
(ii) The Chase Manhattan Bank, N.A., London Branch (the "Agent" and the
"Issuing and Principal Paying Agent"); and
(iii) Chase Manhattan Bank Luxembourg S.A. (the "Paying Agent").
WHEREAS, the Corporation proposes to issue up to U.S.$1,500,000,000 (or its
equivalent in other currencies) in aggregate principal amount of Euro Medium-
Term Notes (the "Notes") outstanding at any one time;
WHEREAS, Notes will be issued in the denominations specified in the
relevant Pricing Supplement issued in connection with each Series and each
Tranche of Notes;
WHEREAS, beneficial interests in each Tranche of Notes will initially be
represented by a Temporary Global Note, exchangeable, as provided in such
Temporary Global Note, for beneficial interests in a Permanent Global Note and,
only under limited circumstances, beneficial interests in a Global Note may be
exchangeable for Definitive Notes, in each case in accordance with the terms of
the Global Notes; and
NOW, THEREFORE, it is agreed as follows:
1. Definitions and Interpretation
(1) Terms and expressions defined in the Program Agreement or the Notes
or used in the applicable Pricing Supplement shall have the same meanings in
this Agreement, except where the context requires otherwise.
(2) Without prejudice to the foregoing in this Agreement:
"outstanding" means, in relation to the Notes, all the Notes issued other
than (a) those which have been redeemed in accordance with the Terms and
Conditions, (b) those in respect of which the date for redemption in accordance
with the Terms and Conditions has occurred and the redemption moneys (including
all interest accrued on such Notes to the date for such redemption and any
interest or other amounts payable under the Terms and Conditions after such
date) have been duly paid to the Agent as provided in this Agreement and remain
available for payment against presentation and surrender of Notes and/or
Receipts and/or Coupons, as the case may be, (c) those which have become void
under Condition 8, (d) those which have been purchased and canceled as provided
in Condition 6 (or as provided in the Global Notes), (e) those mutilated or
defaced Notes which have been surrendered in exchange for replacement Notes
pursuant to Condition 10, (f) (for the purposes only of determining how many
Notes are outstanding and without prejudice to their status for any other
purpose) those Notes alleged to have been lost, stolen or destroyed and in
respect of which replacement Notes have been issued pursuant to Condition 10,
(g) any Temporary Global Note to the extent that it shall have been exchanged
for a Permanent Global Note, in each case pursuant to their respective
provisions; provided that for the purposes of (i) ascertaining the right to
attend and vote at any meeting of the Noteholders and (ii) the determination
of how many Notes are outstanding for the purposes of Schedule 7, those Notes
which are beneficially held by, or are held on behalf of, the Corporation or
any of its affiliates shall (unless and until ceasing to be so held) be deemed
not to remain outstanding;
<PAGE>
"Paying Agents" means the Issuing and Principal Paying Agent and the Paying
Agent referred to above and such other Paying Agent or Agents as may be
appointed from time to time hereunder, and
(3) The term "Notes" as used in this Agreement shall include the
Permanent Global Note, the Definitive Notes and the Coupons and, as the case may
be, the Temporary Global Note. The term "Global Note" as used in this Agreement
shall include both the Temporary Global Note and the Permanent Global Note,
each of which is a "Global Note." The term "Noteholders" as used in this
Agreement shall mean the several persons who are for the time being the holders
of the Notes, which expression shall, while the Notes are represented by a
Global Note, mean (other than with respect to the payment of principal and
interest on the Notes, the right to which shall be vested as against the
Corporation solely in the bearer of such Global Note in accordance with and
subject to its terms) the persons for the time being shown in the records of
Euroclear (as defined below) or Cedel (as defined below) (other than Cedel,
if Cedel shall be an accountholder of Euroclear, and Euroclear, if Euroclear
shall be an accountholder of Cedel) as the Noteholders of particular principal
amounts of Notes (in which regard any certificate or other document issued by
Euroclear or Cedel as to the principal amount of Notes standing to the credit
of the account of any person shall be conclusive and binding for all purposes).
(4) For purposes of this Agreement, the Notes of each Series shall form
a separate series of Notes and the provisions of this Agreement shall apply
mutatis mutandis separately and independently to the Notes of each Series and
in such provisions the expressions "Notes", "Noteholders", "Receipts",
"Receiptholders", "Coupons", "Couponholders", "Talons" and "Talonholders" shall
be construed accordingly.
(5) All references in this Agreement to principal and/or interest or
both in respect of the Notes or to any moneys payable by the Corporation under
this Agreement shall have the meaning set out in Condition 5.
(6) All references in this Agreement to the "relevant currency" shall
be construed as references to the currency (which term shall, for these
purposes, be deemed to include ECU) in which the relevant Notes and/or Coupons
are denominated (or payable in the case of Dual Currency Notes) or, in the case
of Notes denominated in ECU, the chosen currency (as defined in Condition 5(c))
in which payments in respect of such Notes are to be made, as the case may be.
(7) In this Agreement, Clause headings are inserted for convenience and
ease of reference only and shall not affect the interpretation of this
Agreement. All references in this Agreement to the provisions of any statute
shall be deemed to be references to that statute as from time to time modified,
extended, amended or re-enacted or to any statutory instrument, order or
regulation made thereunder or under such re-enactment.
(8) All references in this Agreement to an agreement, instrument or
other document (including, without limitation, this Agreement, the Program
Agreement, the Notes and any Terms and Conditions appertaining thereto) shall
be construed as a reference to that agreement, instrument or document as the
same may be amended, modified, varied or supplemented from time to time.
(9) Any references herein to Euroclear and/or Cedel shall, whenever
the context so permits, be deemed to include a reference to any additional or
alternative clearance system approved by the Corporation and the Agent.
2
<PAGE>
2. Appointments of Agent, Paying Agents and Calculation Agents
(1) The Corporation hereby appoints The Chase Manhattan Bank, N.A.,
London Branch, as Agent and The Chase Manhattan Bank, N.A., London Branch hereby
accepts such appointment as agent of the Corporation, upon the terms and subject
to the conditions set out below, for the purposes of, inter alia:
(a) completing, authenticating and delivering Global Notes and
(if required) authenticating and delivering Definitive Notes;
(b) exchanging Temporary Global Notes for Permanent Global Notes
or Definitive Notes, as the case may be, in accordance with the terms of
such Temporary Global Notes;
(c) under limited circumstances, exchanging Permanent Global
Notes for Definitive Notes in accordance with the terms of such Permanent
Global Notes;
(d) paying sums due on Global Notes and Definitive Notes,
Receipts and Coupons;
(e) determining the end of the Restricted Period applicable to
each Tranche;
(f) unless otherwise specified in the applicable Pricing
Supplement, determining the interest and/or other amounts payable in
respect of the Notes in accordance with the Terms and Conditions;
(g) arranging on behalf of the Corporation for notices to be
communicated to the Noteholders;
(h) preparing and sending monthly reports to the Ministry of
Finance of Japan (the "MoF") and the German Central Bank and subject to
confirmation from the Corporation for the need for such further reporting
ensuring that all necessary action is taken to comply with any reporting
requirements of any competent authority of any relevant currency as may be
in force from time to time with respect to the Notes to be issued under the
Program;
(i) subject to the Procedures Memorandum, submitting to the Stock
Exchange such number of copies of each Pricing Supplement which relates to
Notes which are to be listed as it may reasonably require;
(j) receiving notice from Euroclear and/or Cedel relating to the
Certificates of non-U.S. beneficial ownership of the Notes; and
(k) performing all other obligations and duties imposed upon it
by the Terms and Conditions and this Agreement.
(2) The Corporation may, in its discretion, appoint one or more agents
outside the United States and its possessions (each a "Paying Agent") for the
payment (subject to applicable laws and regulations) of the principal of and
any interest and Additional Amounts, if any, (as defined in Section 5 of the
Terms and Conditions) on the Notes. The Corporation hereby appoints Chase
Manhattan Bank, Luxembourg S.A., at its office in Luxembourg at 5 rue Plactis,
L-2338 Luxembourg-Grund, as its Paying Agent in Luxembourg. Each Paying Agent
shall have the powers and authority granted to and conferred
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upon it herein and in the Notes, and such further powers and authority,
acceptable to it, to act on behalf of the Corporation as the Corporation may
hereafter grant to or confer upon it in writing. As used herein, "paying
agencies" shall mean paying agencies maintained by a Paying Agent on behalf
of the Corporation as provided elsewhere herein.
(3) The Corporation will appoint an agent to make certain calculations
with respect to the Notes (the "Calculation Agent") pursuant to the Terms and
Conditions.
3. Issue of Temporary Global Notes
(1) Subject to sub-clause (2), following receipt of a notification from
the Corporation in respect of an issue of Notes (such notification being by
receipt of a confirmation (a "Confirmation"), substantially in the applicable
form set out in the Procedures Memorandum) the Agent will take the steps
required of the Agent in the Procedures Memorandum. For this purpose the Agent,
is hereby authorized on behalf of the Corporation:
(a) to prepare a Temporary Global Note in accordance with such
Confirmation by attaching a copy of the applicable Pricing Supplement
to a copy of the relevant master Temporary Global Note;
(b) to authenticate (or cause to be authenticated) such
Temporary Global Note;
(c) to deliver such Temporary Global Note to the specified
common depositary of Euroclear and/or Cedel in accordance with the
Confirmation against receipt from the common depositary of confirmation
that such common depositary is holding the Temporary Global Note in safe
custody for the account of Euroclear and/or Cedel and to instruct
Euroclear or Cedel or both of them (as the case may be) unless otherwise
agreed in writing between the Agent and the Corporation (i) in the case of
an issue of Notes on a non-syndicated basis, to credit the Notes
represented by such Temporary Global Note to the Agent's distribution
account, and (ii) in the case of Notes issued on a syndicated basis, to
hold the Notes represented by such Temporary Global Note to the
Corporation's order; and
(d) to ensure that the Notes of each Tranche are assigned a
Common Code and ISIN by Euroclear and Cedel which are different from the
Common Code and ISIN assigned to Notes of any other Tranche of the same
Series until 40 days after the completion of the distribution of the Notes
of such Tranche as notified by the Agent to the relevant Dealer.
(2) The Agent shall only be required to perform its obligations under
sub-clause (1) if it holds:
(a) master Temporary Global Notes, duly executed by a person or
persons authorized to execute the same on behalf of the Corporation, which
may be used by the Agent for the purpose of preparing Temporary Global
Notes in accordance with paragraph (a) of that sub-clause; and
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(b) master Permanent Global Notes, duly executed by a person or
persons authorized to execute the same on behalf of the Corporation, which
may be used by the Agent for the purpose of preparing Permanent Global
Notes in accordance with Clause 4 below.
(3) The Agent will provide Euroclear and/or Cedel with the
notifications, instructions or other information to be given by the Agent to
Euroclear and/or Cedel in accordance with the standard procedures of Euroclear
and/or Cedel.
4. Determination of Exchange Date, Issue of Permanent Global Notes or
Definitive Notes and Determination of Restricted Period
(1) (a) The Agent shall determine the Exchange Date for each
Temporary Global Note in accordance with the terms thereof. Forthwith
upon determining the Exchange Date in respect of any Tranche the Agent
shall notify such determination to the Corporation, the relevant Dealer,
Euroclear and Cedel.
(b) The Agent shall deliver, upon notice from Euroclear
or Cedel, a Permanent Global Note or Definitive Notes, as the case may be,
in accordance with the terms of the Temporary Global Note. Upon any such
exchange of a portion of a Temporary Global Note for an interest in a
Permanent Global Note the Agent is hereby authorized on behalf of the
Corporation:
(i) in the case of the first Tranche of any Series of
Notes, to prepare and complete a Permanent Global Note in
accordance with the terms of the Temporary Global Note applicable
to such Tranche by attaching a copy of the applicable Pricing
Supplement to a copy of the relevant master Permanent Global
Note;
(ii) in the case of the first Tranche of any Series of
Notes, to authenticate such Permanent Global Note;
(iii) in the case of the first Tranche of any Series of
Notes, to deliver such Permanent Global Note to the common
depositary which is holding the Temporary Global Note applicable to
such Tranche for the time being on behalf of Euroclear and/or Cedel
either in exchange for such Temporary Global Note or, in the case of
a partial exchange, on entering details of such partial exchange of
the Temporary Global Note in the relevant spaces in Schedule
2 of both the Temporary Global Note and the Permanent Global
Note, and in either case against receipt from the common
depositary of confirmation that such common depositary is
holding the Permanent Global Note in safe custody for the
account of Euroclear and/or Cedel; and
(iv) in any other case, to attach a copy of the applicable
Pricing Supplement to the Permanent Global Note applicable to the
relevant Series and enter details of any exchange in whole or part
as aforesaid.
(2) (a) In the case of a Tranche in respect of which there is only
one Dealer, the Agent will determine the end of the Restricted Period in
respect of such Tranche as being the fortieth day following the date
certified by the relevant Dealer to the Agent as being the date as of which
distribution of the Notes of that Tranche was completed.
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(b) In the case of a Tranche in respect of which there is more
than one Dealer but is not issued on a syndicated basis, the Agent will
determine the end of the Restricted Period in respect of such Tranche as
being the fortieth day following the latest of the dates certified by all
the relevant Dealers to the Agent as being the respective dates as of
which distribution of the Notes of that Tranche purchased by each such
dealer was completed.
(c) In the case of a Tranche issued on a syndicated basis, the
Agent will determine the end of the Restricted Period in respect of such
Tranche as being the fortieth day following the date certified by the
Lead Manager to the Agent as being the date as of which distribution of
the Notes of that Tranche was completed.
(d) Forthwith upon determining the end of the Restricted Period
in respect of any Tranche, the Agent shall notify such determination to the
Corporation and the relevant Dealer or the Lead Manager in the case of a
syndicated issue.
5. Issue of Definitive Notes
(1) Interests in a Global Note will be exchangeable for Definitive Notes
with Coupons attached only if: (i) an Event of Default (as defined in the Terms
and Conditions) occurs and is continuing, or (ii) the Corporation is notified
that either Euroclear or Cedel has been closed for business for a continuous
period of 14 days (other than by reason of holiday, statutory or otherwise)
after the original issuance of the Notes or has announced an intention
permanently to cease business or has in fact done so and no alternative
clearance system approved by the Noteholders is available, or (iii) the
Corporation, after notice to the Agent, determines to issue Notes in definitive
form. Upon the occurrence of these events, the Agent shall deliver the relevant
Definitive Note(s) in accordance with the terms of the relevant Global Note.
For this purpose the Agent is hereby authorized on behalf of the
Corporation:
(a) to authenticate such Definitive Note(s) in accordance with
the provisions of this Agreement; and
(b) to deliver such Definitive Note(s) to or to the order of
Euroclear and/or Cedel in exchange for such Global Note.
The Agent shall notify the Corporation forthwith upon receipt of a request for
issue of (a) Definitive Note(s) in accordance with the provisions of a Global
Note and this Agreement (and the aggregate principal amount of such Temporary
Global Note or Permanent Global Note, as the case may be to be exchanged in
connection therewith).
(2) The Corporation undertakes to deliver to the Agent sufficient
numbers of executed Definitive Notes with, if applicable, Receipts, Coupons and
Talons attached to enable the Agent to comply with its obligations under this
Clause 5.
6. Terms of Issue
(1) The Agent shall cause all Temporary Global Notes, Permanent Global
Notes and Definitive Notes delivered to and held by it under this Agreement to
be maintained in safe custody and shall ensure that such Notes are issued only
in accordance with the provisions of this Agreement and the relevant Global Note
and Terms and Conditions.
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(2) Subject to the procedures set out in the Procedures Memorandum, for
the purposes of Clause 3(1) the Agent is entitled to treat a telephone, telex
or facsimile communication from a person purporting to be (and who the Agent
believes in good faith to be) the authorized representative of the Corporation
named in the lists referred to in, or notified pursuant to, Clause 17(7) as
sufficient instructions and authority of the Corporation for the Agent to act
in accordance with Clause 3(1).
(3) In the event that a person who has signed on behalf of the
Corporation any Note not yet issued but held by the Agent in accordance with
Clause 3(1) ceases to be authorized as described in Clause 17(7), the Agent
shall (unless the Corporation gives notice to the Agent that Notes signed by
that person do not constitute valid and binding obligations of the Corporation
or otherwise until replacements have been provided to the Agent) continue to
have authority to issue any such Notes, and the Corporation hereby warrants to
the Agent that such Notes shall, unless notified as aforesaid, be valid and
binding obligations of the Corporation. Promptly upon such person ceasing to be
authorized, the Corporation shall provide the Agent with replacement Notes and
upon receipt of such replacement Notes the Agent shall cancel and destroy the
Notes held by it which are signed by such person and shall provide to the
Corporation a confirmation of destruction in respect thereof specifying the
Notes so canceled and destroyed.
(4) If the Agent pays an amount (the "Advance") to the Corporation on
the basis that a payment (the "Payment") has been, or will be, received from a
Dealer and if the Payment is not received by the Agent on the date the Agent
pays the Corporation, the Agent shall notify the Corporation by tested
telex or facsimile that the Payment has not been received and the Corporation
shall repay to the Agent the Advance and shall pay interest on the Advance
(or the unreimbursed portion thereof) from (and including) the date such
Advance is made to (but excluding) the earlier of repayment of the Advance
and receipt by the Agent of the Payment (at a rate quoted at that time by the
Agent as its cost of funding the Advance).
(5) Except in the case of issues where the Agent does not act as
receiving bank for the Corporation in respect of the purchase price of the Notes
being issued, if on the relevant Issue Date a Dealer does not pay the full
purchase price due from it in respect of any Note (the "Defaulted Note") and,
as a result, the Defaulted Note remains in the Agent's distribution account with
Euroclear and/or Cedel) after such Issue Date, the Agent will continue to hold
the Defaulted Note to the order of the Corporation. The Agent shall notify the
Corporation forthwith of the failure of the Dealer to pay the full purchase
price due from it in respect of any Defaulted Note and, subsequently, shall
notify the Corporation forthwith upon receipt from the Dealer of the full
purchase price in respect of such Defaulted Note.
7. Payments
(1) The Agent shall advise the Corporation, no later than ten Business
Days (as defined below) immediately preceding the date on which any payment is
to be made to the Agent pursuant to this sub-clause (1) of the payment amount,
value date and payment instructions and the Corporation will before 10:00 a.m.
New York time on each date on which any payment in respect of any Notes issued
by it becomes due, transfer to an account specified by the Agent such amount in
the relevant currency as shall be sufficient for the purposes of such payment
in funds settled through such payment system as the Agent and the Corporation
may agree.
(2) The Corporation will ensure that no later than 4:00 p.m. (London
time) on the second Business Day (as defined below) immediately preceding the
date on which any payment is to be made to the Agent pursuant to sub-clause
(1), the Agent shall receive from the paying bank of the Corporation an
irrevocable confirmation in the form of a SWIFT message on tested telex that
such payment shall be made. For the purposes of this Clause 7 "Business Day"
means a day which is both:
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(a) a day (other than a Saturday or a Sunday) on which
commercial banks and foreign exchange markets settle payments in London and
in Charlotte, North Carolina; and
(b) either (1) in relation to a payment to be made in a Specified
Currency other than ECU, a day on which commercial banks and foreign
exchange markets settle payments in the principal financial center of the
country of the relevant Specified Currency (if other than London) or (2) in
relation to a payment to be made in ECU, an ECU Settlement Day.
(3) The Agent shall ensure that payments of both principal and interest
in respect of any Temporary Global Note will be made only to the extent that
certification of non-U.S. beneficial ownership as required by U.S. securities
laws and U.S. Treasury regulations (in the form set out in the Temporary Global
Note) has been received from Euroclear and/or Cedel in accordance with the terms
thereof.
(4) Subject to the receipt by the Agent of the payment confirmation as
provided in sub-clause (2) above, the Agent or the relevant Paying Agent shall
pay or cause to be paid all amounts due in respect of the Notes on behalf of
the Corporation in the manner provided in the Terms and Conditions. If any
payment provided for in sub-clause (1) is made late but otherwise in accordance
with the provisions of this Agreement, the Agent and each Paying Agent shall
nevertheless make payments in respect of the Notes as aforesaid
following receipt by it of such payment.
(5) If for any reason the Agent considers in its sole discretion that
the amounts to be received by the Agent pursuant to sub-clause (1) will be, or
the amounts actually received by it pursuant thereto are, insufficient to
satisfy all claims in respect of all payments then falling due in respect of the
Notes, neither the Agent nor any Paying Agent shall be obliged to pay any such
claims until the Agent has received the full amount of all such payments.
Should the Agent or any Paying Agent elect not to make payment of amounts
falling due in respect of the Notes as aforesaid, it shall advise the
Corporation of any such decision as soon as practicable by telephone with
confirmation by telefax.
(6) Without prejudice to sub-clauses (4) and (5), if the Agent pays any
amounts to the holders of Notes, Receipts or Coupons or to any Paying Agent at a
time when it has not received payment in full in respect of the relevant Notes
in accordance with sub-clause (1) (the excess of the amounts so paid over the
amounts so received being the "Shortfall"), the Corporation will, in addition to
paying amounts due under sub-clause (1), pay to the Agent on demand interest (at
at rate which represents the Agent's cost of funding the Shortfall) on the
Shortfall (or the unreimbursed portion thereof) until the receipt in full by the
Agent of the Shortfall.
(7) The Agent shall on demand promptly reimburse each Paying Agent for
payments in respect of Notes properly made by such Paying Agent in accordance
with this Agreement and the Terms and Conditions unless the Agent has notified
the Paying Agent, prior to the opening of business in the location of the office
of the Paying Agent through which payment in respect of the Notes can be made
prior to the day on which such Agent has to give payment instructions in respect
of the due date of a payment in respect of the Notes, that the Agent does not
expect to receive sufficient funds to make payment of all amounts falling due in
respect of such Notes.
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(8) If the Agent pays out on or after the due date therefor, or becomes
liable to pay out, funds on the assumption that the corresponding payment by
the Corporation has been or will be made and such payment has in fact not been
so made by the Corporation, then the Corporation shall on demand reimburse the
Agent for the relevant amount, and pay interest to the Agent on such amount from
the date on which it is paid out to the date of reimbursement at a rate per
annum equal to the cost to the Agent of funding the amount paid out, as
certified by the Agent and expressed as a rate per annum. For the avoidance of
doubt, the provisions of the Terms and Conditions as to subordination shall not
apply to the Corporation's obligations under this sub-clause 8.
(9) While any Notes are represented by a Global Note or Global Notes,
all payments due in respect of such Notes shall be made to, or to the order of,
the holder of the Global Note or Global Notes, subject to and in accordance with
the provisions of the Global Note or Global Notes. On the occasion of any such
payment the Paying Agent to which any Global Note was presented for the purpose
of making such payment shall cause the appropriate Schedule to the relevant
Global Note to be annotated so as to evidence the amounts and dates of such
payments of principal and/or interest as applicable.
(10) If a payment in respect of a Note denominated in ECU is to be made
in a chosen currency:
(i) the Agent shall choose a component currency of the ECU as the
chosen currency as provided in Condition 5(c) and shall forthwith notify
the Corporation, the other Paying Agents and the Stock Exchange;
(ii) the Agent shall promptly perform the duties required of it
under Condition 5(c); and
(iii) the Agent shall notify the Corporation and the other Paying
Agents of the amount payable per Note and Coupon in the chosen currency.
(11) If the amount of principal and/or interest then due for payment is
not paid in full (otherwise than by reason of a deduction required by law to be
made therefrom), the Paying Agent to which a Note is presented for the purpose
of making such payment shall make a record of such shortfall on the Note and
such record shall, in the absence of manifest error, be prima facie evidence
that the payment in question has not to that extent been made.
8. Determinations and Notifications in Respect of Notes
and Interest Determination
(a) Determinations and Notifications
(1) The Agent shall make all such determinations and calculations
(howsoever described) as it is required to do under the Terms and Conditions,
all subject to and in accordance with the Terms and Conditions, provided that
certain calculations with respect to the Notes, and associated publication or
notification, shall be made by the Calculation Agent in accordance with the
Terms and Conditions.
(2) The Agent or the Calculation Agent, as the case may be, shall not be
responsible to the Corporation or to any third party (except in the event of
negligence, default or bad faith of the Agent or the Calculation Agent) as a
result of the Agent or the Calculation Agent having acted in good faith on any
quotation given by any Reference Bank which subsequently may be found to be
incorrect.
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(3) The Agent or the Calculation Agent, as the case may be, shall
promptly notify (and confirm in writing to) the Corporation, the other Paying
Agents and (in respect of a Series of Notes listed on a Stock Exchange) the
relevant Stock Exchange of, inter alia, each Rate of Interest, Interest Amount
and Interest Payment Date and all other amounts, rates and dates which it is
obliged to determine or calculate under the Terms and Conditions as soon as
practicable after the determination thereof (and in any event no later than the
tenth Business Day as defined in Clause 7(2) immediately preceding the date
on which payment is to be made to the Agent pursuant to Clause 7(1) and of any
subsequent amendment thereto pursuant to the Terms and Conditions.
(4) The Agent or the Calculation Agent, as the case may be, shall use
its best efforts to cause each Rate of Interest, Interest Amount and Interest
Payment Date and all other amounts, rates and dates which it is obliged to
determine or calculate under the Terms and Conditions to be published as
required in accordance with the Terms and Conditions as soon as possible after
their determination or calculation.
(5) If the Agent or the Calculation Agent, as the case may be, does not
at any material time for any reason determine and/or calculate and/or publish
the Rate of Interest, Interest Amount and/or Interest Payment Date in respect
of any Interest Period or any other amount, rate or date as provided in this
Clause 8, it shall forthwith notify the Corporation and the Paying Agent of
such fact.
(6) Determinations with regard to Notes (including, without limitation,
Indexed Notes and Dual Currency Notes) shall be made by the Calculation Agent
specified in the applicable Pricing Supplement in the manner specified in the
applicable Pricing Supplement. Unless otherwise agreed between the Corporation
and the relevant Dealer, such determinations shall be made on the basis of a
Calculation Agency Agreement substantially in the form of Schedule 9 to this
Agreement.
(7) For the purposes of monitoring the aggregate principal amount of
Notes issued under the Program, the Agent shall determine the U.S. dollar
equivalent of the principal amount of each issue of Notes denominated in
another currency, each issue of Dual Currency Notes and each issue of Indexed
Notes as follows:
(a) the U.S. dollar equivalent of Notes denominated in a currency
other than U.S. Dollars shall be determined by the Agent as of the date of
the agreement to issue such Notes or on the preceding day on which
commercial banks and foreign exchange markets are open for business in
London, in each case on the basis of the spot rate for the sale of the U.S.
dollar against the purchase of such other currency in the London foreign
exchange market quoted by any leading bank selected by the Agent;
(b) the U.S. dollar equivalent of Dual Currency Notes, Indexed
Notes and Partly Paid Notes shall be determined in the manner specified
above by reference to the original principal amount of such Notes; and
(c) the U.S. dollar equivalent of Zero Coupon Notes and other
Notes issued at a discount shall be deemed to be the net proceeds received
by the Company for the relevant issue.
(b) Interest Determinations, Screen Rate Determination
including Fallback Provisions
(1) Where screen rate determinations ("Screen Rate Determination") is
specified in the applicable Pricing Supplement as the manner in which the Rate
of Interest is to be determined, the Rate of Interest for each Interest Period
will, subject as provided below, be either:
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(A) the offered quotation (if there is only one quotation on the
relevant screen page (the "Relevant Screen Page")); or
(B) the arithmetic mean (rounded if necessary to the fifth
decimal place, with 0.000005 being rounded upwards) of the offered
quotations,
(expressed as a percentage rate per annum), for the reference rate ("Reference
Rate") which appears or appear, as the case may be, on the Relevant Screen Page
at approximately 11:00 a.m. (London time) on the interest determination date
("Interest Determination Date") in question plus or minus (as indicated in the
applicable Pricing Supplement) the Margin (if any), all as determined by the
Calculation Agent. If five or more such offered quotations are available on the
Relevant Screen Page, the highest (or, if there is more than one such
highest quotation, one only of such quotations) and the lowest (or, if there is
more than one such lowest quotation, one only of such quotations) shall be
disregarded by the Calculation Agent for the purpose of determining the
arithmetic mean (rounded as provided above) of such offered quotations.
(2) If the Relevant Screen Page is not available or if, in the case of
sub-clause (b)(1)(A) above, no such offered quotation appears or, in the case of
sub-clause (b)(1)(B) above, fewer than three such offered quotations appear,
in each case as at the time specified in the preceding paragraph, the
Calculation Agent shall at its sole discretion request the principal London
office of each of the Reference Banks (defined below) to provide the Calculation
Agent with its offered quotation (expressed as a percentage rate per annum) for
deposits in the Specified Currency for the relevant Interest Period to leading
banks in the London inter-bank market at approximately 11:00 a.m. (London time)
on the Interest Determination Date in question. If two or more of the Reference
Banks provide the Calculation Agent with such offered quotations, the Rate of
Interest for such Interest Period shall be the arithmetic mean (rounded if
necessary to the fifth decimal place with 0.000005 being rounded upwards) of
such offered quotations plus or minus (as appropriate) the Margin (if any), all
as determined by the Calculation Agent.
(3) If on any Interest Determination Date one only or none of the
Reference Banks provides the Calculation Agent with such offered quotations as
provided in the preceding paragraph, the Rate of Interest for the relevant
Interest Period shall be the rate per annum which the Calculation Agent
determines as being the arithmetic mean (rounded if necessary to the fifth
decimal place, with 0.000005 being rounded upwards) of the rates, as
communicated to (and at the request of) the Calculation Agent by the Reference
Banks or any two or more of them, at which such banks were offered, at
approximately 11:00 a.m. (London time) on the relevant Interest Determination
Date, deposits in the Specified Currency for the relevant Interest Period by
leading banks in the London inter-bank market plus or minus (as appropriate) the
Margin (if any). If fewer than two of the Reference Banks provide the
Calculation Agent with such offered quotations, the Rate of Interest shall be
the offered quotation for deposits in the Specified Currency for the relevant
Interest Period, or the arithmetic mean (rounded as provided above) of the
offered quotations for deposits in the Specified Currency for the relevant
Interest Period, at which, at approximately 11:00 a.m. (London time) on the
relevant Interest Determination Date, any one or more banks informs the
Calculation Agent it is quoting to leading banks in the London inter-bank
market plus or minus (as appropriate) the Margin (if any), provided that, if the
Rate of Interest cannot be determined in accordance with the foregoing
provisions of this paragraph, the Rate of Interest shall be determined as at the
last preceding Interest Determination Date (though substituting, where a
different Margin is to be applied to the relevant Interest Period from that
which applied to the last preceding Interest Period, the Margin relating to the
relevant Interest Period, in place of the Margin relating to that last preceding
Interest Period).
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(4) If the Reference Rate from time to time in respect of Floating Rate
Notes is specified in the applicable Pricing Supplement as being other than the
London inter-bank offered rate, the Rate of Interest in respect of such Notes
will be determined as provided in the applicable Pricing Supplement.
In this Clause 8, the expresssion "Reference Banks" means, in the case of
sub-clause (b)(1)(A) above, those banks whose offered rates were used to
determine such quotation when such quotation last appeared on the Relevant
Screen Page and in the case of sub-clause (b)(1)(B) above, those banks whose
offered quotations last appeared on the Relevant Screen Page when no fewer than
three such offered quotations appeared.
9. Notice of any Withholding or Deduction
If the Corporation is, in respect of any payment, compelled to withhold or
deduct any amount for or on account of taxes, duties, assessments or
governmental charges as specifically contemplated under the Terms and
Conditions, the Corporation shall give notice thereof to the Agent as soon as it
becomes aware of the requirement to make such withholding or deduction and shall
give to the Agent such information as it shall require to enable it to comply
with such requirement.
10. Duties of the Agent in Connection with Early Redemption
(1) If the Corporation decides to redeem any outstanding Notes (in whole
or in part) for the time being outstanding prior to their Maturity Date or the
Interest Payment Date falling in the Redemption Month (as the case may be) in
accordance with the Terms and Conditions, the Corporation shall give notice of
such decision to the Agent not less than seven London Business Days before the
date on which the Corporation will give notice to the Noteholders in
accordance with the Terms and Conditions of such redemption in order to enable
the Agent to undertake its obligations herein and in the Terms and Conditions.
(2) If only some of the Notes of like tenor and of the same Series are
to be redeemed on such date, the Agent shall make the required drawing in
accordance with the Terms and Conditions but shall give the Corporation
reasonable notice of the time and place proposed for such drawing. Where partial
redemptions are to be effected when there are Definitive Notes outstanding, the
Issuing and Principal Paying Agent will select by lot the Notes to be redeemed
from the outstanding Notes in compliance with all applicable laws and stock
exchange requirements and deemed by the Agent to be appropriate and fair; and
where partial redemptions are to be effected when there are no Definitive Notes
outstanding, the rights of Noteholders will be governed by the standard
provisions of Euroclear and Cedel. Notice of any partial redemption and, when
there are Definitive Notes outstanding, of the serial numbers of the Notes so
drawn, will be given by the Agent to the Noteholders in accordance with the
terms of the Notes and this Agreement.
(3) The Agent shall publish the notice on behalf of and at the expense
of the Corporation required in connection with any such redemption and shall at
the same time also publish a separate list of the serial numbers of any Notes
previously drawn and not presented for redemption. Such notice shall specify
the date fixed for redemption, the redemption amount, the manner in which
redemption will be effected and, in the case of a partial redemption, the serial
numbers of the Notes to be redeemed. Such notice will be published in
accordance with the Terms and Conditions. The Agent will also notify the other
Paying Agent of any date fixed for redemption of any Notes.
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(4) Immediately prior to the date on which any notice of redemption is
to be given to the Noteholders, the Corporation shall deliver to the Agent a
certificate stating that the Corporation is entitled to effect such redemption
and setting forth in reasonable detail a statement of facts showing that all
conditions precedent to such redemption have occurred or been satisfied and
shall comply with all notice requirements provided for in the Terms and
Conditions.
(5) Each Paying Agent will keep a stock of notices (each a "Put Notice")
in the form set out in Schedule 8 and will make such notices available on demand
to holders of Notes, the Terms and Conditions of which provide for redemption
at the option of Noteholders. Upon receipt of any Note deposited in the
exercise of such option in accordance with the Terms and Conditions, the Paying
Agent with which such Note is deposited shall hold such Note (together with any
Coupons, if any, relating to it and deposited with it) on behalf of the
depositing Noteholder (but shall not, save as provided below, release it) until
the due date for redemption of the relevant Note consequent upon the exercise
of such option, when, subject as provided below, it shall present such Note
(and any such Coupons, if any) to itself for payment of the amount due thereon
together with any interest due on such date in accordance with the Terms and
Conditions and shall pay such moneys in accordance with the directions of the
Noteholder contained in the Put Notice. If, prior to such due date for its
redemption, such Note becomes immediately due and payable or if upon due
presentation payment of such redemption moneys is improperly withheld or
refused, the Paying Agent concerned shall post such Note (together with any
such Coupons, if any) by uninsured post to, and at the risk of, the relevant
Noteholder unless the Noteholder has otherwise requested and paid the costs of
such insurance to the relevant Paying Agent at the time of depositing the Notes
at such address as may have been given by the Noteholder in the Put Notice. At
the end of each period for the exercise of such option, each Paying Agent shall
promptly notify the Agent of the principal amount of the Notes in respect of
which such option has been exercised with it together with their serial numbers
and the Agent shall promptly notify such details to the Corporation.
11. Receipt and Publication of Notices; Receipt of Certificates
(1) Upon the receipt by the Agent of a demand or notice from any
Noteholder in accordance with the Terms and Conditions the Agent shall forward
a copy thereof to the Corporation.
(2) On behalf of and at the request and expense of the Corporation, the
Agent shall cause to the published all notices required to be given by the
Corporation to the Noteholders in accordance with the Terms and Conditions.
(3) The Agent shall have no responsibility to obtain the certificate of
the Corporation delivered by the Corporation to the Agent pursuant to Condition
9 if such a certificate is required to be issued, nor shall the Agent have any
responsibility to notify the Corporation that the Agent has not obtained such a
certificate from the Corporation if such a certificate is required to be issued.
12. Cancellation of Notes, Receipts, Coupons and Talons
(1) All Notes which are redeemed, all Receipts or Coupons which are paid
and all Talons which are exchanged shall be delivered outside the United States
to the Agent, and shall be canceled by the Agent. In addition, all Notes which
are purchased by or on behalf of the Corporation or any of its subsidiaries and
are surrendered to the Agent for cancellation, together (in the case of Notes in
definitive form) with all unmatured Receipts, Coupons or Talons (if any)
attached thereto or surrendered therewith, shall be canceled by the Agent.
(2) The Corporation shall have the right to request that the Agent
provide, without limitation, the following information:
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(a) the aggregate principal amount of Notes which have been
redeemed and the aggregate amount paid in respect thereof;
(b) the number of Notes canceled together (in the case of
Definitive Notes, if any) with details of all unmatured Receipts, Coupons
or Talons (if any) attached thereto or delivered therewith;
(c) the aggregate amount paid in respect of interest on the
Notes;
(d) the total number by maturity date of Receipts, Coupons and
Talons so canceled; and
(e) (in the case of Definitive Notes, if any) the serial numbers
of such Notes,
shall be given to the Corporation by the Agent as soon as reasonably practicable
and in any event within three months after the date of such repayment or, as the
case may be, payment or exchange.
(3) The Agent shall destroy all canceled Notes, Receipts, Coupons and
Talons.
(4) The Agent shall keep a full and complete record of all Notes,
Receipts, Coupons and Talons (other than serial numbers of Coupons, except those
which have been replaced pursuant to Condition 10) and of all replacement Notes,
Receipts, Coupons or Talons issued in substitution for mutilated, defaced,
destroyed,lost or stolen Notes, Receipts, Coupons or Talons. The Agent shall at
all reasonable times make such record available to the Corporation and any
persons authorized by it for inspection and for the taking of copies thereof or
extracts therefrom.
(5) All records and certificates made or given pursuant to this Clause
12 and Clause 13 shall make a distinction between Notes, Receipts, Coupons and
Talons of each Series.
13. Issue of Replacement Notes, Receipts, Coupons and Talons
(1) The Corporation will cause a sufficient quantity of additional forms
of Notes, Receipts, Coupons and Talons to be available, upon request to the
Agent in Luxembourg (in such capacity, the "Replacement Agent") at is specified
office for the purpose of issuing replacement Notes, Receipts, Coupons and
Talons as provided below.
(2) The Replacement Agent will, subject to and in accordance with the
Terms and Conditions and the following provisions of this Clause 13,
authenticate and cause to be delivered any replacement Notes, Receipts, Coupons
and Talons which the Corporation may determine to issue in place of Notes,
Receipts, Coupons and Talons which have been lost, stolen, mutilated, defaced or
destroyed.
(3) In the case of a mutilated or defaced Note, the Replacement Agent
shall ensure that (unless otherwise covered by such indemnity as the Corporation
may reasonably require) any replacement Note will only have attached to it
Receipts, Coupons and Talons corresponding to those (if any) attached to the
mutilated or defaced Note which is presented for replacement.
(4) The Replacement Agent shall not issue any replacement Note, Receipt,
Coupon or Talon unless and until the applicant therefor shall have:
(a) paid such reasonable costs and expenses as may be incurred in
connection therewith, including any tax or other governmental charge that
may be imposed in relation thereto;
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(b) furnished it with such evidence and indemnity as the
Corporation may reasonably require; and
(c) in the case of any mutilated or defaced Note, Receipt, Coupon
or Talon, surrendered it to the Replacement Agent.
(5) The Replacement Agent shall cancel any mutilated or defaced Notes,
Receipts, Coupons and Talons in respect of which replacement Notes, Receipts,
Coupons and Talons have been issued pursuant to this Clause 13 and shall furnish
the Corporation with a certificate stating the serial numbers of the Notes,
Receipts, Coupons and Talons so canceled and, unless otherwise instructed by the
Corporation in writing, shall destroy such canceled Notes, Receipts, Coupons and
Talons and furnish the Corporation with a destruction certificate stating the
serial number of the Notes (in the case of Definitive Notes) and the number by
maturity date of Receipts, Coupons and Talons so destroyed.
(6) The Replacement Agent shall, on issuing any replacement Note,
Receipt, Coupon or Talon, forthwith inform the Corporation, the Agent and the
other Paying Agents of the serial number of such replacement Note, Receipt,
Coupon or Talon issued and (if known) of the serial number of the Note, Receipt,
Coupon or Talon in place of which such replacement Note, Receipt, Coupon or
Talon has been issued. Whenever replacement Receipts, Coupons or Talons are
issued pursuant to the provisions of this Clause 13, the Replacement Agent shall
also notify the Agent and the other Paying Agents of the maturity dates of the
lost, stolen, mutilated, defaced or destroyed Receipts, Coupons or Talons and of
the replacement Receipts, Coupons or Talons issued.
(7) The Agent shall keep a full and complete record of all replacement
Notes, Receipts, Coupons and Talons issued and shall make such record available
at all reasonable times to the Corporation and any persons authorized by it for
inspection and for the taking of copies thereof or extracts therefrom.
(8) Whenever any Note, Receipt, Coupon or Talon for which a replacement
Note, Receipt, Coupon or Talon has been issued and in respect of which the
serial number is known is presented to the Agent or any of the Paying Agents
for payment, the Agent or, as the case may be, the relevant Paying Agent shall
immediately send notice thereof to the Corporation and the other Paying Agents
and shall not make payment in respect thereto, until instructed by the
Corporation.
14. Copies of Documents Available for Inspection
The Agent and the Paying Agent shall hold available for inspection copies
of:
(i) the organizational documents of the Corporation;
(ii) the latest available audited consolidated financial
statements of NationsBank Corporation and its consolidated subsidiaries
beginning with such financial statements for the fiscal years ended
December 31, 1993 and December 31, 1994 and the latest available
consolidated unaudited interim financial statements of NationsBank
Corporation and its consolidated subsidiaries, beginning with the
statements for the quarter ended June 30, 1995;
(iii) the Program Agreement and this Agreement;
(iv) the Offering Circular; and
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(v) any future offering circulars, information memoranda and
supplements (except that a Pricing Supplement relating to any unlisted Note
will only be available for inspection by a holder of such Note and such
holder must produce evidence satisfactory to the Paying Agent as to
ownership) to the Offering Circular and any other documents incorporated
therein by reference and in the case of a syndicated issue of listed Notes,
the syndication agreement (or equivalent documents).
For this purpose, the Corporation shall furnish the Agent and the Paying
Agents with sufficient copies of each of such documents.
15. Meetings of Noteholders
(1) The provisions of Schedule 7 hereto shall apply to meetings of the
Noteholders and shall have effect in the same manner as if set out in this
Agreement.
(2) Without prejudice to sub-clause (1), each of the Agent and the
Paying Agents on the request of any Noteholder shall issue voting certificates
and block voting instructions in accordance with Schedule 7 and shall forthwith
give notice to the Corporation in writing of any revocation or amendment of a
block voting instruction. Each of the Agent and the Paying Agents will keep a
full and complete record of all voting certificates and block voting
instructions issued by it and will, not less than 24 hours before the time
appointed for holding a meeting or adjourned meeting, deposit as such place as
the Agent shall designate or approve, full particulars of all voting
certificates and block voting instructions issued by it in respect of such
meeting or adjourned meeting.
16. Repayment by the Agent
Upon the Corporation being discharged from its obligation to make payments
in respect of any Notes pursuant to the relevant Terms and Conditions, and
provided that there is no outstanding, bona fide and proper claim in respect of
any such payments, the Agent shall forthwith on written demand pay to the
Corporation sums equivalent to any amounts paid to it by the Corporation for the
purposes of such payments.
17. Conditions of Appointment
(1) The Agent shall be entitled to deal with money paid to it by the
Corporation for the purpose of this Agreement in the same manner as other money
paid to a banker by its customers except:
(a) that it shall not exercise any right of set-off, lien or
similar claim in respect thereof;
(b) as provided in sub-clause (2) below; and
(c) that it shall not be liable to account to the Corporation for
any interest thereon.
(2) In acting hereunder and in connection with the Notes, the Agent and
the Paying Agents shall act solely as agents of the Corporation and will not
thereby assume any obligations towards or relationship of agency or trust for or
with any of the owners or holders of the Notes, Receipts, Coupons or Talons.
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(3) The Agent and the Paying Agents hereby undertake to the Corporation
to perform such obligations and duties, and shall be obliged to perform such
duties and only such duties as are herein, in the Terms and Conditions and in
the Procedures Memorandum specifically set forth and no implied duties or
obligations shall be read into this Agreement or the Notes against the Agent and
the Paying Agents, other than the duty to act honestly and in good faith.
(4) The Agent may consult with legal and other professional advisers and
the opinion of such advisers shall be full and complete protection in respect of
any action taken, omitted or suffered hereunder in good faith and in accordance
with the opinion of such advisers.
(5) Each of the Agent and the Paying Agents shall be protected and shall
incur no liability for or in respect of any action taken, omitted or suffered in
reliance upon any instruction, request or order from the Corporation or any
notice, resolution, direction, consent, certificate, affidavit, statement,
cable, telex or other paper or document which it reasonably believes to be
genuine and to have been delivered, signed or sent by the proper party or
parties or upon written instructions from the Corporation.
(6) Any of the Agent and the Paying Agents and their officers, directors
and employees may become the owner of, or acquire any interest in any Notes,
Receipts, Coupons or Talons with the same rights that it or he would have if the
Agent or the relevant Paying Agent, as the case may be, concerned were not
appointed hereunder, and may engage or be interested in any financial or other
transactions with the Corporation and may act on, or as depositary, trustee or
agent for, any committee or body of Noteholders or Couponholders or in
connection with any other obligations of the Corporation as freely as if the
Agent or the relevant Paying Agent, as the case may be, were not appointed
hereunder.
(7) The Corporation shall provide the Agent with a certified copy of the
list of persons authorized to execute documents and take action on its behalf in
connection with this Agreement and shall notify the Agent immediately in writing
if any of such persons ceases to be so authorized or if any additional person
becomes so authorized together, in the case of an additional authorized person,
with evidence satisfactory to the Agent that such person has been so authorized,
provided, however, that the Agent shall not incur any liability for any losses,
claims or damages resulting from the Corporation's failure to provide such
notification to the Agent.
18. Communication Between the Parties
A copy of all communications relating to the subject matter of this
Agreement between the Corporation and the Noteholders, Receiptholders or
Couponholders and any of the Paying Agents shall be sent to the Agent by the
relevant Paying Agent.
19. Changes in Agent and Paying Agents
(1) The Corporation agrees that, for so long as any Note is outstanding,
or until moneys for the payment of all amounts in respect of all outstanding
Notes have been made available to the Agent or have been returned to the
Corporation as provided herein:
(a) so long as any Notes are listed on any Stock Exchange, there
will at all times be a Paying Agent with a specified office in such place
as may be required by the rules and regulations of the relevant Stock
Exchange; and
(b) there will at all times be a Paying Agent with a specified
office in a city in continental Europe; and
(c) there will at all times be an Agent.
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In addition, the Corporation shall appoint a Paying Agent having a
specified office in New York City in the circumstances described in the final
paragraph of Condition 5(b). Any variation, termination, appointment or change
shall only take effect (other than in the case of insolvency (as provided in
sub-clause (5)), when it shall be of immediate effect) after not less than 30
nor more than 45 days' prior notice thereof shall have been given to the
Noteholders in accordance with the Terms and Conditions.
(2) The Agent may (subject as provided in sub-clause (4)) at any time
resign as Agent by giving at least 90 days' written notice to the Corporation of
such intention on its part, specifying the date on which its desired resignation
shall become effective, provided that such date shall never be less than three
months after the receipt of such notice by the Corporation unless the
Corporation agrees to accept less notice.
(3) The Agent may (subject as provided in sub-clause (4)) be removed at
any time on at least 45 days' notice by the filing with it of an instrument in
writing signed on behalf of the Corporation specifying such removal and the date
when it shall become effective.
(4) Any resignation under sub-clause (2) or removal under sub-clause (3)
shall only take effect upon the appointment by the Corporation as hereinafter
provided, of a successor Agent and (other than in cases of insolvency of the
Agent) on the expiry of the notice to be given under Clause 21. The Corporation
agrees with the Agent that if, by the day falling ten days before the expiry of
any notice under sub-clause (2), the Corporation has not appointed a successor
Agent, then the Agent shall be entitled, on behalf of the Corporation, to
appoint as a successor Agent in its place a reputable financial institution of
good standing as it may reasonably determine to be capable of performing the
duties of the Agent hereunder.
(5) In case at any time the Agent resigns, or is removed, or becomes
incapable of acting or is adjudged bankrupt or insolvent, or files a voluntary
petition in bankruptcy or makes an assignment for the benefit of its creditors
or consents to the appointment of an administrator, liquidator or administrative
or other receiver of all or a substantial part of its property, or admits in
writing its inability to pay or meet its debts as they mature or suspends
payment thereof, or if any order of any court is entered approving any petition
filed by or against it under the provisions of any applicable bankruptcy or
insolvency law or if a receiver of it or of all or a substantial part of its
property is appointed or any officer takes charge or control of it or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, a successor Agent, which shall be a reputable financial institution
of good standing, may be appointed by the Corporation by an instrument in
writing filed with the successor Agent. Upon the appointment as aforesaid of a
successor Agent and acceptance by the latter of such appointment and (other than
in case of insolvency of the Agent) upon expiry of the notice to be given under
Clause 21 the Agent so superseded shall cease to be the Agent hereunder.
(6) Subject to sub-clause (1):
(A) the Corporation may, after prior consultation (other than in
the case of insolvency of any Paying Agent) with the Agent, terminate the
appointment of any of the Paying Agents at any time; and/or
(B) the Corporation may in respect of the Program or the
Corporation may in respect of any Series of Notes, if so required by the
relevant Stock Exchange or regulatory body, appoint one or more further
Paying Agents by giving to the Agent, and to the relevant Paying Agent, at
least 45 days' notice in writing to that effect.
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(7) Subject to sub-clause (1), all or any of the Paying Agents may
resign their respective appointments hereunder at any time by giving the
Corporation and the Agent at least 45 days' written notice to that effect.
(8) Upon its resignation or removal becoming effective the Agent or the
relevant Paying Agent:
(a) shall, in the case of the Agent, forthwith transfer all
moneys held by it hereunder and the records referred to in Clause 12(4) to
the successor Agent hereunder; and
(b) shall be entitled to the payment by the Corporation of its
commissions, fees and expenses for the services theretofore rendered
hereunder in accordance with the terms of Clause 25.
(9) Upon its appointment becoming effective, a successor Agent and any
new Paying Agent shall without further act, deed or conveyance, become vested
with all the authority, rights, powers, trusts, immunities, duties and
obligations of its predecessor or, as the case may be, a Paying Agent with like,
effect as if originally named as Agent or (as the case may be) a Paying Agent
hereunder.
20. Merger and Consolidation
Any corporation into which the Agent or any Paying Agent may be merged or
converted, or any corporation with which the Agent or any of the Paying Agents
may be consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Agent or any of the Paying Agents shall be a party,
or any corporation to which the Agent or any of the Paying Agents shall sell or
otherwise transfer all or substantially all the assets of the Agent or any
Paying Agent shall, on the date when such merger, conversion, consolidation or
transfer becomes effective and to the extent permitted by any applicable laws,
become the successor Agent or, as the case may be, Paying Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of the parties hereto, unless otherwise required by the Corporation, and
after the said effective date all references in this Agreement to the Agent or,
as the case may be, such Paying Agent shall be deemed to be references to such
corporation. Written notice of any such merger, conversion, consolidation or
transfer shall forthwith be given to the Corporation by the relevant Agent or
Paying Agent.
21. Notification of Changes to Paying Agents
Following receipt of notice or resignation from the Agent or any Paying
Agent and forthwith upon appointing a successor Agent or, as the case may be,
further or other Paying Agents or on giving notice to terminate the appointment
of any Agent or, as the case may be, Paying Agent, the Agent (on behalf of and
at the expense of the Corporation) shall give or cause to be given not more than
60 days' nor less than 30 days' notice thereof to the Noteholders in accordance
with the Terms and Conditions.
22. Change of Specified Office
If the Agent or any Paying Agent determines to change its specified office
it shall give to the Corporation and (if applicable) the Agent written notice of
such determination giving the address of the new specified office which shall be
in the same city and stating the date on which such change is to take effect,
which shall not be less than 45 days thereafter. The Agent (on behalf and at the
expense of the Corporation) shall within 15 days of receipt of such notice
(unless the appointment of the Agent, or the relevant Paying Agent, as the case
may be, is to terminate pursuant to Clause 19 on or prior to the date of
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such change) give or cause to be given not more than 45 days' nor less than 30
days' notice thereof to the Noteholders in accordance with the Terms and
Conditions.
23. Notices
All notices hereunder shall be deemed to have been given when deposited in
the mail as first class mail, registered or certified, return receipt requested,
postage prepaid, addressed to any party hereto as follows:
Address
The Corporation: NationsBank Corporation
NationsBank Corporate Center
NC 1007-23-1
Charlotte, North Carolina 28255-0065
Attn: John E. Mack
Treasurer
Telecopy: (704) 386-0270
with a copy to:
NationsBank Corporation
NationsBank Corporate Center
Legal Department
NC 1007-20-1
Charlotte, North Carolina 28255-0065
Attn: Paul J. Polking, Esq.
General Counsel
Telecopy: (704) 386-6453
The Agent:
The Chase Manhattan Bank, N.A.
Woolgate House
Coleman Street
London EC2P 2HD
United Kingdom
Attn: Manager, Corporate Trust
Operations
Telecopy: 71-1202-347945
The Paying Agent:
Chase Manhattan Bank Luxembourg S.A.
5 rue Plaetis
L-2338 Luxembourg - Grund.
Manager, Corporate Trust Operations
Telecopy: 552-462685-380
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or at any other address of which any of the foregoing shall have notified the
others in writing.
(a) if delivered in person to the relevant address specified in
the signature pages hereof and if so delivered, shall be deemed to have
been delivered at the time of receipt; or
(b) if sent by facsimile or telex to the relevant number
specified on the signature pages hereof and, if so sent, shall be deemed to
have been delivered immediately after transmission provided such
transmission is confirmed by the answerback of the recipient (in the case
of telex) or when an acknowledgement of receipt is received (in the case of
facsimile).
Where a communication is received after business hours it shall be deemed
to be received and become effective on the next business day. Every
communication shall be irrevocable save in respect of any manifest error
therein.
24. Taxes and Stamp Duties
The Corporation agrees to pay any and all stamp and other documentary taxes
or duties which may be payable in connection with the execution, delivery,
performance and enforcement of this Agreement.
25. Commissions, Fees and Expenses
(A) The Corporation undertakes to pay in respect of the services of the
Agent and the Paying Agents under this Agreement such fees and expenses as may
be agreed between them from time to time, the initial such fees being set out in
a letter of even date herewith from the Agent to, and countersigned by, the
Corporation.
(B) The Corporation will promptly pay on demand all out-of-pocket
expenses (including legal, advertising, facsimile, telex and postage expenses)
properly incurred by the Agent and the Paying Agents in connection with their
services hereunder, including without limitation the expenses contemplated in
Clause 24.
26. Indemnity
(A) The Corporation undertakes to indemnify and hold harmless each of
the Agent and the Paying Agents against all losses, liabilities, costs
(including, without limitation, legal fees and expenses), expenses, claims,
actions or demands which the Agent or any Paying Agent, as the case may be, may
reasonably incur or which may be made against the Agent or any Paying Agent, as
a result of or in connection with the appointment or the exercise of or
performance of the powers, discretions, authorities and duties of the Agent or
any Paying Agent under this Agreement except such as may result from its own
gross negligence, bad faith or failure to comply with its obligations hereunder
or that of its officers, employees or agents.
(B) Each of the Agent and the Paying Agents shall severally indemnify
and hold harmless the Corporation against any loss, liability, costs (including,
without limitation, legal fees and expenses), expense, claim, action or demand
which it may reasonably incur or which may be made against it as a result of
such Agent's or Paying Agent's own negligence, bad faith or material failure to
comply with its obligations under this Agreement or that of its officers,
employees or agents.
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(C) If, under any applicable law and whether pursuant to a judgment
being made or registered or in the liquidation, insolvency or analogous process
of any party hereto or for any other reason, any payment under or in connection
with this Agreement is made or fails to be satisfied in a currency (the "Other
Currency") other than that in which the relevant payment is expressed to be due
(the "Required Currency") under this Agreement, then, to the extent that the
payment (when converted into the Required Currency at the rate of exchange on
the date of payment or, if it is not practicable for the payee to purchase the
Required Currency with the Other Currency on the date of payment, at the rate of
exchange as soon thereafter as it is practicable for it to do so or, in the case
of a liquidation, insolvency or analogous process, at the rate of exchange on
the latest date permitted by applicable law for the determination of liabilities
in such liquidation, insolvency or analogous process) actually received by the
payee falls short of the amount due under the terms of this Agreement, the payor
shall, as a separate and independent obligation, indemnify and hold harmless the
payee against the amount of such shortfall. For the purpose of this Clause 27,
"rate of exchange" means the rate at which the payee is able on the relevant
date to purchase the Required Currency with the Other Currency and shall take
into account any premium and other costs of exchange.
27. Reporting
(A) The Agent shall upon receipt of a written request therefor from the
Corporation and after the payment of any further remuneration agreed between the
Corporation and the Agent (on behalf of the Corporation and on the basis of the
information and documentation the Agent had in its possession) use all
reasonable efforts to submit such reports or information as may be required from
time to time by any applicable law, regulation or guideline promulgated by (i)
any relevant United States governmental regulatory authority in respect of the
issue and purchase of Notes or (ii) any other relevant governmental regulatory
authority in respect of the issue and purchase of Notes denominated in the
applicable currency of such governmental regulatory authority.
(B) The Agent will notify the MoF of such details relating to Yen Notes
and provide such other information about the Program to the MoF as may be
required.
(C) The Agent will notify the German Bundesbank at the end of each month
about the amounts, dates of issue and other terms of all DM-denominated Notes
issued during the month in question and provide such other information about the
Program to the German Bundesbank as may be required.
28. Governing Law
(A) This Agreement, the Notes, and any Receipts, Coupons or Talons
appertaining thereto shall be governed by and construed in accordance with the
laws of the State of New York, United States of America, without regard to
principles of conflicts of laws.
(B) The Corporation and the Agent each hereby irrevocably submits to the
non-exclusive jurisdiction of any United States Federal court sitting in New
York City, the Borough of Manhattan over any suit, action or proceeding arising
out of or related to this Agreement, any Note, Receipt, Coupon or Talon, as the
case may be (together, the "Proceedings"). The Corporation and the Agent each
irrevocably waives, to the fullest extent permitted by law, any objection which
it may have to the laying of the venue of the Proceedings brought in such a
court and any claim that the Proceedings have been brought in an inconvenient
forum. The Corporation and the Agent each agrees that final judgment in the
Proceedings brought in such a court shall be conclusive and binding upon the
Corporation or the Agent, as the case may be, and may be enforced in any court
of the jurisdiction to which the Corporation or the Agent is subject by a suit
upon such judgment, provided that the service of process is effected upon
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the Corporation and the Agent in the manner specified in subsection (C) below or
as otherwise permitted by law.
(C) As long as any of the Notes, Receipts, Coupons or Talons remains
outstanding, the Corporation shall at all times either maintain an office or
have an authorized agent in New York City upon whom process may be served in the
Proceedings. Service of process upon either it at its offices or upon such agent
with written notice of such service mailed or delivered to the Corporation
shall, to the fullest extent permitted by law, be deemed in every respect
effective service of process upon the Corporation in the Proceedings. The
Corporation hereby appoints CT Corporation System as its agent for such
purposes, and covenants and agrees that service of process in the Proceedings
may be made upon it at its office or at the specified offices of such agent (or
such other addresses or at the offices of any other authorized agents which the
Corporation may designate by written notice to the Agent) and prior to any
termination of such agencies for any reason, it will so appoint a successor
thereto as agent hereunder.
29. Amendments
Without the consent of the Noteholders, Receiptholders or Couponholders,
the Agent and the Corporation may agree to modifications of or amendments to
this Agreement, the Notes, the Receipts or the Coupons for any of the following
purposes:
(i) to evidence the succession of another corporation to the Corporation
and the assumption by any such successor of the covenants of the
Corporation in this Agreement, the Notes, Receipts or Coupons;
(ii) to add to the covenants of the Corporation for the benefit of the
Noteholders, the Receiptholders or the Couponholders, or to
surrender any right or power herein conferred upon the Corporation;
(iii) to relax or eliminate the restrictions on payment of principal and
interest in respect of the Notes, Receipts or Coupons in the United
States, provided that such payment is permitted by United States tax
laws and regulations then in effect and provided that no adverse tax
consequences would result to the Noteholders, the Receiptholders or
the Couponholders;
(iv) to cure any ambiguity, to correct or supplement any defective
provision herein or any provision which may be inconsistent with any
other provision herein;
(v) to make any other provisions with respect to matters or questions
arising under the Notes, the Receipts, the Coupons or this
Agreement, provided such action pursuant to this sub-clause (v)
shall not adversely affect the interests of the Noteholders, the
Receiptholders or the Couponholders; and
(vi) permit further issuances of Notes in accordance with the terms of
this Agreement and as further provided hereof.
Any such modification or amendment shall be binding on the Noteholders, the
Receiptholders and the Couponholders and any such modification or amendment
shall be notified to the Noteholders, the Receiptholders or the Couponholders in
accordance with Condition 13 as soon as practicable thereafter.
-23-
<PAGE>
30. Descriptive Headings
The descriptive headings in this Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
31. Counterparts
This Agreement may be executed in any number of couterparts, all of which
shall constitute one and the same instrument. Any party may enter into this
Agreement by signing such a counterpart.
-24-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their respective corporate names by their respective officers
thereunder duly authorized as of the date and year first above written.
NATIONSBANK CORPORATION
as Issuer
By /s/ John E. Mack
Name: JOHN E. MACK
Title: Senior Vice President and Treasurer
THE CHASE MANHATTAN BANK, N.A.,
LONDON BRANCH
as Agent and
Principal Paying Agent
By /s/ S. Kaufman
Name: S. Kaufman
Title: senior Vice President
CHASE MANHATTAN BANK LUXEMBOURG S.A.
as Paying Agent
By /s/ S. Kaufman
Name: S. Kaufman
Title: Authorized Signatory
<PAGE>
ISSUING AND PAYING AGENCY AGREEMENT
BETWEEN
NATIONSBANK, N.A. (CAROLINAS),
NATIONSBANK OF TEXAS, N.A.
AND
NATIONSBANK OF GEORGIA, N.A.
AS ISSUERS
AND
BANKERS TRUST COMPANY,
AS ISSUING AND PAYING AGENT,
DATED AS OF APRIL 10, 1995
-------------------
SHORT-TERM AND MEDIUM-TERM NOTES
DUE FROM 30 DAYS TO 15 YEARS FROM DATE OF ISSUE
<PAGE>
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. Definition................................................................................. 1
SECTION 2. Appointment of Agents...................................................................... 9
(a) Issuing and Paying Agent................................................ 9
(b) Selling Agents......................................................... 10
(c) Registrar.............................................................. 10
(d) Transfer Agents........................................................ 10
(e) Calculation Agents...................................................... 10
SECTION 3. The Notes.................................................................................. 11
(a) Note Form; Signature.................................................... 11
(b) Denominations........................................................... 14
(c) Completion of Notes..................................................... 14
(d) Date.................................................................... 15
(e) Certificate of Authentication........................................... 15
(f) Original Issue Discount Note............................................ 15
(g) Custody of Notes........................................................ 15
(h) Certificated Notes...................................................... 15
SECTION 4. Authorized Representatives................................................................. 16
SECTION 5. Completion, Authentication and Delivery of
Notes........................................................................................ 16
SECTION 6. Procedure upon Sale of the Notes........................................................... 20
SECTION 7. Payment of Interest; Actions on Days Other
than Business Days........................................................................... 20
SECTION 8. Payment of Principal....................................................................... 22
SECTION 9. Designation of Accounts to Receive Pay-
ment......................................................................................... 22
SECTION 10. Information Regarding Amounts Due......................................................... 22
SECTION 11. Specified Currency Notes.................................................................. 23
SECTION 12. Deposit of Funds.......................................................................... 23
SECTION 13. Optional Redemption....................................................................... 23
(a) Optional Redemption..................................................... 23
(b) Optional Repayment...................................................... 24
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Page
(c) Optional Extension of Maturity.......................................... 24
(d) Optional Renewal........................................................ 26
SECTION 14. Events of Default......................................................................... 27
SECTION 15. Registration; Transfer.................................................................... 28
SECTION 16. Persons Deemed Owners..................................................................... 30
SECTION 17. Mutilated, Lost, Stolen or Destroyed
Notes........................................................................................ 30
SECTION 18. Return of Unclaimed Funds................................................................. 31
SECTION 19. Amendment or Supplement................................................................... 31
SECTION 20. Resignation or Removal of Agents; Ap-
pointment of Successors to Agents............................................................ 33
(a) Resignation or Removal of Agent......................................... 33
(b) Appointment of Successor to Agent....................................... 34
(c) Successor of Agent...................................................... 35
(d) Merger, Etc. of Agent................................................... 35
(e) Change in Duties of an Agent............................................ 36
(f) Additional Agents....................................................... 36
SECTION 21. Reliance on Instructions.................................................................. 36
SECTION 22. Cancellation of Unissued Notes............................................................ 36
SECTION 23. Representation and Warranties of the
Issuers; Instructions by Certificate......................................................... 36
SECTION 24. Fees...................................................................................... 37
SECTION 25. Notices................................................................................... 37
SECTION 26. Information Furnished by the Issuing and
Paying Agent................................................................................. 38
SECTION 27. Liability................................................................................. 39
SECTION 28. Additional Responsibilities; Additional
Responsibilities............................................................................. 39
SECTION 29. Transfer of Notes and Moneys.............................................................. 39
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<PAGE>
Page
SECTION 30. Indemnity................................................................................. 41
SECTION 31. Limitation of Liability; Reliance on
Opinions and Certificates.................................................................... 41
SECTION 32. Benefit of Agreement...................................................................... 42
SECTION 33. Governing Law............................................................................. 42
SECTION 34. Headings and Table of Contents............................................................ 42
SECTION 35. Counterparts.............................................................................. 43
SECTION 35. Termination of Prior Issuing and Paying
Agent Agreements............................................................................. 43
EXHIBIT A - Forms of DTC Letters of Representations
EXHIBIT B - Administrative Procedures
EXHIBIT C - Form of Fixed Rate Note
EXHIBIT D - Form of Floating Rate Note
EXHIBIT E - Form of Legend for Original Issue Discount
Note
EXHIBIT F - The Issuers' Authorized Representatives
EXHIBIT G - Form of Issuing and Paying Agent's Officer's
Certificate Referencing Authorized Represen-
tatives
iii
<PAGE>
NATIONSBANK, N.A. (CAROLINAS)
NATIONSBANK OF TEXAS, N.A.
NATIONSBANK OF GEORGIA, N.A.
SHORT-TERM AND MEDIUM-TERM NOTES
ISSUING AND PAYING AGENCY AGREEMENT
ISSUING AND PAYING AGENCY AGREEMENT dated as of April 10,
1995, between NATIONSBANK, N.A. (CAROLINAS), NATIONSBANK OF TEXAS, N.A., and
NATIONSBANK OF GEORGIA, N.A., each a national banking association organized
under the laws of the United States, each as an Issuer, and BANKERS TRUST
COMPANY, a New York banking corporation, as Issuing and Paying Agent.
SECTION 1. Definitions. Except as otherwise expressly provided
or unless the context otherwise requires: (l) the words and phrases with initial
capitals used herein have the meanings specified in this Section; and (2) the
words "herein," "hereof" and "hereunder" and other words of similar impact refer
to this Issuing and Paying Agency Agreement as a whole and not to any particular
section or other subdivision. Capitalized terms used herein but not otherwise
defined herein shall have the same meaning and intention specified therefor in
the applicable Note.
ADDITIONAL RESPONSIBILITIES - Has the meaning given such term
in Section 28.
ADMINISTRATIVE PROCEDURES - The Administrative Procedures
applicable to the Notes, as set forth in Exhibit B hereto.
AGENT OR AGENTS - Any of the Issuing and Paying Agent, any
paying agent or the Registrar, as the context indicates.
AGREEMENT - This Issuing and Paying Agency Agreement,
including the exhibits hereto, as amended or supplemented from time to time.
AMORTIZING NOTE - Any Note the terms of which provide for the
payment of Principal thereof and interest thereon on each Interest Payment Date
and the Stated Maturity thereof.
<PAGE>
AUTHORIZED DENOMINATION - Has the meaning given such term in
Section 3(b).
AUTHORIZED REPRESENTATIVE - With respect to an Issuer, any
duly authorized representative of such Issuer as set forth in Exhibit F hereto,
and any other representative of such Issuer as to which such Issuer may
hereafter certify in writing to the Issuing and Paying Agent.
BUSINESS DAY - Unless otherwise specified in a Pricing
Supplement relating to a particular Note, with respect to any Note issued by an
Issuer, any day that is not a Saturday or Sunday and that is not a day on which
banking institutions in The City of New York, New York are generally authorized
or obligated by law to close (or, if the Issuing and Paying Agent is other than
Bankers Trust Company, the city in which such successor Issuing and Paying
Agent's principal office is located). With respect to LIBOR Notes, "Business
Day" means London Business Day. If a particular Note is denominated in or
indexed to a Specified Currency other than U.S. dollars or the European Currency
Unit ("ECU"), "Business Day" means any day that is not a Saturday or Sunday and
that is not a day on which banking institutions in The City of New York and the
principal financial center of the country issuing the Specified Currency are
generally authorized or obligated by law or regulation to close and is a day on
which banking institutions in such principal financial center are carrying out
transactions in such Specified Currency and, if such Note is denominated in or
indexed to ECU, each day which is not a day that banking institutions in the
country of Luxembourg are authorized or required by law or regulation to close
and which is an ECU clearing day, as determined by the ECU Banking Association
in Paris, France.
CALCULATION AGENT - With respect to Notes issued by an Issuer,
such person appointed by such Issuer to calculate the interest rates applicable
to Floating Rate Notes or certain other Notes, and for certain related matters,
as more fully described in Section 2(e).
CERTIFICATE OF AUTHENTICATION - Has the meaning given such
term in Section 3(e).
CERTIFICATED NOTES - Any Notes issued in fully registered,
certificated form.
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<PAGE>
COMPONENTS - Has the meaning given such term in Section 11(d).
DEPOSITARY - With respect to Notes issued in the form of one
or more Global Notes, the Person designated as Depositary by the Issuer thereof
pursuant hereto, which Depositary at all times shall be a trust company validly
existing and in good standing (at the time of its appointment) under the laws of
the United States or any state thereof and shall be a clearing agency duly
registered under the Securities Exchange Act.
DISTRIBUTION AGREEMENT - The Distribution Agreement, dated
April 10, 1995, among the Issuers, NationsBanc Capital Markets, Inc., CS First
Boston Corporation, Lehman Brothers, Lehman Brothers Inc. (including its
affiliates Lehman Commercial Paper Inc. and Lehman Government Securities Inc.)
and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
amended and supplemented from time to time.
DTC - The Depository Trust Company or its successors and
assigns.
EVENT OF DEFAULT - Has the meaning given such term in Section
14.
EXTENSION NOTICE - The notice to be provided to Holders of
Notes the Stated Maturity of which is extended by an Issuer as provided in
Section 13(c) hereof.
EXTENSION PERIOD(S) - The period or periods, by which an
Issuer may extend the Stated Maturity of Notes which provide for such extension,
as described more fully in Section 13(c) hereof.
FINAL MATURITY DATE - The latest date designated on the face
of a Note which provides for the maturity thereof.
FIXED RATE NOTES - Any Notes bearing interest at fixed rates
and substantially in the form of Exhibit C hereto.
FLOATING RATE NOTES - Any Notes bearing interest at a variable
rate or rates determined by reference to an interest rate formula, which may be
adjusted by adding or
3
<PAGE>
subtracting a number of basis points or "spread" specified by the Issuer on the
related Floating Rate Note as being applicable to such Floating Rate Note and/or
by multiplying a percentage or "spread multiplier" specified by the Issuer
thereof on the related Floating Rate Note as being applicable to such Floating
Rate Note and substantially in the form of Exhibit D.
GLOBAL NOTE - A Note, in the form provided by Section 3(a),
issued to the Depositary or its nominee, and registered in the Register in the
name of the Depositary or its nominee.
HOLDER - Means the person in whose name a Note is registered
in the Register.
INITIAL MATURITY DATE - Has the meaning given such term in
Section 13(d).
INITIAL REDEMPTION DATE - With respect to a Note that is
subject to an Optional Redemption, the date specified as the Initial Redemption
Date on such Note and after which, but prior to the Stated Maturity, an Optional
Redemption of such Note may occur as specified in such Note.
INITIAL RENEWAL DATE - Has the meaning given such term in
Section 13(d).
INTEREST PAYMENT DATE - A date for payment of interest on a
Note, as provided in the Note.
ISSUER - Each of NationsBank, N.A. (Carolinas), a national
banking association, and its successors and assigns, NationsBank of Texas, N.A.,
a national banking association, and its successors and assigns, and NationsBank
of Georgia, N.A., a national banking association, and its successors and
assigns. All such entities are collectively referred to herein as the "Issuers".
ISSUING AND PAYING AGENT - Bankers Trust Company, or any
successor Issuing and Paying Agent appointed in accordance with this Agreement
under Section 20 that has accepted such appointment hereunder.
LETTERS OF REPRESENTATIONS - The letters from the Issuing and
Paying Agent to be furnished to DTC in accor-
4
<PAGE>
dance with Section 2(a) hereof, substantially in the forms set forth in Exhibit
A hereto.
LONDON BUSINESS DAY - Any day on which dealings in deposits in
U.S. dollars are transacted in the London inter-bank market.
NEW MATURITY DATE - Has the meaning given such term in Section
13(d).
NEW YORK BUSINESS DAY - Any day other than a Saturday or
Sunday or a day on which banking institutions in The City of New York are
authorized or required by law or executive order to close.
NOTE OR NOTES - Any of an Issuer's Short-Term Notes or
Medium-Term Notes issued, authenticated and delivered under this Agreement.
OFFERING CIRCULAR - The Offering Circular of the Issuers
relating to the Notes dated April 10, 1995, as the same may be amended or
supplemented from time to time.
OFFICER'S CERTIFICATE - With respect to an Issuer, a
certificate (i) signed by the Chairman of the Board, the President, or any
Executive Vice President or Senior Vice President of an Issuer or such other
persons as such Issuer designates in an Officer's Certificate signed by the
President or any Vice President, and (ii) delivered to the Issuing and Paying
Agent.
OPTIONAL REDEMPTION - A redemption of a Note on or after the
date designated on such Note as the Initial Redemption Date at the option of the
Issuer thereof as set forth in such Note at a Redemption Price as set forth in
such Note.
ORIGINAL ISSUE DATE - As to any Note, the date on which such
Note was issued and the purchase price therefore was paid by the related Holder.
ORIGINAL ISSUE DISCOUNT NOTE - Any Note issued at an issue
price representing more than a DE MINIMIS discount from the principal amount
payable at its Stated Maturity for federal income tax purposes.
5
<PAGE>
ORIGINAL STATED MATURITY - Has the meaning given such term in
Section 13(c).
OUTSTANDING - For purposes of the provisions of this Agreement
and the Notes, any Note authenticated and delivered pursuant to this Agreement
shall, as of any date of determination, be deemed to be "Outstanding," except:
(i) Notes theretofore cancelled or delivered to the Issuing and Paying Agent for
cancellation; (ii) Notes that have become due and payable on their Principal
Payment Date and with respect to which monies sufficient to pay the Principal or
Redemption Price thereof, as the case may be, and interest thereon shall have
been made available to the Issuing and Paying Agent; or (iii) Notes in lieu of
or in substitution for which other Notes shall have been authenticated and
delivered pursuant to this Agreement.
PAYMENT DATE - A date for payment of Principal of and interest
on an Amortizing Note as provided in the Note.
PERSON - Any legal person, including any individual,
corporation, partnership, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency, instrumentality
or political subdivision thereof.
PREDECESSOR NOTES - With respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 17 or the terms of a Note in lieu of
or in exchange for a mutilated, lost, destroyed, or stolen Note shall be deemed
to evidence the same debt as the mutilated, lost, destroyed or stolen Note, and
any Note issued upon registration of transfer of or in exchange for any other
Note shall be deemed to evidence all or a portion of the same debt evidenced by
such other Note.
PREPAYMENT OPTION DATES - If specified on the applicable Note,
a date or dates for prepayment of a Note prior to the Stated Maturity thereof at
the option of the Holder.
PREPAYMENT OPTION PRICE - The amount prepayable to a Holder on
a Prepayment Option Date together with any accrued interest to the Prepayment
Option Date, as and if specified above on the applicable Note.
6
<PAGE>
PRICING SUPPLEMENT - A supplement to the Offering Circular for
a particular Note or Notes.
PRINCIPAL - The amount of a Note due and payable on the Stated
Maturity therefor or, in the case of an Amortizing Note, the "Amortized Face
Amount" (as specified in the Note).
PRINCIPAL OFFICE - Subject to the right of each to change its
office, by advance written notice to the Issuers, such term means, (1) for the
Issuing and Paying Agent, its principal corporate trust office at Four Albany
Street, 4th floor, New York, New York 10006, Attention: Corporate Trust and
Agency Group; and (2) for any successor or additional Agents, their offices
specified in writing to the Issuers and the Issuing and Paying Agent.
PRINCIPAL PAYMENT DATE - The date provided on the face of the
Note on which the Principal, or Redemption Price of the Note, as the case may
be, becomes due and payable.
REDEMPTION PRICE - With respect to any Note subject to an
Optional Redemption, the amount specified in such Note as payable, when such
Note is redeemed on or after the Initial Redemption Date, pursuant to the
related Note.
REGISTER - The register for the registration and transfer of
the Notes maintained by the Issuing and Paying Agent pursuant to Section 15
hereof.
REGISTRAR - Bankers Trust Company, or any successor or
successors as Registrar, appointed in accordance with Section 20 hereof, who
shall perform the duties provided under Section 2(c) hereof.
REGULAR RECORD DATE - With respect to any Note, unless
otherwise specified in such Note, the Regular Record Date with respect to any
Interest Payment Date or Payment Date shall be the date that is the fifteenth
calendar day (whether or not a Business Day) prior to the applicable Interest
Payment Date or Payment Date, as the case may be.
RENEWABLE NOTE - A Note the maturity of which may be renewed
at the option of the Holder in accordance with the terms thereof.
7
<PAGE>
RENEWAL DATE - Has the meaning given such term in Section
13(d).
SECURITIES EXCHANGE ACT - The Securities Exchange Act of 1934,
as amended.
SELLING AGENT - Any party, other than an Issuer,
to the Distribution Agreement, including any party added to
such agreement after its initial date of execution. The
initial Selling Agents are: NationsBanc Capital Markets,
Inc., CS First Boston Corporation, Lehman Brothers, Lehman
Brothers Inc. (including its affiliates Lehman Commercial
Paper Inc. and Lehman Government Securities Inc.) and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
SPECIAL ELECTION INTERVAL - A period during which, if so
specified on the applicable Renewable Note, on the Interest Payment Date
occurring in the last month of each such Special Election Interval after an
Initial Renewal Date, the term of the Note may be extended to the Interest
Payment Date occurring in the last month in a period equal to twice the Special
Election Interval after the applicable Renewal Date, if the Holder of such Note
elects to extend the term of the Note or any portion thereof as provided in such
Note.
SPECIAL ELECTION PERIOD - A period, if specified on the
applicable Note, during which the Holder of such Note may elect to renew the
term of the Note, or if provided in the applicable Note, any portion thereof, by
delivering a notice to such effect to the Paying Agent.
SPECIFIED CURRENCY - The currency in which such Note is
denominated if such currency is denominated in a composite currency, currency
unit or a currency other than U.S. dollars.
SPECIFIED CURRENCY NOTE - A Note, which pursuant to the terms
specified thereon, is denominated in a Specified Currency.
STATED MATURITY - As to any Note or any installment of
Principal thereof or interest thereon, the date specified therein as the fixed
date on which the Principal of such Note or such installment of Principal and
interest is due and payable.
8
<PAGE>
TRANSFER AGENT - With respect to any Note issued by an Issuer,
any Person appointed by such Issuer to exchange or transfer Notes issued by such
Issuer.
SECTION 2. Appointment of Agents.
(a) Issuing and Paying Agent. Each Issuer hereby
appoints Bankers Trust Company, as Issuing and Paying Agent of the
Issuers in respect to the Notes upon the terms and subject to the
conditions herein set forth, and Bankers Trust Company hereby accepts
such appointment. The Issuing and Paying Agent shall have the powers
and authority granted to and conferred upon it in the Notes and this
Agreement and such further powers and authority to act on behalf of
each Issuer as may be agreed upon by such Issuer and the Issuing and
Paying Agent from time to time. All of the terms and provisions with
respect to such powers and authority contained in the Notes are subject
to and governed by the terms and provisions hereof.
Each Issuer further appoints and authorizes Bankers
Trust Company, as Issuing and Paying Agent, to act as its Issuing and
Paying Agent in executing the Letters of Representations to be
delivered to the Depositary, in substantially the forms set forth in
Exhibit A hereto.
The Issuing and Paying Agent shall at all times be a
bank or trust company organized under the laws of the United States or
any jurisdiction in the United States and authorized and empowered
under such laws to fulfill and perform all the duties and obligations
of the Issuing and Paying Agent hereunder.
The Issuing and Paying Agent hereby represents that
it is a corporation meeting the foregoing requirements and that it
shall promptly notify each Issuer of any occurrence or event that
renders it unable to continue to make the aforesaid representation.
(b) Selling Agents. Each Issuer has ap-
pointed NationsBanc Capital Markets, Inc., Lehman
Brothers, Lehman Brothers Inc. (including its affili-
ates Lehman Commercial Paper Inc. and Lehman Government
Securities Inc.) and Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as Selling
9
<PAGE>
Agents for the Notes by and under the terms of the Distribution
Agreement, under which the Issuers may, from time to time, appoint
other Selling Agents.
(c) Registrar. Each Issuer hereby appoints Bankers
Trust Company as Registrar of the Issuers in respect of the Notes upon
the terms and subject to the conditions herein set forth, and Bankers
Trust Company hereby accepts such appointment. The Registrar will keep
the Register and otherwise act as Registrar in accordance with the
terms of this Agreement.
The Registrar will keep a record of all Notes at its
Principal Office or at such other location as it may choose and as to
which it will give advance notice to the Issuer. The Registrar will
include in such record a notation as to whether such Notes have been
paid or cancelled or, in the case of mutilated, destroyed, stolen or
lost Notes, whether such Notes have been replaced. In the case of the
replacement of any of the Notes, the Registrar will keep a record of
the Notes so replaced and the Notes issued in replacement thereof.
(d) Transfer Agents. Each Issuer (at its sole cost
and expense) may appoint from time to time one or more Transfer Agents
for one or more of the Notes. The Issuer shall solicit written
acceptance of the appointment from any entity so appointed as Transfer
Agent. Such written acceptance shall be in a form satisfactory to the
Issuing and Paying Agent and state that by the Transfer Agent's
acceptance of such appointment, it agrees to act as a Transfer Agent
pursuant to the terms and conditions of this Agreement. Each Issuer
hereby appoints Bankers Trust Company as the initial Transfer Agent for
the Notes, and Bankers Trust Company hereby accepts such appointment.
(e) Calculation Agents. The Issuing and Paying Agent
is hereby designated as calculation agent (in such capacity, the
"Calculation Agent") for the purpose of calculating the rate of
interest on the Floating Rate Notes including the CD Rate, the
Commercial Paper Rate, the Federal Funds Rate, the Prime Rate, LIBOR,
the CMT Rate, the 11th District Cost of Funds Rate and the Treasury
Rate all in accordance with the terms of the Floating Rate Notes.
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<PAGE>
The duties and responsibilities of the Calculation Agent shall
be as specified herein, in the Administrative Procedures attached as
Exhibit B hereto, and in the applicable Note. As promptly as
practicable after each Interest Determination Date for a Floating Rate
Note, the Calculation Agent will notify the Issuer thereof of the
interest rate which will become effective on the next interest Reset
Date (as defined in such Floating Rate Note). Upon the request of the
Holder of a Floating Rate Note, the Calculation Agent will provide to
such Holder the interest rate then in effect and, if determined, the
interest rate which will become effective on the next Interest Reset
Date with respect to such Floating Rate Note.
Each Issuer (at its sole cost and expense) may appoint from
time to time one or more Calculation Agents for one or more of the
Notes. The Issuer shall solicit written acceptance of the appointment
from any entity so appointed as Calculation Agent. Such written
acceptance shall be in a form satisfactory to the Issuing and Paying
Agent and state that by the Calculation Agent's acceptance of such
appointment, it agrees to act as a Calculation Agent pursuant to the
terms and conditions of this Agreement. Each Issuer hereby appoints
Bankers Trust Company as the initial Calculation Agent for the Notes,
and Bankers Trust Company hereby accepts such appointment.
SECTION 3. The Notes.
(a) Note Form; Signature. Except as otherwise
provided in Section 3(h) hereof, each Note issued by an Issuer with the
same original issue date and otherwise having identical terms shall be
represented by a single note certificate (each a "Global Note"). Fixed
Rate Notes will be substantially in the form of Exhibit C hereto and
Floating Rate Notes will be substantially in the form of Exhibit D
hereto, provided that any Specified Currency Notes will be
substantially in either such form with such changes as may be agreed
upon by the Issuer and the Issuing and Paying Agent as provided in
Section 11 hereof. The Notes may contain such insertions, omissions,
substitutions, and other variations as the Issuer determines to be
required or permitted by this Agreement and may have such letters,
numbers, or other marks of identification and such
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<PAGE>
legend or legends or endorsements placed thereon as any officer of the
Issuer executing such Notes may determine to be necessary or
appropriate, as evidenced by such officer's execution of such Notes by
manual or facsimile signature, including, without limitation, any
legends or endorsements that may be required to comply with any law or
with any rules or regulations pursuant thereto, or with any rules of
any securities exchange on which the Notes may be listed or to conform
to general usage.
Any Global Note issued hereunder shall, in addition to the provisions
contained in Exhibits C or D, hereto, as the case may be, bear a legend in
substantially the following form:
"This Note is a Global Note within the meaning of the Issuing
and Paying Agency Agreement hereinafter referred to and is
registered in the name of a Depositary or a nominee of a
Depositary. This Note is exchangeable for Notes registered in
the name of a person other than the Depositary or its nominee
only in the limited circumstances described in the Issuing and
Paying Agency Agreement and may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another
nominee of the Depositary."
Furthermore, each Global Note issued hereunder to DTC or its nominee
shall bear a legend in substantially the following form:
"Unless this Note is presented by an authorized representative
of The Depository Trust Company to the issuer or its agent for
registration of transfer, exchange or payment, and any
certificate issued is registered in the name of CEDE & CO. or
such other name as requested by an authorized representative
of The Depository Trust Company and any payment is made to
CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the regis-
12
<PAGE>
tered owner hereof, CEDE & CO., has an interest herein."
Each Issuer will from time to time furnish the Issuing and
Paying Agent with an adequate supply of Certificated Notes, without coupons,
serially numbered, which will have the Principal amount, date of issue, Stated
Maturity, Initial Redemption Date, if any, rate of interest (in the case of
Fixed Rate Notes) or base rate, initial interest rate, spread and/or spread
multiplier, if any, interest reset dates, index maturity and maximum and minimum
interest rates, if any (in the case of Floating Rate Notes), and, in each case,
the name and address of the Holder, and other applicable terms which may be
specified with respect to such Notes in accordance with the Administrative
Procedures left blank.
Each Floating Rate Note will bear interest at a rate
determined by reference to a base rate, which may be adjusted by a spread or
multiplied by a spread multiplier. Each Floating Rate Note will designate an
applicable base rate. Such base rate shall be calculated by reference to an
interest rate formula described in such Note. The interest rates borne by any
particular Notes may vary as against the rates borne by any other Notes. Any
such variations in interest rates with respect to particular Notes shall not
affect the rates of interest borne by any other Notes issued hereunder.
Each Note will be signed manually or by facsimile by an
Authorized Representative included in Group I on Exhibit F hereto. The Notes
will have a Stated Maturity of not less than (30) thirty days from date of issue
and not more than (15) fifteen years from date of issue and will be issued in
the respective orders of the serial numbers imprinted thereon. The Issuing and
Paying Agent hereby agrees to hold such blank Notes in safekeeping in accordance
with its customary practices and procedures.
Notwithstanding the foregoing, any Global Note issued by an
Issuer shall be exchangeable pursuant to this Section for Notes registered in
the name of Persons other than the Depositary for such Note or its nominee only
if (i) such Depositary notifies the Issuing and Paying Agent that it is
unwilling or unable to continue as Depositary for such Global Note or if at any
time such Depositary ceases to be a clearing agency registered under the
Securities Exchange Act
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and in either such case a successor Depositary is not appointed by the Issuers
within ninety (90) days, or (ii) the Issuer thereof executes and delivers to the
Issuing and Paying Agent a written notification that such Global Note shall be
so exchangeable or (iii) an Event of Default occurs with respect to such Global
Note. Any Global Note that is exchangeable pursuant to the preceding sentence
shall be exchangeable for Notes registered in such names as such Depositary
shall direct. Notwithstanding any other provision in this Agreement, a Global
Note may not be transferred except as a whole by the Depositary with respect to
such Global Note to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary.
The aggregate principal amount of Notes which may be issued
and Outstanding at any time may not exceed $9,000,000,000. Not more than
$9,000,000,000 aggregate principal amount of Notes with maturities ranging from
more than 270 days to 15 years may be issued. Notes having maturities ranging
from 30 days to 270 days may be issued from time to time and may be outstanding
at any one time in an aggregate maximum principal amount equal to $9,000,000,000
minus the principal amount of Notes having maturities of more than 270 days
which have been issued. Outstanding notes issued by any of the Issuers which
were issued pursuant to any of those certain individual Issuing and Paying Agent
Agreements with an April 30, 1993 Effective Date entered into between Bankers
Trust Company and (i) NationsBank of North Carolina, N.A., as Issuer, (ii)
NationsBank of Georgia, N.A., as Issuer and (iii) NationsBank of Texas, N.A., as
Issuer, shall be deemed to be Notes issued hereunder solely for the purposes of
calculating the principal amount of Notes which may be issued or outstanding
hereunder.
(b) Denominations. Unless otherwise indicated in the
applicable Notes and except as provided in Section 3(h) and to the
extent that an Issuer elects to issue Notes in definitive form, the
Notes shall be issuable only in book-entry form, without coupons, in
minimum denominations of $250,000 and integral multiples of $1,000 in
excess thereof.
(c) Completion of Notes. Upon receipt of
the information set forth in Section 5(a), the Issuing
and Paying Agent shall complete and authenticate each Note.
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<PAGE>
(d) Date. The Issuing and Paying Agent will
date each Note the date of its authentication.
(e) Certificate of Authentication. Only Notes that
bear thereon a certificate of authentication substantially in a form
set forth below (a "Certificate of Authentication"), executed by the
Issuing and Paying Agent by its manual signature, will be valid:
Certificate of Authentication
This is one of the Notes referred to in the
within-mentioned Issuing and Paying Agency Agreement.
Dated:_____ BANKERS TRUST COMPANY
as Issuing and Paying Agent
By __________________________
Authorized Signatory
(f) Original Issue Discount Note. Each
Original Issue Discount Note shall contain on its face
a legend substantially in the form of Exhibit E hereto.
(g) Custody of Notes. The Issuing and Paying Agent
shall maintain in safe custody all blank Notes an Issuer delivers to it
and that it holds hereunder and shall complete and issue such Notes
only in accordance with the terms hereof.
(h) Certificated Notes. If at any time the Depositary
notifies an Issuer or the Issuing and Paying Agent that it is unwilling
or unable to continue to act as depositary for any of the Global Notes,
or if at any time such Depositary ceases to be a clearing agency
registered under the Securities Exchange Act and in either such case a
successor Depositary is not appointed by the Issuers within ninety (90)
days, the Issuers will execute and the Issuing and Paying Agent will,
upon the receipt of procedures for certificated securities in form and
substance satisfactory to the Issuers and the Issuing and Paying Agent
and upon receipt of instructions in writing from the Issuers,
authenticate and deliver to the Holder or the Holder's designee Notes
of like tenor and terms in definitive form in an
15
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aggregate principal amount equal to the Global Notes then outstanding
in exchange for such Global Notes.
SECTION 4. Authorized Representatives. Each Issuer hereby
certifies that each person named in Exhibit F hereto and designated as
affiliated with such Issuer is a duly Authorized Representative of such Issuer
and that the signature set forth opposite such representative's name is his or
her true and genuine signature. The Issuing and Paying Agent shall be entitled
to rely on the information set forth in Exhibit F for purposes of determining an
Authorized Representative until such time as the Issuing and Paying Agent
receives a subsequent certificate from the Issuer deleting or amending any of
the information set forth therein. The Issuing and Paying Agent shall not have
any responsibility to an Issuer to determine whether any signature on a Note
purporting to be that of an Authorized Representative in Group I of Exhibit F
with respect to such Issuer is genuine, so long as such signature resembles the
specimen signature set forth in Group I of Exhibit F or in a subsequent
certificate delivered to the Issuing and Paying Agent by such Issuer. Any Note
bearing the signature of a person who is an Authorized Representative in Group I
of Exhibit F with respect to an Issuer on the date he or she signs such Note
shall be a binding obligation of such Issuer upon the completion and
authentication thereof by the Issuing and Paying Agent, notwithstanding that
such person shall have ceased to be an Authorized Representative on the date
such Note is completed, authenticated or delivered by the Issuing and Paying
Agent.
SECTION 5. Completion, Authentication and
Delivery of Notes.
(a) From time to time, the Issuing and Paying Agent
shall receive instructions from an Authorized Representative included
in Group II on Exhibit F hereto with respect to an Issuer regarding the
completion and delivery of Notes. The Issuing and Paying Agent may rely
on such instructions if they are received by one of the duly Authorized
Representatives of the Issuing and Paying Agent named in Exhibit G
hereto or their successors, which may be named by the Issuing and
Paying Agent (of which the Issuers shall be notified in writing), from
time to time through the use of a facsimile transmission (confirmed by
guaranteed delivery of overnight courier) from any person purporting to
be
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any of the individuals included in Group II on Exhibit F hereto. Such
instructions shall include the following (each term as used or
defined in the related form of Note attached):
1. Issuer of the Note, Principal Amount of
the Note, CUSIP Number and, if applica-
ble, the Specified Currency.
2. (a) Fixed Rate Notes:
(i) Interest Rate,
(ii) Interest Payment Dates.
(iii) Regular Record Dates.
(b) Floating Rate Notes:
(i) Base Rate or Rates,
(ii) Initial Interest Rate,
(iii) Spread and/or Spread Multi-
plier, if any,
(iv) Interest Reset Date or
Dates,
(v) Interest Reset Period,
(vi) Interest Payment Dates,
(vii) Regular Record Dates,
(viii) Index Maturity,
(ix) Maximum and Minimum Interest
Rates, if any,
(x) Calculation Agent, if other
than the Issuing and Paying
Agent.
3. Price to public, if any, of the Note (or
whether the Note is being offered at varying
prices relating to prevailing
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<PAGE>
market prices at time of resale as
determined by the Selling Agent).
4. Trade date.
5. Original Issue Date.
6. Stated Maturity.
7. Redemption provisions, if any, including
Initial Redemption Date, Initial Redemption
Percentage, Annual Redemption Reduction
Percentage, whether partial redemption is
permitted and method of determining Notes to
be redeemed.
8. Prepayment Option Date(s) and Prepayment
Option Price(s).
9. Extension provisions, if any, including
length of Extension Period(s), number of
Extension Periods and Final Maturity
Date.
10. Renewal terms, if any, including Special
Election Interval and Special Election
Period.
11. Net proceeds to the Issuer.
12. The Selling Agent's commission or under-
writing discount and the Selling Agent's
participant account at the Depositary
for settlement.
13. Whether such Notes are being sold to the
Selling Agent as principal or to an investor
or other purchaser through the Selling Agent
acting as agent for the Issuer, or through
the Issuer itself.
14. Whether such Note is being issued as an
Original Issue Discount Note and the terms
thereof.
15. Such other information specified with
respect to the Notes (whether by adden-
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dum or otherwise), including, with respect
to any Specified Currency Note, provisions
regarding the calculation of any payments
under such Note.
(b) Upon receipt of the information set forth in
subsection (a) above, the Issuing and Paying Agent will confirm by
facsimile to the Issuer the principal amount of the Notes of the Issuer
issued as of such date hereunder after giving effect to such
transaction and to all other transactions of which such Issuer has
given instructions to the Issuing and Paying Agent but which have not
yet been settled.
(c) Upon receipt of such instructions, if such Notes
are to be issued as one or more Global Notes, the Issuing and Paying
Agent shall communicate to the Depositary and the Selling Agent through
DTC's Participant Terminal System, a pending deposit message specifying
the following settlement information and any such additional
information as is required in the Administrative Procedures:
1. The information set forth in Section
5(a).
2. Identification numbers of the partici-
pant accounts maintained by the Deposi-
tary on behalf of the Issuing and Paying
Agent and the Selling Agent.
3. Identification of the Note as a Fixed
Rate Note or Floating Rate Note.
4. Initial Interest Payment Date for such
Note, number of days by which such date
succeeds the related record date for
Depositary purposes (or, in the case of
Floating Rate Notes which reset daily or
weekly, the date five calendar days pre-
ceding the Interest Payment Date) and,
if then calculable, the amount of inter-
est payable on such Interest Payment
Date (which amount shall have been con-
firmed by the Issuing and Paying Agent).
5. CUSIP number representing such Note.
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6. Whether such Note represents any other
Notes issued or to be issued in book-
entry form.
(d) Instructions regarding the completion of a Note
must be received by the Issuing and Paying Agent not later than 11:00
A.M., New York City time, on the Original Issue Date.
SECTION 6. Procedure upon Sale of the Notes. The Issuing and
Paying Agent will deliver Notes to the appropriate Selling Agents on the
Original Issue Date as provided in Section 5(c) hereof.
SECTION 7. Payment of Interest; Actions on Days
Other than Business Days.
(a) Subject to the receipt of funds as provided in
Section 12 hereof, interest payments will be made on the Notes on each
Interest Payment Date and on the Stated Maturity thereof (or the date
of Optional Redemption, if any) pursuant to the terms stated thereon.
All such interest payments (other than interest due on the Stated
Maturity, or on the date of Optional Redemption, if a Note is redeemed
prior to its Stated Maturity) will be paid to the Holder of such Note
at the close of business on the applicable Regular Record Date.
Notwithstanding the foregoing, if a Note is dated between the Regular
Record Date next preceding an Interest Payment Date and such Interest
Payment Date, the first payment of interest on such Note will be made
on the next succeeding Interest Payment Date following the next
succeeding Regular Record Date, to the Holder on the Regular Record
Date immediately succeeding such first Interest Payment Date, unless
otherwise specified in the applicable Pricing Supplement. Interest will
begin to accrue on the issue date and not from the previous Interest
Payment Date. Interest on Fixed Rate Notes (including payments for
partial periods) will be calculated on the basis of a 360-day year
consisting of twelve 30-day months; provided, however, that if the term
of such Fixed Rate Note is for a period from 30 days through and
including one year, then interest payable on such Fixed Rate Note, if
any, on each Interest Payment Date and on the Stated Maturity will be
calculated on the basis of the actual number of calendar days from and
including the last Interest Payment
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Date to which interest has been paid to, but excluding, such Interest
Payment Date or Stated Maturity, as the case may be, divided by 360. In
the case of Floating Rate Notes, interest will be calculated and paid
on the basis of the actual number of days since the preceding Interest
Payment Date (or, if none, since the Original Issue Date) divided by
360 or, if the base rate is the Treasury Rate or CMT Rate, as defined
in the applicable Note, by the actual number of days since the
preceding Interest Payment Date (or, if none, since the Original Issue
Date). All interest on Certificated Notes (other than interest payable
at Stated Maturity or upon any Optional Redemption) will be paid by
check of the Issuing and Paying Agent mailed by such Issuing and Paying
Agent to the Holder as such Holder's address is shown in the Register
referred to in Section 15 on the applicable Regular Record Date, or to
such other address in the United States as such Holder shall designate
to the Issuing and Paying Agent in writing not later than the relevant
Regular Record Date; provided, however, that a Holder of one million
dollars ($1,000,000) or more in aggregate Principal amount of
Certificated Notes (all of which have identical terms and tenor) shall
be entitled to receive payments of interest (other than interest
payable at maturity or upon redemption) by wire transfer of immediately
available funds upon written request to the Issuing and Paying Agent
not later than fifteen (15) calendar days prior to the applicable
Payment Date. All interest payments on any Global Note (other than
Interest due on the Stated Maturity or the Optional Redemption Date, if
any) shall be paid by the transfer of immediately available funds to
the Depositary. The Issuing and Paying Agent will withhold taxes, if
any, on interest to the extent that it has been instructed in writing
by the Issuer of the related Note that any taxes should be withheld.
(b) Actions Due on Saturdays, Sundays and Holidays.
If any date on which a payment, notice or other action required by this
Agreement, the Administrative Procedures or the Note falls on any day
other than a Business Day, then that action or payment need not be
taken or made on such date, but may be taken or made on the next
succeeding Business Day on which the Issuing and Paying Agent is open
for business with the same force and effect as if made on such date.
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<PAGE>
SECTION 8. Payment of Principal. Upon the Stated Maturity (or
date of Optional Redemption, if any) of any Note, or on each Interest Payment
Date and the Stated Maturity, in the case of an Amortizing Note, and upon
presentation and surrender of any Note on or after the Stated Maturity (or the
date of Optional Redemption, if any), the Issuing and Paying Agent shall pay,
subject to the receipt of funds as provided in Section 12 hereof, the Principal
amount of the Note together with accrued interest due on the Stated Maturity (or
the date of Optional Redemption, if any) either (i) by separate wire transfer of
immediately available funds to such account at a bank in The City of New York
(or other bank consented to by the Issuer of the related Note) as the Holder of
such Note shall have designated in writing to the Issuing and Paying Agent at
least 15 days prior to such Principal Payment Date and if such Note is a Global
Note, to the Depositary, or (ii) by check of the Issuing and Paying Agent
payable to the order of the Holder of the Note or its properly designated
assignee or custodian. The Issuing and Paying Agent will cancel the Note and
remit it directly to the Issuer thereof.
SECTION 9. Designation of Accounts to Receive Payment. In the
event that Notes are issued in certificated form, a bank account to receive
payments due under a certificated Note may be designated to the Issuing and
Paying Agent to receive payments of interest and Principal under Sections 7 and
8 hereof either (i) by an Authorized Representative of an Issuer included in
Group II of Exhibit F hereto in the authentication instructions given by it to
the Issuing and Paying Agent under Section 5(a) hereof in respect of particular
Notes, or (ii) in the event that the authentication instructions make no
designation, or that the Holder wishes to change a designation previously made,
by written notice from the Holder to the Issuing and Paying Agent. Such written
notice must be provided to the Issuing and Paying Agent not later than fifteen
(15) days prior to any Interest Payment Date, Principal Payment, Specified
Currency Payment Date on Payment Date, as the case may be.
SECTION 10. Information Regarding Amounts Due. The
Issuing and Paying Agent shall provide to each Issuer, at least five (5)
Business Days before each Interest Payment Date, a list of interest payments to
be made on the following Interest Payment Date for each Note and in total. The
Issuing and Paying Agent will provide to the Issuers by the fifteenth day of
each month a list of the Principal and
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interest to be paid on Notes maturing in the next succeeding month.
SECTION 11. Specified Currency Notes. Prior to the issuance of
any Specified Currency Note, the Issuer thereof shall provide to the Issuing and
Paying Agent a form of such Note, which form shall be in substantially the form
of Exhibit C or D hereto, with such changes and additions as may be reasonably
satisfactory to the Issuing and Paying Agent.
SECTION 12. Deposit of Funds. Each Issuer shall, prior to
11:00 a.m., New York City time, on each Interest Payment Date pay to the Issuing
and Paying Agent an amount in immediately available funds sufficient to pay all
interest due on Notes issued by such Issuer on such Interest Payment Date and
shall, prior to 11:00 a.m., New York City time, on the Stated Maturity (or any
date of Optional Redemption, if any) of any Note issued by such Issuer, pay to
the Issuing and Paying Agent an amount in immediately available funds sufficient
to pay the Principal of any such Note, and interest accrued to the Stated
Maturity (or the date of Optional Redemption, as the case may be).
SECTION 13. Optional Redemption.
(a) Optional Redemption. If so provided in the
applicable Note, an Issuer may at its option redeem a Note issued by it
in whole or from time to time in part (subject to the requirement that
the principal amount of such Note after such redemption, if such Note
is redeemed in part, (unless otherwise specified in a Pricing
Supplement) be not less than $250,000 or any integral multiple of
$1,000 in excess thereof, such minimum denomination, the "Authorized
Denomination") on or after the date designated in such Note as the
Initial Redemption Date at the applicable Redemption Price, in each
case, with accrued and unpaid interest to the date of redemption. An
Issuer may exercise such option by giving to the Holder thereof a
notice of such redemption at least thirty (30) but not more than sixty
(60) days prior to the date of redemption. In the event of redemption
of the Note in part only, a new Note or Notes of like tenor and terms
for the unredeemed portion thereof shall be issued in the name of the
Holder thereof upon the cancellation thereof in accordance with the
terms of this Agreement. Unless other
23
<PAGE>
wise provided in the applicable Note, if less than all of the Notes
with like tenor and terms to such Note are to be redeemed, the Notes to
be redeemed shall be selected by the Issuing and Paying Agent by pro
rata, by lot or by such method as shall be agreed upon by the Issuing
and Paying Agent and the Issuer as being fair and appropriate.
(b) Optional Repayment. If so provided in the
applicable Note, such Note will be repayable prior to its Stated
Maturity at the option of the Holder on the Prepayment Option Dates and
at the Prepayment Option Prices provided in the applicable Note
together with accrued interest to such date. Unless otherwise provided
in the applicable Note, in order for the Note to be repaid, the Issuer
thereof must receive, at least thirty (30) but not more than forty-five
(45) days prior to an Prepayment Option Date, the Note and the form,
entitled "Option to Elect Repayment" included with such Note at the
time of its issue, duly completed. Exercise of this repayment option
shall be irrevocable, except as otherwise provided under Section 13(c)
below. If so provided in the applicable Note, the repayment option may
be exercised by the Holder of such Note for less than the aggregate
principal amount of the Note then outstanding provided that the
principal amount of the Note remaining outstanding after repayment is
in an Authorized Denomination. Upon such partial repayment the Note
shall be cancelled and a new Note or Notes of like tenor and terms for
the remaining principal amount thereof shall be issued in the name of
the Holder.
(c) Optional Extension of Maturity. If so specified
in the applicable Note, the Stated Maturity of such Note may be
extended at the option of the Issuer thereof, in the manner set forth
below (unless otherwise provided on the face thereof), for that
number of periods each of such length as provided in the applicable
Note (each an "Extension Period") up to but not beyond the Final
Maturity Date set forth in such Note. The Issuer may exercise such
option by notifying the Issuing and Paying Agent of such exercise at
least fifty (50) but no more than sixty (60) days prior to the Stated
Maturity in effect prior to such exercise (the "Original Stated
Maturity"). If the Issuer exercises such option, the Issuing and Paying
Agent will
24
<PAGE>
mail (by first class mail, postage prepaid) to the Holder of the Note
no later than forty (40) days prior to the Original Stated Maturity a
notice (the "Extension Notice") relating to such Extension Period,
setting forth (i) the election of the Issuer to extend the Original
Stated Maturity, (ii) the new Stated Maturity (which shall then be
considered the Stated Maturity for all purposes of the Note), (iii)
spread or spread multiplier applicable to the Extension Period, and
(iv) the provisions, if any, for redemption during such Extension
Period. Upon the Issuing and Paying Agent's transmittal of the
Extension Notice, the Original Stated Maturity of the Note shall be
extended automatically, and, except as modified by the Extension Notice
and as described in the next paragraph, such Note will have the same
terms as prior to the transmittal of such Extension Notice.
Notwithstanding the foregoing, not later than twenty
(20) days prior to the Original Stated Maturity of such Note an Issuer
may, at its option, in the case of a Fixed Rate Note, revoke the
interest rate provided for in the Extension Notice for the Extension
Period and establish an interest rate that is higher than the interest
rate provided for in the Extension Notice for the Extension Period, or
in the case of a Floating Rate Note, revoke the spread or spread
multiplier provided for in the Extension Notice for the Extension
Period by causing the Issuing and Paying Agent to transmit notice of
such higher interest rate, or higher spread or spread multiplier, as
the case may be, to the Holder of such Note. Such notice shall be
irrevocable. All Notes with respect to which the Stated Maturity is
extended and with respect to which the Holders of such Notes have not
tendered such Notes for repayment (or have validly revoked any such
tender) pursuant to the succeeding paragraph will bear such higher
interest rate, or higher spread or spread multiplier, as the case may
be, for the Extension Period.
If an Issuer elects to extend the Stated Maturity of
the Note, the Holder thereof will have the option to elect repayment of
the Note by the Issuer thereof on the Original Stated Maturity at a
price equal to the aggregate principal amount thereof outstanding plus
interest accrued to such date. In order to obtain such repayment, the
Holder thereof must fol-
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<PAGE>
low the procedures set forth in Section 13(b) for optional repayment
except that the period for delivery of the Note or notification to the
Issuing and Paying Agent shall be at least twenty-five (25) but not
more than thirty-five (35) days prior to the Original Stated Maturity
and except that, if the Holder thereof has tendered the Note for
repayment pursuant to an Extension Notice, such Holder may, by written
notice to the Issuing and Paying Agent, revoke such tender for
repayment until the close of business on the tenth day prior to the
Original Stated Maturity.
(d) Optional Renewal. If so provided in the
applicable Note, such Note may be renewed by the Holder of the Note on
an Interest Payment Date (provided in the applicable Note) occurring in
or prior to the twelfth month following the Original Issue Date (the
"Initial Maturity Date") in accordance with the procedures described
below.
Unless a Special Election Interval is provided in the
applicable Note, on the Interest Payment Date occurring in the sixth
month prior to the Initial Maturity Date (as provided in the applicable
Note) of a Renewable Note (the "Initial Renewal Date") and on the
Interest Payment Date occurring in each sixth month (or in the last
month of each Special Election Interval) after such Initial Renewal
Date (each, together with the Initial Renewal Date, a "Renewal Date"),
the term of the Note may be extended to the Interest Payment Date
occurring in the twelfth month (or, if a Special Election Interval is
specified the last month in a period equal to twice the Special
Election Interval) after such Renewal Date, if the Holder of such Note
elects to extend the term of the Note or any portion thereof as
provided below. If the Holder of the Note does not elect to extend the
term of any portion of the principal amount of such Note during the
specified period prior to any Renewal Date, such portion will become
due and payable on the Interest Payment Date occurring in the sixth
month (or the last month in the Special Election Interval) after such
Renewal Date (the "New Maturity Date").
A Holder of such Note may elect to renew the term of
the Note, or if provided in the applicable Note, any portion
constituting an Authorized Denomina-
26
<PAGE>
tion thereof, by delivering a notice to such effect to the Issuing and
Paying Agent not less than fifteen (15) nor more than thirty (30) days
prior to such Renewal Date (unless a different Special Election Period
is provided in the applicable Note). Such election will be irrevocable
and will be binding upon each subsequent Holder of the Note. An
election to renew the term of such Note may be exercised with respect
to less than the entire principal amount of the Note only if notice is
provided as provided in the applicable Note and only in such principal
amount, or any integral multiple in excess thereof, as specified in
such notice. Notwithstanding the foregoing, the term of such Note may
not be extended beyond the maturity provided in the applicable Note.
If the Holder of such Note does not elect to renew
the term of the Note, the Note must be presented to the Issuing and
Paying Agent (or any duly appointed paying agent) and, if the Note is
issued in definitive form, as soon as practicable following receipt of
the Note, the Issuing and Paying Agent (or any duly appointed paying
agent) shall issue in exchange herefor in the name of the Holder (i) a
Note, in a principal amount equal to the principal amount of such Note
for which no election to renew the term thereof was exercised, with
terms identical to those specified on the Note (except that such Note
shall have a fixed, nonrenewable maturity on the New Maturity Date) and
(ii) if an election to renew is made with respect to less than the full
principal amount of the Note, a replacement Note, in a principal amount
equal to the principal amount of such exchanged Note for which the
election to renew was made, with terms identical to such exchanged
Note.
SECTION 14. Events of Default.
Unless otherwise specified in the applicable Note, the
following will constitute "Events of Default" and the only Events of Default
with respect to each Note: (a) default in the payment of any interest upon such
Note when due, which continues for thirty (30) days; (b) default in the payment
of any principal of or premium, if any, upon such Note when due; (c) default in
the performance of any covenant or agreement of the Issuer thereof contained in
such Note which, unless otherwise specified therein, contin-
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<PAGE>
ues for 90 days; (d) the appointment of a conservator, receiver,
liquidator or similar official for the Issuer thereof or for all or
substantially all of its property, or the taking by the Issuer thereof of any
action to seek relief under any applicable insolvency or reorganization law.
If an Event of Default with respect to a Global Note shall
occur, the Issuer thereof shall promptly issue Certificated Notes in exchange
for such Global Note and the remedies provided in such Global Note for any such
Event of Default will be exercisable only after such exchange has occurred, and
only by the Holders of such Certificated Notes. The Holder of each such
Certificated Note will itself be solely and entirely responsible for the
exercise of any remedies provided therein.
If an Event of Default with respect to a Certificated Note
shall occur and be continuing with respect thereto, the Holder thereof may: (i)
by written notice to the Issuing and Paying Agent declare the entire outstanding
principal amount thereof, together with any unpaid interest and premium accrued
thereon, to be immediately due and payable; (ii) institute a judicial proceeding
of the enforcement of the terms thereof including the collection of all sums due
and unpaid thereunder, prosecute such proceeding to judgment or final decree,
and enforce the same against the Issuer thereof and collect monies adjudged or
decreed to be payable in the manner provided by law out of the property of the
Issuer thereof; and (iii) take such other action at law or in equity as may
appear necessary or desirable to collect and enforce such Certificated Note;
provided, however, that in the event that such Note is an Original Issue
Discount Note, unless otherwise specified in such Note, the amount of principal
that becomes due and payable upon such declaration shall be equal to the
Amortized Face Amount as defined therein, and provided further, that the Holder
of a Certificated Note may waive any Event of Default that occurs with respect
thereto.
SECTION 15. Registration; Transfer.
(a) The Registrar shall maintain a Register in which
it shall register the names, addresses and taxpayer identification
numbers of the Holders of the Notes and shall register the transfer of
Notes.
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(b) Upon surrender for registration of transfer of
any Note to the Registrar or any Transfer Agent, the Issuer thereof
shall execute, and the Issuing and Paying Agent shall complete,
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes, of any Authorized Denominations and
having identical terms and provisions and for a like aggregate
principal amount.
(c) At the option of the Holder of a certificated
Note, certificated Notes may be exchanged for other certificated Notes
of any Authorized Denominations and having identical terms and
provisions and for a like aggregate principal amount, upon surrender of
the Notes to be exchanged at the Registrar or any Transfer Agent.
Whenever any certificated Notes are so surrendered for exchange, the
Issuer thereof shall execute, and the Issuing and Paying Agent shall
complete, authenticate and deliver, the certificated Notes which the
Holder of the certificated Note making the exchange is entitled to
receive. Each new Note issued upon presentment of any Note for
registration of transfer or exchange shall be issued as of the date of
its authentication. Except as provided herein, owners of beneficial
interests in a Global Note representing Book Entry Notes registered in
their names, will not receive or be entitled to receive physical
delivery of Certificated Notes and will not be considered the owners or
Holders thereof under this Agreement.
(d) Notwithstanding the foregoing neither the
Registrar or any Transfer Agent shall register the transfer of or
exchange (i) any Note that has been called for redemption in whole or
in part, except the unredeemed portion of Notes being redeemed in part,
(ii) any Note during the period beginning at the opening of business 15
days before the mailing of a notice of such redemption and ending at
the close of business on the date of such mailing, or (iii) any Global
Note in violation of the legend contained on the face of such Global
Note.
(e) All Notes issued upon any registration of
transfer or exchange of Notes shall be the valid obligations of the
Issuer thereof, evidencing the same debt, and entitled to the same
benefits as the Notes
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surrendered upon such registration of transfer or exchange.
(f) Every Note presented or surrendered for
registration of transfer or for exchange shall be duly endorsed, or be
accompanied by a written instrument of transfer with such evidence of
due authorization and guaranty of signature as may reasonably be
required by the Registrar or any Transfer Agent, as applicable, in form
satisfactory to either of them, duly executed by the Holder thereof or
his attorney duly authorized in writing.
(g) No service charge shall be made to a Holder of
Notes for any transfer or exchange of Notes, but the Issuer thereof may
require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
SECTION 16. Persons Deemed Owners. Prior to due presentment of
a Note for registration of transfer, the Issuer thereof, the Issuing and Paying
Agent and any agent of such Issuer or the Issuing and Paying Agent may treat the
Holder as the owner of such Note for the purpose of receiving payment of
Principal of, interest and premium, if any, on such Note and for all other
purposes whatsoever, whether or not such Note be overdue, and neither such
Issuer, the Issuing and Paying Agent nor any agent of such Issuer or the Issuing
and Paying Agent shall be affected by notice to the contrary.
SECTION 17. Mutilated, Lost, Stolen or Destroyed Notes. In
case any Note shall become mutilated, destroyed, lost or stolen, and upon the
satisfaction by the applicant of the requirements of this Section 17 for a
substituted Note, the Issuer thereof shall execute, and upon its written request
the Issuing and Paying Agent shall authenticate and deliver, a new Note having
identical terms and provisions and having a number not contemporaneously
outstanding, in exchange and substitution for the mutilated Note or in lieu of
any substitution for the Note destroyed, lost or stolen. In the case of loss,
theft or destruction, the applicant for a substituted Note shall furnish to such
Issuer and to the Issuing and Paying Agent such security or indemnity as may be
required by them to save each of them harmless. Such applicant shall also
furnish to such Issuer and to the Issuing and Paying Agent evidence to their
satisfaction of the
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destruction, loss or theft of such Note and of the ownership thereof. In the
case of mutilation, the applicant for a substituted Note shall surrender such
mutilated Note to the Issuer thereof or to the Issuing and Paying Agent for
cancellation thereof. The Issuing and Paying Agent may authenticate any such
substituted Note and deliver the same upon the written request or authorization
of any Authorized Representative. Upon the issuance of any substituted Note, the
Issuer thereof may require the payment of a sum sufficient to cover any expense
connected therewith. In case any Note which has matured or is about to mature
shall become mutilated or be destroyed, lost or stolen, the Issuer thereof may,
instead of issuing a substituted Note, pay or authorize the payment of the same
(without surrender thereof except in the case of a mutilated Note) if the
applicant for such payment shall furnish such Issuer and the Issuing and Paying
Agent with such security or indemnity as may be required by them to save each of
them harmless, and, in the case of destruction, loss or theft, evidence to the
satisfaction of such Issuer of the destruction, loss or theft of such Note and
of the ownership thereof. All applications under this Section shall be processed
by the Issuing and Paying Agent.
SECTION 18. Return of Unclaimed Funds. Any money deposited
with the Issuing and Paying Agent and remaining unclaimed for two (2) years
after the date upon which the last payment of principal of or interest on any
Note to which such deposit relates shall have become due and payable, shall be
repaid to the Issuer of such Note by the Issuing and Paying Agent on written
demand, and the Holder of any Note to which such deposit related entitled to
receive payment shall thereafter look only to the Issuer thereof for the payment
thereof and all liability of the Issuing and Paying Agent with respect to such
money shall thereupon cease.
SECTION 19. Amendment or Supplement. The Issuers and the
Issuing and Paying Agent may modify, amend or supplement this Agreement without
the consent of any Holder. In addition, an Issuer may modify, amend or
supplement the terms and conditions of the Notes issued by it, without the
consent of any Holder thereof: (i) to evidence succession of another party to
such Issuer, and such party's assumption of such Issuer's obligations under the
Notes, upon the occurrence of a merger or consolidation, or transfer, sale or
lease of assets as described below; (ii) to add addition
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al covenants, restrictions or conditions for the protection of the Holder
thereof; (iii) to cure ambiguities in the Notes, or correct defects or
inconsistencies in the provisions thereof; (iv) to reflect the replacement of
the Issuing and Paying Agent, or the assumption, by such Issuer or a substitute
Issuing and Paying Agent of some or all of the Issuing and Paying Agent's or
Calculation Agent's responsibilities under this Agreement; (v) to evidence the
replacement or change of address of the Depositary; (vi) in the case of any
extendible, redeemable, prepayable, amortizing or indexed amortizing Note, to
reduce the principal amount thereof to reflect the payment, prepayment and/or
redemption of a portion of the outstanding principal amount thereof; (vii) in
the case of any extendible, renewable or indexed amortizing Note, to reflect any
change in the maturity date thereof in accordance with the terms thereof; or
(viii) to reflect the issuance in exchange therefor, in accordance with the
terms thereof, of one or more certificated notes. However, the Notes may not be
modified or amended without the express written consent of the registered Holder
to: (i) change the Stated Maturity, except in the case of an extendible,
renewable or indexed amortizing note as provided therein; (ii) extend the time
of payment for the premium, if any, or interest on the Note, except in the case
of an extendible, renewable or indexed amortizing note as provided therein;
(iii) change the coin or currency in which the principal of, premium, if any, or
interest on the Note is payable; (iv) reduce the principal amount thereof or the
interest rate thereon, except in the case of an extendible, prepayable,
redeemable, amortizing or indexed Note as provided therein; (v) change the
method of payment to other than wire transfer in immediately available funds;
(vi) impair the right of the Holder thereof to institute suit for the
enforcement of payments of principal of, premium, if any, or interest or other
amounts on the Note; (vii) change any Note's definition of "Event of Default" or
otherwise eliminate or impair any remedy available thereunder upon the
occurrence of any Event of Default (as defined in such Note); or (viii) modify
the provisions therein governing the amendment thereof.
Notes authenticated and delivered after the execution of any
agreement modifying, amending or supplementing this Agreement or the Notes may
bear a notation in form approved by the Issuer thereof as to any matter provided
for in such modification, amendment or supplement to this Agreement or the
Notes. New Notes so modified as to conform, in
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the opinion of the Issuer thereof, to any provisions contained in any such
modification, amendment or supplement may be prepared by such Issuer,
authenticated by the Issuing and Paying Agent (or any Authenticating Agent) and
delivered in exchange for Outstanding Notes.
No Issuer may consolidate or merge with or into any other
person, or convey, transfer or lease its properties and assets substantially as
an entirety to any person, unless (i) the surviving entity in such consolidation
or merger, or the person that acquires by conveyance or transfer, or that
leases, the properties and assets of such Issuer substantially as an entirety,
shall be a bank, corporation or partnership organized and validly existing under
the laws of the United States, any State thereof or the District of Columbia,
and shall expressly assume the due and punctual payment of the principal of,
premium, if any, and interest on the Notes issued by such Issuer, and the
performance or observance of every provision of the Notes on the part of such
Issuer to be performed or observed; and (ii) immediately after giving effect to
such transaction, no Event of Default with respect to such Issuer, and no event
which, after notice or the lapse of time or both, would become an Event of
Default with respect to such Issuer, shall have happened and be continuing.
If this Agreement is amended or modified pursuant to an
agreement by the parties hereto pursuant to this Section 19, the Issuing and
Paying Agent may require, and shall be fully protected in relying upon, an
opinion of counsel, which opinion may be rendered by counsel to the Issuer,
stating that the execution of such amendment or modification is authorized or
permitted by this Agreement, and that such amendment or modification constitutes
the legal, valid and binding obligation of the Issuers enforceable in accordance
with its terms and subject to customary exceptions.
SECTION 20. Resignation or Removal of Agents;
Appointment of Successors to Agents.
(a) Resignation or Removal of Agent. Any Agent may at
any time resign as such by giving written notice to the Issuers and,
except in the case of the resignation of the Issuing and Paying Agent,
to the Issuing and Paying Agent of such intention on its part,
specifying the date on which its desired resignation
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shall become effective; provided that such date shall not be less than
thirty (30) days after the date on which such notice is given unless
each Issuer agrees to accept less notice.
An Issuer may remove any Agent with respect to Notes
issued by such Issuer at any time by filing with it an instrument in
writing signed by or on behalf of such Issuer and specifying such
removal and the date when it shall become effective.
The resignation or removal of an Agent with respect
to Notes issued by an Issuer shall become effective on the date set
forth in the notice thereof and shall only be effective with respect to
such Issuer and Notes issued by such Issuer, except that any
resignation or removal of the Issuing and Paying Agent or the Registrar
shall take effect upon the Issuers' appointment, as hereinafter
provided, of a successor Issuing and Paying Agent or Registrar, as the
case may be, and such Agent's acceptance of such appointment; provided,
that if the Issuers have not appointed a replacement Agent within 30
days after any such removal or replacement, the affected Agent (at the
expense of the Issuers) may petition any court of competent
jurisdiction for the appointment of a successor Agent.
(b) Appointment of Successor to Agent. In case at
any time the Issuing and Paying Agent or the Registrar becomes
incapable of acting, or is adjudged bankrupt or insolvent, or files a
petition for corporate reorganization under any applicable federal,
state, or foreign bankruptcy, insolvency, or similar law or makes an
assignment for the benefit of its creditors, or consents to the
appointment of a receiver, custodian, or other similar official of all
or substantially all of its property, or admits in writing its
inability to pay or meet its debts as they mature, or if a receiver,
custodian, or other similar official of it or of all or substantially
all of its property is appointed, or if an order of any court is
entered for relief against it under the provisions of any applicable
federal, state or foreign bankruptcy, insolvency or similar law, or if
any public officer takes charge or control of any such Agent, or of its
property or affairs, for the purpose of rehabilitation, conservation
or liquidation, such Agent shall promptly notify the
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Issuers and the Issuing and Paying Agent, in writing, of the
occurrence of such event.
Either (i) following receipt of notice of resignation
from, (ii) upon an Issuer's removal of, or (iii) following the Issuers'
receipt of the notice referred to in the first paragraph of this
Section 20(b) from, the Issuing and Paying Agent or the Registrar, the
Issuers (or the applicable Issuer, in the case of clause (ii) above)
shall appoint a successor to such Agent by an instrument in writing
filed with the Issuing and Paying Agent (or its successor). Upon the
appointment as aforesaid of a successor Issuing and Paying Agent or
Registrar and acceptance by such successor of such appointment, the
Issuing and Paying Agent or Registrar hereunder so superseded shall
cease to be such Issuing and Paying Agent or Registrar hereunder.
(c) Successor of Agent. Any successor Issuing and
Paying Agent or Registrar appointed hereunder shall execute,
acknowledge, and deliver to its predecessor and to the Issuers (or the
applicable Issuer) an instrument accepting such appointment hereunder,
and thereupon such successor Issuing and Paying Agent or Registrar
without any further act, deed or conveyance, shall become vested with
all the authority, rights, powers, trusts, immunities, duties, and
obligations of such predecessor, with like effect as if originally
named as such Issuing and Paying Agent or Registrar hereunder. Such
predecessor, upon payment of any amount then payable to it pursuant to
Section 24, shall thereupon become obligated to transfer, deliver and
pay over, and such successor Issuing and Paying Agent or Registrar
shall be entitled to receive, all money, securities and other property
on deposit with or held by such predecessor as such Issuing and Paying
Agent or Registrar hereunder.
(d) Merger, Etc. of Agent. Any corporation into
which any Agent hereunder may be merged, or converted, or any
corporation with which any Agent may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to
which any Agent shall be a party, or a corporation to which any Agent
shall sell or otherwise transfer all or substantially all of the assets
and business of such Agent shall be
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the successor to such Agent under this Agreement (provided that it
shall be qualified as aforesaid) without the execution or filing of any
paper or any further act on the part of any of the parties hereto. Each
Agent will advise the Issuers promptly after any public announcement of
a proposal by such Agent to enter into any such transaction.
(e) Change in Duties of an Agent. The Issu-
ers may vary the appointment of any Agent other than
the Issuing and Paying Agent.
(f) Additional Agents. Each Issuer may from time to
time appoint a paying agent for one or more Notes. In the event that
(i) the Issuing and Paying Agent shall be removed or resign and any
successor thereto shall not be located in The City of New York or (ii)
the Issuing and Paying Agent shall cease to maintain an office in The
City of New York at which amounts due on the Notes are payable, then in
either such case each Issuer, with respect to Notes issued by it, shall
appoint a paying agent with an office in The City of New York at which
such Notes may be paid.
SECTION 21. Reliance on Instructions. The Issuing and Paying
Agent shall incur no liability to an Issuer in acting hereunder upon
instructions contemplated hereby which the Issuing and Paying Agent believed in
good faith to have been properly given. In the event a discrepancy exists
between the instructions as originally received by the Issuing and Paying Agent
and any subsequent written confirmation thereof, such original instructions will
be deemed controlling provided the Issuing and Paying Agent gives notice to the
applicable Issuer of such discrepancy promptly upon receipt of such written
confirmation.
SECTION 22. Cancellation of Unissued Notes. Promptly upon the
written request of an Issuer, the Issuing and Paying Agent shall cancel and
return to such Issuer all unissued Notes of such Issuer in its possession.
SECTION 23. Representation and Warranties of the
Issuers; Instructions by Certificate.
(a) Each instruction given to the Issuing and Paying
Agent in accordance with Section 5 hereof shall constitute a
representation and warranty to the
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Issuing and Paying Agent by the applicable Issuer that the issuance and
delivery of the Notes have been duly and validly authorized by such
Issuer and, when completed, authenticated and delivered pursuant
hereto, the Notes will constitute the valid and legally binding
obligations of such Issuer enforceable against such Issuer in
accordance with its terms.
(b) Any instruction given by an Issuer to the Issuing
and Paying Agent under this Agreement shall be in the form of an
Officers' Certificate. For the purposes of this Agreement, "Officers'
Certificate" means a certificate signed by an Authorized Representative
and delivered to the Issuing and Paying Agent.
SECTION 24. Fees. For their services under this Agreement, the
Agents, including the Issuing and Paying Agent, shall be entitled to
compensation as shall be mutually agreed upon in writing between each such Agent
and the Issuers from time to time and the Issuers jointly and severally agree to
reimburse the Issuing and Paying Agent for all reasonable out of pocket
disbursements and advances made or incurred by the Issuing and Paying Agent
incurred without negligence or willful misconduct.
SECTION 25. Notices.
(a) All communications by or on behalf of an Issuer
relating to the completion, delivery or payment of the Notes are to be
directed to the Corporate Trust Agency Group of the Issuing and Paying
Agent, Four Albany Street, 4th floor, New York, New York 10006,
Attention: Corporate Trust and Agency Group (or such other department
or division as the Issuing and Paying Agent shall specify in writing to
the Issuers). Each Issuer will send all Notes to be completed and
delivered by the Issuing and Paying Agent to such Corporate Trust and
Agency Group (or such other department or division as the Issuing and
Paying Agent shall specify in writing to the Issuers). The Issuing and
Paying Agent will, upon written request, advise the Issuers from time
to time of the individuals generally responsible for the administration
of this Agreement.
(b) Notices and other communications hereunder shall
(except to the extent otherwise expressly provided) be in writing and
shall be addressed as fol-
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lows, or to such other address as the party receiving such notice
shall have previously specified:
If to an Issuer:
NationsBank, N.A. (Carolinas)
NationsBank Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255
Telephone: (704) 388-2375
Telecopier: (704) 386-9946
Attention: James T. Houghton
NationsBank of Texas, N.A.
NationsBank Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255
Telephone: (704) 388-2375
Telecopier: (704) 386-9946
Attention: James T. Houghton
NationsBank of Georgia, N.A.
NationsBank Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255
Telephone: (704) 388-2375
Telecopier: (704) 386-9946
Attention: James T. Houghton
If to the Issuing and Paying Agent:
Bankers Trust Company
Four Albany Street,
4th floor,
New York, New York 10006
Telephone: (212) 250-6161
Telecopier: (212) 250-6961/6392
Attention: Corporate Trust and Agency Group
SECTION 26. Information Furnished by the Issuing and Paying
Agent. Upon the reasonable request of an Issuer and from time to time, the
Issuing and Paying Agent shall promptly provide such Issuer with information
with respect to Notes issued by it hereunder to the extent such information is
reasonably available.
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SECTION 27. Liability. Neither the Issuing and Paying Agent
nor its officers or employees shall be liable to an Issuer for any act or
omission hereunder except in the case of negligence or willful misconduct. The
duties and obligations of the Issuing and Paying Agent, its officers and
employees shall be determined by the express provisions of this Agreement and
they shall not be liable except for the negligent performance of such duties and
obligations as are specifically set forth herein and no implied covenants shall
be read into this Agreement against them. Neither the Issuing and Paying Agent
nor its officers shall be required to ascertain whether any issuance or sale of
Notes (or any amendment or termination of this Agreement) is in compliance with
any other agreement to which any Issuer is a party (whether or not any of the
Agents is also a party to such other agreement).
SECTION 28. Additional Responsibilities; Attorneys'
Fees.
(a) If an Issuer shall ask the Issuing and Paying
Agent to perform any duties not specifically set forth in the Agreement
as duties of the Issuing and Paying Agent (the "Additional
Responsibilities") and the Issuing and Paying Agent chooses to perform
such Additional Responsibilities, the Issuing and Paying Agent shall be
held to the same standard of care and shall be entitled to all the
protective provisions (including, but not limited to, indemnification)
set forth herein.
(b) In the event an Issuer shall default under any
of the provisions or obligations of this Agreement, the Notes or any
amendment, supplement or modification related hereto, affecting the
rights or duties of the Issuing and Paying Agent, and the Issuing and
Paying Agent shall employ attorneys or incur other expenses for the
enforcement of performance or observance of any such obligation or
agreement, such Issuer agrees that, in the absence of negligence or
willful misconduct on the part of the Issuing and Paying Agent, it will
on demand therefore pay to the Issuing and Paying Agent the reasonable
fees of such attorneys and such other expenses incurred by the Issuing
and Paying Agent.
SECTION 29. Transfer of Notes and Moneys.
(a) The Issuing and Paying Agent shall hold all
Certificated Notes delivered to it for payment solely for the benefit
of the respective Holders of the Notes which
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shall have so delivered such Notes until moneys representing the
payment for such Notes shall have been delivered to or for the account
of or to the order of such Holders.
(b) The Issuing and Paying Agent shall hold all
moneys delivered to it pursuant to this Agreement for the payment of
Certificated Notes in trust solely for the benefit of the person or
entity which shall have so delivered such moneys until such Notes shall
have been delivered to or for the account of such person or entity, but
such moneys need not be segregated from other funds except to the
extent required by law.
(c) The Issuing and Paying Agent shall only make such
payments called for under this Agreement from funds transferred to it
for payment pursuant to this Agreement which funds are immediately
available and on deposit in an appropriate account maintained by the
Issuing and Paying Agent in The City of New York.
(d) Under no circumstances shall the Issuing and
Paying Agent be obligated to expend any of its own funds in connection
with the performance of its duties hereunder.
(e) The Issuing and Paying Agent may become a
purchaser, holder, transferor or otherwise own, hold or transfer any
Notes and may commence or join in any action which a Holder is entitled
to take without any conflict with its responsibilities pursuant to this
Agreement.
(f) The Issuing and Paying Agent shall not be
required to invest any moneys delivered to it.
(g) The Issuing and Paying Agent shall have no
liability for interest on any moneys received from the
Issuer hereunder.
(h) The Issuing and Paying Agent shall not be
responsible for the correctness of any recital in the Notes or in any
offering materials and makes no representations as to the validity of
the Notes and shall incur no responsibility in respect thereto.
(i) The Issuing and Paying Agent shall be protected
in acting upon any notice, order, requisition, request, consent,
certificate, order, opinion (including
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an opinion of counsel), affidavit, letter, telegram or other paper or
document in good faith deemed by it to be genuine and correct and to
have been signed or sent by the proper person or persons.
(j) Any action taken by the Issuing and Paying Agent
pursuant to this Agreement upon the request or authority or consent of
any person who at the time of making such request or giving such
authority or consent is the Holder of any Note shall be conclusive and
binding upon all future holders of the same Note and Notes issued in
exchange therefor or in place thereof.
(k) Any instruction given by an Issuer to the Issuing
and Paying Agent under this Agreement shall be in the form of an
Officers' Certificate. For the purposes of this Agreement, "Officers'
Certificate" means a certificate signed by an Authorized Representative
and delivered to the Issuing and Paying Agent.
(l) In paying Notes hereunder, the Issuing and Paying
Agent shall be acting as a conduit and shall not be paying Notes for
its own account, and in the absence of written notice from an Issuer to
the contrary and in the absence of gross negligence or wilful
misconduct of the Issuing and Paying Agent, the Issuing and Paying
Agent shall be entitled to assume that any Global Note presented to it,
or deemed presented to it, for payment, is entitled to be so paid.
SECTION 30. Indemnity. The Issuers covenant and agree to
jointly and severally indemnify the Issuing and Paying Agent (including its
directors, officers, attorneys, employees and agents) for, and to hold it
harmless against, any loss, liability or expense (including reasonable
attorney's fees and disbursements) incurred without negligence or willful
misconduct on its part, arising out of or in connection with this Agreement or
the Administrative Procedures and/or the performance of the Issuing and Paying
Agent's duties hereunder and the Administrative Procedures, including the
reasonable costs and expenses of defending it against any claim of liability in
the premises. The Issuing and Paying Agent may refuse to perform any duty or
exercise any right or power hereunder unless it receives indemnity satisfactory
to it against any related loss, liability or expense. These indemnification
obligations shall survive the termination of this Agreement including any
termination under state or federal banking law or other insol-
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vency law, to the extent enforceable under applicable law, and shall
survive the resignation or removal of the Issuing and Paying Agent while
remaining applicable to any action taken or omitted by the Issuing and Paying
Agent while acting pursuant to this Agreement.
SECTION 31. Limitation of Liability; Reliance on
Opinions and Certificates.
(a) THE ISSUING AND PAYING AGENT'S DUTIES ARE MINISTERIAL IN
NATURE AND IN NO EVENT SHALL THE ISSUING AND PAYING AGENT BE LIABLE, DIRECTLY OR
INDIRECTLY, TO ANY PERSON OR ENTITY FOR ANY (a) LOSS, LIABILITY, DAMAGES OR
EXPENSES (OTHER THAN, IN THE CASE OF THE ISSUERS ONLY, THOSE WHICH RESULT
DIRECTLY FROM THE ISSUING AND PAYING AGENT'S NEGLIGENCE OR WILLFUL MISCONDUCT)
OR (b) SPECIAL, INCIDENTAL, INDIRECT, PUNITIVE OR CONSEQUENTIAL DAMAGES
(INCLUDING, WITHOUT LIMITATION, LOST PROFITS), EVEN IF THE ISSUING AND PAYING
AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS LIMITATION OF
LIABILITY WILL APPLY REGARDLESS OF THE FORM OF ACTION, INCLUDING WITHOUT
LIMITATION FOR BREACH OF THIS CONTRACT OR TORT (INCLUDING NEGLIGENCE).
(b) The Issuing and Paying Agent shall be entitled to consult
with counsel of its choosing and shall have no liability to an Issuer in respect
of an action taken or omitted by the Issuing and Paying Agent in good faith in
reliance on an opinion of counsel or an Officers' Certificate, including
in-house counsel.
(c) Notwithstanding anything to the contrary herein, the
Issuing and Paying Agent shall not be responsible for any misconduct or
negligence on the part of any agent, correspondent, attorney or receiver
appointed with due care by it hereunder.
SECTION 32. Benefit of Agreement. This Agreement is solely for
the benefit of the parties hereto and the Holders and their successors and
assigns and no other person shall acquire or have any rights under or by virtue
hereof.
SECTION 33. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York
applicable to agreements to be entered into and to be performed in such State.
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SECTION 34. Headings and Table of Contents. The table of
contents and the section and subsection headings herein are for convenience only
and shall not affect the construction hereof.
SECTION 35. Counterparts. This Agreement may be
signed in separate counterparts, each of which shall be deemed
to be an original and all of which together shall constitute
but one and the same instrument.
SECTION 36. Termination of Prior Issuing and Paying Agent
Agreements. Each Issuer and Bankers Trust Company agree that on the day on which
no notes issued by such Issuer and authenticated and delivered under the Issuing
and Paying Agent Agreement with an April 30, 1993 Effective Date entered into
between Bankers Trust Company and such Issuer remain outstanding, such agreement
shall terminate (other than the provisions contained therein which by their
terms survive termination).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on their behalf by their officers duly authorized
thereunto, as of the day and year first above written.
NATIONSBANK, N.A. (CAROLINAS), as Issuer
By: /s/
Name: James T. Houghton
Title: Senior Vice President
NATIONSBANK OF TEXAS, N.A., as Issuer
By: /s/
Name: James T. Houghton
Title: Senior Vice President
NATIONSBANK OF GEORGIA, N.A., as Issuer
By: /s/
Name: James T. Houghton
Title: Senior Vice President
BANKERS TRUST COMPANY,
as Issuing and Paying Agent
By: /s/
Name: Jenna Rossheim
Title: Assistant Vice President
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</TABLE>
<PAGE>
ARTICLES OF ASSOCIATION
OF
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH)
Charter No. 13068
FIRST. The title of this association shall be
"NATIONSBANK, NATIONAL ASSOCIATION (SOUTH)".
SECOND. The main office of this association shall be in
the City of Atlanta, County of Fulton, State of Georgia. The general
business of the association shall be conducted at its main office and
its branches.
THIRD. The board of directors of this association shall
consist of not less than five nor more than twenty-five persons, the
exact number to be fixed and determined from time to time by resolution
of a majority of the full board of directors or by resolution of the
shareholders. Each director shall own common or preferred stock of the
association or of a holding company owning the association in an amount
sufficient to satisfy the applicable requirements of the national
banking laws, regulations and rules in effect from time to time.
Any vacancy in the board of directors may be filled by
action of a majority of the remaining directors between meetings of
shareholders. The board of directors may not increase the number of
directors to a number which: (1) exceeds by more than two the number of
directors last elected by shareholders where the number was 15 or less;
and (2) exceeds by more than four the number of directors last elected
by shareholders where the number was 16 or more, but in no event shall
the number of directors exceed 25.
Terms of directors, including directors selected to fill
vacancies, shall expire at the next regular meeting of shareholders at
which directors are elected, unless the directors resign or are removed
from office.
Despite the expiration of a director's term, the
director shall continue to serve until his or her successor is elected
and qualifies or until there is a decrease in the number of directors
and his or her position is eliminated.
FOURTH. There shall be an annual meeting of the
shareholders to elect directors and transact whatever other business may
be brought before the meeting. It shall be held at the main office or
any other convenient place the board of directors may designate, on the
day of each year specified therefor in the bylaws. If no election is
held on the day fixed, an election may be held on any subsequent day
within 60 days of the
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day fixed, to be designated by the board of directors, or, if the
directors fail to fix the day, by shareholders representing two-thirds
of the shares issued and outstanding.
In all elections of directors, the number of votes each
common shareholder may cast will be determined by multiplying the number
of shares he or she owns by the number of directors to be elected. Those
votes may be cumulated and cast for a single candidate or may be
distributed among two or more candidates in the manner selected by the
shareholder. On all other questions, each common shareholder shall be
entitled to one vote for each share of stock held by him or her.
A director may resign at any time by delivering written
notice to the board of directors, its chairperson, or to the
association, which resignation shall be effective when the notice is
delivered unless the notice specifies a later effective date.
A director may be removed by shareholders at a meeting
called to remove him or her, when notice of the meeting stating that the
purpose or one of the purposes is to remove him or her is provided, if
there is a failure to fulfill one of the affirmative requirements for
qualification, or for cause, provided, however, that a director may not
be removed if the number of votes sufficient to elect him or her under
cumulative voting is voted against his or her removal.
FIFTH. The authorized amount of capital stock of this
association shall be one billion two hundred million dollars
($1,200,000,000) divided into sixty million (60,000,000) shares of
common stock of the par value of twenty dollars ($20) each, and ten
million (10,000,000) shares of preferred stock, no par value, but the
capital stock may be increased or decreased from time to time, according
to the provisions of the laws of the United States.
The shares may be issued from time to time as authorized
by the board of directors without further approval of shareholders,
except as otherwise provided in this Article Fifth or to the extent
that such approval is required by governing law, rule, or regulation.
The consideration for the issuance of the shares shall
be paid in full before their issuance and shall not be less than the par
value of shares having par value. Neither promissory notes nor future
services shall constitute payment or part payment for the issuance of
shares this association. The consideration for the shares shall be
cash, tangible or intangible property (to the extent direct investment
in such property would be permitted), labor, or services actually
performed for this association, or any combination of the foregoing. In
the absence of actual fraud in the transaction, the value of such
property, labor, or services, as determined by the board of directors of
the association shall be conclusive. Upon payment of such
consideration, such shares shall be deemed to be fully paid and
nonassessable. In the case of a stock dividend, that part of the
surplus of the association which is transferred to stated capital upon
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the issuance of shares as a share dividend shall be deemed to be the
consideration for their issuance.
No shares of capital stock (including shares issuable
upon conversion, exchange, or exercise of other securities) shall be
issued, directly or indirectly, to officers, directors or controlling
persons of the association other than as part of a general public
offering or as qualifying shares to a director, unless their issuance or
the plan under which they would be issued has been approved by a
majority of the total votes eligible to be cast at a legal meeting.
Nothing contained in this Article Fifth (or in any
supplementary sections hereto) shall entitle the holders of any class of
a series of capital stock to vote as a separate class or series or to
more than one vote per share, except as to the cumulation of votes for
the election of directors: Provided, That this restriction on voting
separately by class or series shall not apply:
(i) To any provision which would authorize the holders
of preferred stock, voting as a class or series, to elect some members
of the board of directors, less than a majority thereof, in the event of
default in the payment of dividends on any class or series of preferred
stock;
(ii) To any provision which would require the holders
of preferred stock, voting as a class or series to approve the merger or
consolidation of the association with another corporation or the sale,
lease, or conveyance (other than by mortgage or pledge) of properties or
business in exchange for securities of a corporation other than the
association if the preferred stock is exchanged for securities of such
other corporation: Provided, That no provision may require such
approval for transactions undertaken with the assistance or pursuant to
the direction of the Office of the Comptroller of the Currency or the
Federal Deposit Insurance Corporation; or
(iii) To any amendment which would adversely change the
specific terms of any class or series of capital stock a set forth in
this Article Fifth (or in any supplementary sections hereto), including
any amendment which would create or enlarge any class or series ranking
prior thereto in rights and preferences. An amendment which increases
the number of authorized shares of any class or series of capital stock,
or substitutes the surviving association in a merger or consolidation
for the association, shall not be considered to be such an adverse
change. A description of the different classes and series (if any) of
the association's capital stock and a statement of the designations, and
the relative rights, preferences, and limitations of the shares of each
class of and series (if any) of capital stock are as follows:
A. Common stock. Except as provided in this Article Fifth (or
in any supplementary sections thereto) the holders of the common stock
shall exclusively possess all voting power. Each holder of shares of
common stock shall be entitled to one
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vote for each share held by such holder, except as to the cumulation of
votes for the election of directors.
Whenever there shall have been paid, or declared and set
aside for payment, to the holders of the outstanding shares of any class
of stock having preference over the common stock as to the payment of
dividends, the full amount of dividends and of sinking fund, retirement
fund or other retirement payments, if any, to which such holders are
respectively entitled in preference to the common stock; then dividends
may be paid on the common stock and on any class or series of stock
entitled to participate therewith as to dividends out of any assets
legally available for the payment of dividends but only when and as
declared by the board of directors. In the event of any liquidation,
dissolution, or winding up of the association, the holders of the common
stock (and the holders of any class or series of stock entitled to
participate with the common stock in the distribution of assets) shall
be entitled to receive, in cash or in kind, the assets of the
association available for distribution remaining after (i) payment or
provision for payment of the association's debts and liabilities; (ii)
distributions or provision for distributions in settlement of its
liquidation account; and (iii) distributions or provisions for
distributions to holders of any class or series of stock having
preference over the common stock in the liquidation, dissolution, or
winding up of the association. Each share of common stock shall have
the same relative rights as and be identical in all respects with all
the other shares of common stock.
B. Preferred stock. The association may provide for one or
more classes of preferred stock, which shall be separately identified,
in supplementary sections to its charter. The shares of any class may
be divided into and issued in series, with each series separately
designated so as to distinguish the shares thereof from the shares of
all other series and classes. The terms of each series shall be set
forth in a supplementary section to the charter. All shares of the
same class shall be identical except as to the following relative rights
and preferences, as to which there may be variations between different
series;
(a) The distinctive serial designation and the number of
shares constituting such series;
(b) The dividend rate or the amount of dividends to be paid on
the shares of such series, whether dividends shall be cumulative and, if
so, from which date the payment date or dates for dividends, and the
participating or other special rights, if any with respect to dividends;
(c) The voting powers, full or limited, if any, of shares of
such series;
(d) Whether the shares of such series shall be redeemable and,
if so, the price(s) at which, and the terms and conditions on which such
shares may be redeemed;
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(e) The amount(s) payable upon the shares of such series in the
event of voluntary or involuntary liquidation, dissolution, or winding
up of the association;
(f) Whether the shares of such series shall be entitled to the
benefit of a sinking or retirement fund to be applied to the purchase or
redemption of such shares, and if so entitled, the amount of such fund
and the manner of its application, including the price(s) at which such
shares may be redeemed or purchased through the application of such
fund;
(g) Whether the shares of such series shall be convertible
into, or exchangeable for, shares of any other class or classes of stock
of the association and, if so, the conversion price(s) or the rate(s) of
exchange, and the adjustments thereof, if any, at which such conversion
or exchange may be made, and any other terms and conditions of such
conversion or exchange;
(h) The price or other consideration for which the shares of
such series shall be issued; and
(i) Whether the shares of such series which are redeemed or
converted shall have the status of authorized but unissued shares of
serial preferred stock and whether such shares may be reissued as shares
of the same or any other series of serial preferred stock.
Each share of each series of serial preferred stock shall have
the same relative rights as and be identical in all respects with all
the other shares of the same series.
The Board of Directors shall have authority to divide, by the
adoption of supplementary charter sections, any authorized class of
preferred stock into series, and within the limitations set forth in
this article and the articles of association, fix and determine the
relative rights and preferences of shares of any series so established.
Prior to the issuance of any preferred shares of a series
established by a supplementary charter section adopted by the board of
directors, the association shall file with the Office of the Comptroller
of the Currency a dated copy of that supplementary section of this
charter established and designating the series and fixing and
determining the relative rights and preferences thereof."
In the event of any increase in common stock of this
association by the sale of additional shares thereof, each shareholder
shall be entitled to subscribe to such additional shares of common stock
in proportion to the number of shares of common stock owned by the
shareholder at the time the increase is authorized by the shareholders,
unless another time subsequent to the date of the shareholders' meeting
is specified in a resolution adopted by the shareholders at the time the
increase is authorized. The board of directors shall have the power to
prescribe a reasonable
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period of time within which the preemptive rights to subscribe to the
new shares of capital stock must be exercised.
Unless otherwise specified in the articles of
association or required by law, (1) all matters requiring shareholder
action, including amendments to the articles of association must be
approved by shareholders owning a majority voting interest in the
outstanding voting stock, and (2) each shareholder shall be entitled to
one vote per share.
Shares of another class or series may be issued as a
share dividend in respect of a class or series of stock if approved by a
majority of the votes entitled to be cast by the class or series to be
issued unless there are no outstanding shares of the class or series to
be issued. Unless otherwise provided by the board of directors, the
record date for determining shareholders entitled to a share dividend
shall be the date the board of directors authorizes the share dividend.
If a shareholder is entitled to fractional shares
pursuant to preemptive rights, a stock dividend, consolidation or
merger, reverse stock split or otherwise, the association may: (a)
issue fractional shares; (b) in lieu of the issuance of fractional
shares, issue scrip or warrants entitling the holder to receive a full
share upon surrendering enough scrip or warrants to equal a full share;
(c) if there is an established and active market in the association's
stock, make reasonable arrangements to provide the shareholder with an
opportunity to realize a fair price through sale of the fraction, or
purchase of the additional fraction required for a full share; (d) remit
the cash equivalent of the fraction to the shareholder; or (e) sell full
shares representing all the fractions at public auction or to the
highest bidder after having solicited and received sealed bids from at
least three licensed stock brokers; and distribute the proceeds pro rata
to shareholders who otherwise would be entitled to the fractional
shares. The holder of a fractional share is entitled to exercise the
rights of shareholders, including the right to vote, to receive
dividends, and to participate in the assets of the association upon
liquidation, in proportion to the fractional interest. The holder of
scrip or warrants is not entitled to any of these rights unless the
scrip or warrants explicitly provide for such rights. The scrip or
warrants may be subject to such additional conditions as: (1) the scrip
or warrants will become void if not exchanged for full shares before a
specified date; and (2) that the shares for which the scrip or warrants
are exchangeable may be sold at the option of the association and the
proceeds paid to scripholders.
The association, at any time and from time to time, may
authorize and issue debt obligations, whether or not subordinated,
without the approval of the shareholders. Obligations classified as
debt, whether or not subordinated, which may be issued by the
association without the approval of shareholders, do not carry voting
rights on any issue, including an increase or decrease in the aggregate
number of the securities, or the exchange or reclassification of all or
part of securities into securities of another class or series.
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SIXTH. The board of directors shall appoint one of its
members president of this association, and one of its members
chairperson of the board and shall have the power to appoint one or more
vice presidents, a secretary who shall keep minutes of the directors'
and shareholders' meetings and be responsible for authenticating the
records of the association, and such other officers and employees as may
be required to transact the business of this association. A duly
appointed officer may appoint one or more officers or assistant officers
if authorized by the board of directors in accordance with the bylaws.
SEVENTH. The board of directors shall have the power to:
(1) Define the duties of the officers, employees and agents
of the association.
(2) Delegate the performance of its duties, but not the
responsibility for its duties, to the officers,
employees, and agents of the association.
(3) Fix the compensation and enter into employment contracts
with its officers and employees upon reasonable terms
and conditions consistent with applicable law.
(4) Dismiss officers and employees.
(5) Require bonds from officers and employees and to fix the
penalty thereof.
(6) Ratify written policies authorized by the association's
management or committees of the board.
(7) Regulate the manner in which any increase or decrease of
the capital of the association shall be made, provided
that nothing herein shall restrict the power of
shareholders to increase or decrease the capital of the
association in accordance with law, and nothing shall
raise or lower from two-thirds the percentage required
for shareholder approval to increase or reduce the
capital.
(8) Manage and administer the business and affairs of the
association.
(9) Amend or repeal bylaws, except to the extent that the
articles of association reserve this power in whole or
in part to shareholders.
(10) Make contracts.
(11) Generally to perform all acts that are legal for a board
of directors to perform.
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Any and all of these functions may be carried out by
officers, employees, or agents of the association and the delegation of
the performance of the board of directors' duties shall be considered
authorized when the action taken by the officers, employees, or agents
of the association is in accordance with the provisions of the bylaws of
the association, the directives of the board of directors, or the powers
and duties incumbent in any position held by the officers, employees, or
agents.
EIGHTH. The board of directors shall have the power to
change the location of the main office to any other place within the
limits of Atlanta, Georgia, without the approval of the shareholders,
and shall have the power to establish or change the location of any
branch or branches of the association to any other location permitted
under applicable law, without the approval of the shareholders subject
to approval by the Comptroller of the Currency.
NINTH. The corporate existence of this association
shall continue until terminated according to the laws of the United
States.
TENTH. To the fullest extent permitted by the laws of
the state in which the bank's holding company is incorporated, subject
only to the limits of the corporate powers of a national association, a
director of the association shall not be personally liable to the
association, its shareholders or otherwise for monetary damage for
breach of duty as a director. Any repeal or modification of this
article shall be prospective only and shall not adversely affect any
limitation on the personal liability of a director of the association
existing at the time of such repeal or modification.
The association shall indemnify and hold harmless any
director, officer, employee, or agent of the association and its
subsidiaries against all liability and expenses to the fullest extent
permitted by the laws of the state in which the association's holding
company is incorporated, and in addition to the indemnification
otherwise provided by law, the association shall indemnify and hold
harmless such directors, officers, employees, or agents against all
liability and expenses, including reasonable attorney's fees, in any
proceeding (including without limitation a proceeding brought by or on
behalf of the association itself) arising out of their status as
directors, officers, employees, or agents, or their service at the
association's request as a director, officer, partner, trustee, employee
or agent of another foreign or domestic corporation, association,
partnership, joint venture, trust, employee benefit plan or other
enterprise, or their activities in any such capacity.
The extent of indemnification provided for in this
section and the procedures for implementation of that indemnification
shall be in accordance with the provisions of the bylaws of NationsBank
Corporation. The association may also provide insurance for such
indemnification relating to the directors, officers, employees or
agent's service to the association in accordance with the provisions of
the bylaws of NationsBank Corporation. To the extent that
indemnification or insurance coverage is
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prohibited or limited by lawful and binding regulations of the Office of
the Comptroller of the Currency, such regulations shall govern this
indemnification provision.
ELEVENTH. These articles of association may be amended
by the affirmative vote of the holders of a majority of the stock of
this association, unless the vote of the holders of a greater amount of
stock is required by law, and in that case by the vote of the holders of
such greater amount. Although prior approval by the board of directors
is not necessary prior to consideration by shareholders, the
association's board of directors may propose one or more amendments to
the articles of association for submission to the shareholders.
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EXHIBIT 4(p)
<PAGE>
STATEMENT OF DESIGNATION OF
8.50% SERIES H NONCUMULATIVE PREFERRED STOCK
OF
NATIONSBANK, N.A. (SOUTH)
WHEREAS, pursuant to Article 5 of the Articles of
Association of NationsBank, N.A. (South) ("NationsBank South"),
the Board of Directors of NationsBank South is authorized to
divide NationsBank South'sauthorized Preferred Stock ("Preferred
Stock") into series and, within the limitations set forth
therein, fix and determine the relative rights and preferences
of the shares of any series so established; and
WHEREAS, the Board of Directors desires to (i) estab-
lish a series of Preferred Stock, designating such series "8.50%
Series H Noncumulative Preferred Stock," (ii) allocate 600,000
shares of authorized Preferred Stock to the 8.50% Series H
Noncumulative Preferred Stock, and (iii) fix and determine the
relative rights and preferences of the shares of the 8.50%
Series H Noncumulative Preferred Stock;
NOW, THEREFORE, BE IT RESOLVED, that 600,000 of the
10,000,000 shares of Preferred Stock authorized by the Articles
of Association of NationsBank South be, and hereby are, deter-
mined to be and shall be of a series designated as 8.50%
Series H Noncumulative Preferred Stock (hereinafter referred to
as the "Series H Preferred Stock") and that the following is a
statement fixing and determining the variations in the relative
rights and preferences of the Series H Preferred Stock pursuant
to authority vested in the Board of Directors by the Articles of
Association of NationsBank South:
1. Rank.
(a) With respect to dividend rights, the Ser-
ies H Preferred Stock ranks senior to NationsBank South's Common
Stock ("Common Stock"), and junior to NationsBank South's 8.75%
Series 1993A Noncumulative Preferred Stock (the "Series 1993A
Preferred Stock").
(b) With respect to rights upon liquidation,
dissolution or winding-up of NationsBank South, the Series H
Preferred Stock ranks senior to the Common Stock to the extent
of the liquidation preference of the Series H Preferred Stock
and ranks on a parity with the Series 1993A Preferred Stock,
except that NationsBank South may create, authorize, issue or
increase the authorized or issued amount of any class or series
<PAGE>
of any equity securities of NationsBank South, or any warrants,
options, or other rights convertible or exchangeable into any
class or series of any equity securities ranking senior to the
Series H Preferred Stock as to rights upon liquidation, dis-
solution or winding-up of NationsBank South, without the consent
of the holders of the Series H Preferred Stock.
(c) The Series H Preferred Stock will be subject
to the future authorization and issuance of additional series of
Preferred Stock that, as designated by the Board of Directors in
its sole discretion, rank junior to ("Junior Stock"), on a
parity with ("Parity Stock"), or senior to ("Senior Stock") the
Series H Preferred Stock with respect to any one or more of the
following: (i) dividend rights; (ii) rights upon liquidation,
dissolution or winding-up of NationsBank South; (iii) redemption
rights; or (iv) any other rights specified by the Board of
Directors.
2. Dividends.
(a) The holders of the Series H Preferred Stock
shall be entitled to receive, when, as, and if declared by the
Board of Directors out of funds of NationsBank South legally
available for payment, noncumulative cash dividends, payable
quarterly in arrears, at the rate of $2.125 per share per annum.
Declared dividends on the Series H Preferred Stock shall accrue
from the date of issuance which is deemed to be December 1,
1995, or the most recent date on which dividends were payable
and shall be payable quarterly on the first day of March, June,
September and December of each year (each a "Dividend Payment
Date"), commencing March 1, 1996; provided, however, that if
such day is a non-business day, the Dividend Payment Date will
be the next business day. Each declared dividend shall be
payable to holders of record as they appear at the close of
business on the stock books of NationsBank South on such record
dates, not more than 30 calendar days and not less than 10
calendar days preceding the Dividend Payment Date therefor, as
determined by the Board of Directors (each of such dates a
"Record Date"). Quarterly dividend periods (each a "Dividend
Period") shall commence on and include the first day of March,
June, September and December of each year and shall end on and
include the day next preceding the next following Dividend Pay-
ment Date.
(b) The initial dividend will be determined
based upon the number of days from the date of issuance to March
1, 1996. Dividends payable for each full Dividend Period shall
be computed by dividing the annual dividend rate by four.
Dividends payable for any period other than a full Dividend
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Period shall be computed on the basis of a 365-day year and the
actual number of days elapsed in such period.
(c) Holders of the Series H Preferred Stock
shall not be entitled to any dividends, whether payable in cash,
property or stock, in excess of the dividends actually declared
by the Board of Directors. The Series H Preferred Stock shall
not participate in dividends with the Common Stock.
(d) No full dividends shall be declared and paid
or set apart for payment on Preferred Stock of NationsBank South
of any series ranking, as to dividends, on a parity with the
Series H Preferred Stock during any calendar quarter unless full
dividends on the Series H Preferred Stock for the Dividend Pe-
riod ending during such calendar quarter have been or contempo-
raneously are declared and paid or declared and a sum sufficient
for the payment thereof is set apart for such payment. When
dividends are not so paid in full (or a sum sufficient for such
full payment is not so set apart) upon the Series H Preferred
Stock and any other Preferred Stock of NationsBank South of any
series ranking as to dividends on a parity with the Series H
Preferred Stock, dividends upon shares of Series H Preferred
Stock and dividends on such other Preferred Stock payable during
such calendar quarter shall be declared pro rata so that the
amount of such dividends so payable per share on the Series H
Preferred Stock and such other Preferred Stock shall in all
cases bear to each other the same ratio that full dividends for
the then-current calendar quarter on the shares of Series H
Preferred Stock (which shall not include any accumulation in
respect of unpaid dividends for prior Dividend Periods) and full
dividends, including required or permitted accumulations, if
any, on shares of such other Preferred Stock, bear to each
other.
(e) If full dividends on the Series H Preferred
Stock have not been declared and paid or set apart for payment
for the Dividend Payment Date falling in the then-current Divi-
dend Period, then, with respect to such then-current Dividend
Period, the following restrictions shall be applicable: (i) no
dividend or distribution (other than in shares of Junior Stock)
may be declared, set aside or paid on any shares of stock of any
series ranking, as to dividends, junior to the Series H
Preferred Stock, (ii) NationsBank South may not repurchase,
redeem or otherwise acquire any shares of its Junior Stock (ex-
cept by conversion into or exchange for Junior Stock) and
(iii) NationsBank South may not, directly or indirectly, repur-
chase, redeem or otherwise acquire (except by conversion into or
exchange for Junior Stock) any shares of any class or series of
equity securities of NationsBank South ranking junior to the
Series H Preferred Stock as to dividend rights.
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(f) Except as expressly otherwise limited here-
in, and to the extent permitted by applicable law, the Board of
Directors: (i) may declare and NationsBank South may pay or set
apart for payment dividends on any Junior Stock or Parity Stock,
(ii) may make any payment on account of or set apart payment for
a sinking fund or other similar fund or agreement for the
purchase or other acquisition, redemption, retirement or other
requirement of, or with respect to, any Junior Stock or Parity
Stock or any warrants, rights, calls or options exercisable or
exchangeable for or convertible into any Junior Stock or Parity
Stock, (iii) may make any distribution with respect to any Jun-
ior Stock or Parity Stock or any warrants, rights, calls or
options exercisable or exchangeable for or convertible into any
Junior Stock or Parity Stock, whether directly or indirectly,
and whether in cash, obligations or securities of NationsBank
South or other property and (iv) may purchase or otherwise
acquire, redeem or retire any Junior Stock or Parity Stock or
any warrants, rights, calls or options exercisable or
exchangeable for or convertible into any Junior Stock or Parity
Stock; and the holders of the Series H Preferred Stock shall not
be entitled to share or participate therein.
3. Liquidation Preference.
(a) In the event of any liquidation, dissolution
or winding-up of NationsBank South, voluntary or involuntary,
the holders of the Series H Preferred Stock will be entitled to
receive out of the assets of NationsBank South available for
distribution to its stockholders, before any distribution of
assets is made to the holders of the Common Stock or any other
shares of capital stock of NationsBank South ranking junior to
the Series H Preferred Stock as to such distribution,
liquidating distributions in the amount of $25.00 per share plus
dividends declared but unpaid for the then-current Dividend
Period (without accumulation of unpaid dividends for prior
Dividend Periods) to the date fixed for such liquidation, dis-
solution or winding-up.
(b) If, upon any voluntary or involuntary liq-
uidation, dissolution or winding-up of NationsBank South, the
amounts payable with respect to the Series H Preferred Stock and
any capital stock ranking on a parity with the Series H
Preferred Stock as to such distributions are not paid in full,
the holders of the Series H Preferred Stock and of such capital
stock will share ratably in any such distribution of assets of
NationsBank South in proportion to the full respective prefer-
ential amounts to which they are entitled (which, in the case of
such capital stock, may include accumulated dividends).
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<PAGE>
(c) After payment of the full amount of the
liquidating distribution to which they are entitled, the holders
of the Series H Preferred Stock will not be entitled to any
further participation in any distribution of assets of Nations-
Bank South. All distributions made with respect to the Series H
Preferred Stock in connection with such liquidation, dissolution
or winding-up of NationsBank South shall be made pro rata to the
holders entitled thereto.
(d) Nothing set forth in this Section 3 shall be
deemed to prevent redemption of the Series H Preferred Stock by
NationsBank South in the manner provided in Section 4 hereof.
Neither the merger nor consolidation of NationsBank South into
or with any other entity or entities, nor the merger or
consolidation of any other entity or entities into or cash with
NationsBank South, nor a sale, transfer, lease or exchange (for
cash, securities or other consideration) of all or any part of
the assets of NationsBank South shall be deemed to be a
liquidation, dissolution or winding up of NationsBank South
within the meaning of this Section 3, unless such sale, trans-
fer, lease or exchange shall be in connection with and intended
to be a plan of complete liquidation, dissolution or winding-up
of NationsBank South.
4. Redemption.
(a) The Series H Preferred Stock is not redeem-
able prior to March 31, 1996. At any time on or after March 31,
1996, NationsBank South shall have the right, at its option and
by action of its Board of Directors, to redeem out of funds of
NationsBank South legally available therefor, in whole at any
time or in part from time to time, the Series H Preferred Stock
upon payment in cash of $25.00 per each share of Series H
Preferred Stock redeemed, plus declared but unpaid dividends for
the then-current Dividend Period to the date fixed for re-
demption (without accumulation of unpaid dividends for prior
Dividend Periods) without interest.
(b) Notice of any redemption specifying the date
fixed for said redemption and the place where the amount to be
paid upon redemption is payable shall be mailed, postage
prepaid, at least 30 but not more than 60 calendar days prior to
said redemption date to the holders of record of the Series H
Preferred Stock to be redeemed, at their respective addresses as
the same shall appear on the books of NationsBank South. If
such notice of redemption shall have been so mailed, and if on
or before the redemption date specified in such notice all funds
necessary for such redemption shall have been set aside by
NationsBank South separate and apart from its other funds, in
trust for the account of the holders of the
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<PAGE>
shares so to be redeemed so as to be and continue to be available
therefor, then, on and after said redemption date, notwithstanding that
any certificate for shares of the Series H Preferred Stock so called for
redemption shall not have been surrendered for cancellation, the shares
represented thereby so called for redemption shall be deemed to be no
longer outstanding, the right to receive dividends thereon shall cease
to accrue, and all rights with respect to such shares of the Series H
Preferred Stock so called for redemption shall forthwith cease and
terminate, except only the right of the holders thereof to receive out
of funds so set aside in trust the amount payable on redemption thereof,
but without interest.
(c) If less than all of the outstanding shares
of the Series H Preferred Stock are to be redeemed, the par-
ticular shares to be redeemed shall be allocated among the
respective holders of Series H Preferred Stock pro rata or by
lot, as the Board of Directors may determine.
(d) Shares of Series H Preferred Stock redeemed
or otherwise purchased or acquired by NationsBank South shall
not be reissued as shares of Series H Preferred Stock but shall
assume the status of authorized but unissued shares of Preferred
Stock of NationsBank South, without designation as to series
until such shares are once more designated as part of a
particular series by the Board of Directors.
(e) Any redemption of the Series H Preferred
Stock shall not be subject to, or conditioned upon, the redemp-
tion of any other series of NationsBank South's Preferred Stock.
5. Voting Rights.
(a) Except as required by applicable law, the
holders of the Series H Preferred Stock will not be entitled to
vote for any purpose.
(b) The right of the holders of the Series H
Preferred Stock to approve an amendment that would adversely
change the specific terms of the Series H Preferred Stock shall
be as provided by applicable law and the Rules and Regulations
of the Office of the Comptroller of the Currency and, unless a
greater vote is required by such law or regulations, such
approval shall be by a vote of the holders of a majority of the
outstanding shares of Series H Preferred Stock; provided, how-
ever, that the creation or issuance of Senior Stock, Parity
Stock or Junior Stock with respect to the payment of dividends
or rights upon liquidation, dissolution or winding-up of
NationsBank South; or a merger, consolidation, reorganization
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<PAGE>
or other business combination in which NationsBank South is not
the surviving entity; or an amendment that increases the number
of authorized shares of Preferred Stock or increases the number
of authorized shares of a series of Preferred Stock constituting
Junior Stock, Parity Stock or Senior Stock, shall not be
considered to be an adverse change to the terms of the Series H
Preferred Stock and shall not require a vote of or the approval
of the holders of the Series H Preferred Stock.
6. Sinking Fund. No sinking fund shall be provided
for the purchase or redemption of shares of the Series H Pre-
ferred Stock.
7. No Other Rights. The shares of Series H Pre-
ferred Stock shall not have any preferences, voting powers or
relative, participating, optional or other special rights, in-
cluding, without limitation, preemptive or conversion rights,
except as set forth above and in NationsBank South's Articles of
Association or as otherwise required by law.
8. Amendments. The Board of Directors reserves the
right to amend these resolutions in accordance with applicable
law.
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<PAGE>
EXHIBIT 4(q)
<PAGE>
STATEMENT OF DESIGNATION OF
8.75% SERIES 1993A NONCUMULATIVE PREFERRED STOCK
OF
NATIONSBANK, N.A. (SOUTH)
WHEREAS, pursuant to Article 5 of the Articles of
Association of NationsBank, N.A. (South) ("NationsBank
South"), the Board of Directors of NationsBank South is autho-
rized to divide NationsBank South's authorized Preferred Stock
("Preferred Stock") into series and, within the limitations set
forth therein, fix and determine the relative rights and pref-
erences of the shares of any series so established; and
WHEREAS, the Board of Directors desires to (i) estab-
lish a series of Preferred Stock, designating such series "8.75%
Series 1993A Noncumulative Preferred Stock," (ii) allocate
2,400,000 shares of the authorized Preferred Stock to the 8.75%
Series 1993A Noncumulative Preferred Stock, and (iii) fix and
determine the relative rights and preferences of the shares of
the 8.75% Series 1993A Noncumulative Preferred Stock;
NOW, THEREFORE, BE IT RESOLVED, that 2,400,000 of the
10,000,000 shares of Preferred Stock authorized by the Articles
of Association of NationsBank South be, and hereby are, deter-
mined to be and shall be of a series designated as 8.75% Series
1993A Noncumulative Preferred Stock (hereinafter referred to as
the "Series 1993A Preferred Stock") and that the following is a
statement fixing and determining the variations in the relative
rights and preferences of the Series 1993A Preferred Stock pur-
suant to authority vested in the Board of Directors by the [Ar-
ticles of Association] of NationsBank South:
I. Rank.
A. With respect to dividend rights, the Series 1993A
Preferred Stock ranks senior to NationsBank South's Common Stock
("Common Stock") and to NationsBank South's 8.5% Series H
Noncumulative Preferred Stock (the "Series H Preferred Stock").
B. With respect to rights upon liquidation, dis-
solution or winding-up of NationsBank South, the Series 1993A
Preferred Stock ranks senior to the Common Stock to the extent
of the liquidation preference of the Series 1993A Preferred
Stock and ranks on a parity with the Series H Preferred Stock.
C. The Series 1993A Preferred Stock will be subject
to the future authorization and issuance of additional series
<PAGE>
of Preferred Stock that, as designated by the Board of Directors
in its sole discretion, rank junior to ("Junior Stock"), on a
parity with ("Parity Stock"), or senior to ("Senior Stock") the
Series 1993A Preferred Stock with respect to any one or more of
the following: (i) dividend rights; (ii) rights upon
liquidation, dissolution or winding up of NationsBank South;
(iii) redemption rights; or (iv) any other rights specified by
the Board of Directors; provided, however, that NationsBank
South may not issue any capital stock that constitutes Senior
Stock without the approval of holders of at least two-thirds of
the outstanding shares of Series 1993A Preferred Stock in
accordance with Section V. hereof.
II. Dividends.
A. The holders of the Series 1993A Preferred Stock
shall be entitled to receive, when, as, and if declared by the
Board of Directors out of the funds of NationsBank South legally
available for the payment of noncumulative cash dividends,
payable quarterly in arrears, at the rate of $2.1875 per share
per annum. Declared dividends on the Series 1993A Preferred
Stock shall accrue from the date of issuance which is deemed to
be December 1, 1995, or the most recent date on which dividends
were payable and shall be payable quarterly on the first day of
March, June, September and December of each year (each a
"Dividend Payment Date"), commencing March 1, 1996; provided,
however, that if any such day is a non-business day, the
Dividend Payment Date will be the next business day. Each
declared dividend shall be payable to holders of record as they
appear at the close of business on the stock books of Nations-
Bank South on such record dates, not more than 30 calendar days
and not less than 10 calendar days preceding the Dividend Pay-
ment Date therefor, as determined by the Board of Directors
(each of such dates a "Record Date"). Quarterly dividend peri-
ods (each a "Dividend Period") shall commence on and include the
first day of March, June, September and December of each year
and shall end on and include the day next preceding the next
following Dividend Payment Date.
B. The initial dividend will be determined based
upon the number of days from the date of issuance to March 1,
1996. Dividends payable for each full Dividend Period shall be
computed by dividing the annual dividend rate by four. Divi-
dends payable for any period other than a full Dividend Period
shall be computed on the basis of a 365-day year and the actual
number of days elapsed in such period.
C. Holders of the Series 1993A Preferred Stock shall
not be entitled to any dividends, whether payable in cash,
property or stock, in excess of the dividends actually
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<PAGE>
declared by the Board of Directors. The Series 1993A Preferred Stock
shall not participate in dividends with the Common Stock.
D. No full dividends shall be declared and paid or
set apart for payment on Preferred Stock of NationsBank South of
any series ranking, as to dividends, on a parity with the Series
1993A Preferred Stock during any calendar quarter unless full
dividends on the Series 1993A Preferred Stock for the Dividend
Period ending during such calendar quarter have been or contem-
poraneously are declared and paid or declared and a sum suffi-
cient for the payment thereof is set apart for such payment.
When dividends are not so paid in full (or a sum sufficient for
such full payment is not so set apart) upon the Series 1993A
Preferred Stock and any other Preferred Stock of NationsBank
South of any series ranking as to dividends on a parity with the
Series 1993A Preferred Stock, dividends upon shares of Series
1993A Preferred Stock and dividends on such other Preferred
Stock payable during such calendar quarter shall be declared pro
rata so that the amount of such dividends so payable per share
on the Series 1993A Preferred Stock and such other Preferred
Stock shall in all cases bear to each other the same ratio that
full dividends for the then-current calendar quarter on the
shares of Series 1993A Preferred Stock (which shall not include
any accumulation in respect of unpaid dividends for prior
Dividend Periods) and full dividends, including required or
permitted accumulations, if any, on shares of such other
Preferred Stock, bear to each other.
E. If full dividends on the Series 1993A Preferred
Stock have not been declared and paid or set apart for payment
for the Dividend Payment Date falling in the then-current Divi-
dend Period, then, with respect to such then-current Dividend
Period, the following restrictions shall be applicable: (i) no
dividend or distribution (other than in shares of Junior Stock)
may be declared, set aside or paid on any shares of stock of any
series ranking, as to dividends, junior to the Series 1993A
Preferred Stock, (ii) NationsBank South may not repurchase,
redeem or otherwise acquire any shares of its Junior Stock (ex-
cept by conversion into or exchange for Junior Stock) and
(iii) NationsBank South may not, directly or indirectly, repur-
chase, redeem or otherwise acquire (except by conversion into or
exchange for Junior Stock) any shares of any class or series of
equity securities of NationsBank South ranking on a parity with
the Series 1993A Preferred Stock as to dividend rights,
otherwise than pursuant to pro rata offers to purchase or a
concurrent redemption of all, or a pro rata portion, of the
outstanding shares of Series 1993A Preferred Stock and such
other Parity Stock.
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<PAGE>
F. Except as expressly otherwise limited herein, and
to the extent permitted by applicable law, the Board of
Directors: (i) may declare and NationsBank South may pay or set
apart for payment dividends on any Junior Stock or Parity Stock,
(ii) may make any payment on account of or set apart payment for
a sinking fund or other similar fund or agreement for the
purchase or other acquisition, redemption, retirement or other
requirement of, or with respect to, any Junior Stock or Parity
Stock or any warrants, rights, calls or options exercisable or
exchangeable for or convertible into any Junior Stock or Parity
Stock, (iii) may make any distribution with respect to any Jun-
ior Stock or Parity Stock or any warrants, rights, calls or
options exercisable or exchangeable for or convertible into any
Junior Stock or Parity Stock, whether directly or indirectly,
and whether in cash, obligations or securities of NationsBank
South or other property and (iv) may purchase or otherwise
acquire, redeem or retire any Junior Stock or Parity Stock or
any warrants, rights, calls or options exercisable or
exchangeable for or convertible into any Junior Stock or Parity
Stock; and the holders of the Series 1993A Preferred Stock shall
not be entitled to share or participate therein.
III. Liquidation Preference.
A. In the event of any liquidation, dissolution or
winding-up of NationsBank South, voluntary or involuntary, the
holders of the Series 1993A Preferred Stock will be entitled to
receive out of the assets of NationsBank South available for
distribution to its stockholders, before any distribution of
assets is made to the holders of the Common Stock or any other
shares of capital stock of NationsBank South ranking junior to
the Series 1993A Preferred Stock as to such distribution, liq-
uidating distributions in the amount of $25.00 per share plus
dividends declared but unpaid for the then-current Dividend
Period (without accumulation of unpaid dividends for prior Div-
idend Periods) to the date fixed for such liquidation, dis-
solution or winding-up.
B. If, upon any voluntary or involuntary liquida-
tion, dissolution or winding-up of NationsBank South, the
amounts payable with respect to the Series 1993A Preferred Stock
and any capital stock ranking on a parity with the Series 1993A
Preferred Stock (including the Series H Preferred Stock) as to
such distributions are not paid in full, the holders of the
Series 1993A Preferred Stock and of such capital stock will
share ratably in any such distribution of assets of NationsBank
South in proportion to the full respective preferential amounts
to which they are entitled (which, in the case of such capital
stock, may include accumulated dividends).
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<PAGE>
C. After payment of the full amount of the liqui-
dating distribution to which they are entitled, the holders of
the Series 1993A Preferred Stock will not be entitled to any
further participation in any distribution of assets of Nations-
Bank South. All distributions made with respect to the Series
1993A Preferred Stock in connection with such liquidation, dis-
solution or winding-up of NationsBank South shall be made pro
rata to the holders entitled thereto.
D. Nothing set forth in this Section III. shall be
deemed to prevent redemption of the Series 1993A Preferred Stock
by NationsBank South in the manner provided in Section IV.
hereof. Neither the merger nor consolidation of NationsBank
South into or with any other entity or entities, nor the merger
or consolidation of any other entity or entities into or with
NationsBank South, nor a sale, transfer, lease or exchange (for
cash, securities or other consideration) of all or any part of
the assets of NationsBank South shall be deemed to be a dis-
solution, liquidation or winding-up of NationsBank South within
the meaning of this Section III., unless such sale, transfer,
lease or exchange shall be in connection with and intended to be
a plan of complete liquidation, dissolution or winding-up of
NationsBank South.
IV. Redemption.
A. The Series 1993A Preferred Stock is not redeem-
able prior to June 1, 1998. At any time on or after June 1,
1998, NationsBank South shall have the right, at its option and
by action of its Board of Directors, to redeem out of funds of
NationsBank South legally available therefor, in whole at any
time or in part from time to time, the Series 1993A Preferred
Stock upon payment in cash of $25.00 per each share of Series
1993A Preferred Stock redeemed, plus declared but unpaid divi-
dends for the then-current Dividend Period to the date fixed for
redemption (without accumulation of unpaid dividends for prior
Dividend Periods) without interest.
B. Notice of any redemption specifying the date
fixed for said redemption and the place where the amount to be
paid upon redemption is payable shall be mailed, postage pre-
paid, at least 30 days but not more than 60 days prior to said
redemption date to the holders of record of the Series 1993A
Preferred Stock to be redeemed, at their respective addresses as
the same shall appear on the books of NationsBank South. If
such notice of redemption shall have been so mailed, and if on
or before the redemption date specified in such notice all funds
necessary for such redemption shall have been set aside by
NationsBank South separate and apart from its other funds, in
trust for the account of the holders of the shares so to be
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<PAGE>
redeemed so as to be and continue to be available therefor,
then, on and after said redemption date, notwithstanding that
any certificate for shares of the Series 1993A Preferred Stock
so called for redemption shall not have been surrendered for
cancellation, the shares represented thereby so called for re-
demption shall be deemed to be no longer outstanding, the right
to receive dividends thereon shall cease to accrue, and all
rights with respect to such shares of the Series 1993A Preferred
Stock so called for redemption shall forthwith cease and
terminate, except only the right of the holders thereof to re-
ceive out of the funds so set aside in trust the amount payable
on redemption thereof, but without interest.
C. If less than all of the outstanding shares of the
Series 1993A Preferred Stock are to be redeemed, the particular
shares to be redeemed shall be allocated among the respective
holders of Series 1993A Preferred Stock pro rata or by lot, as
the Board of Directors may determine.
D. Shares of Series 1993A Preferred Stock redeemed
or otherwise purchased or acquired by NationsBank South shall
not be reissued as shares of Series 1993A Preferred Stock but
shall assume the status of authorized but unissued shares of
Preferred Stock of NationsBank South, without designation as to
series until such shares are once more designated as part of a
particular series by the Board of Directors.
E. Any redemption of the Series 1993A Preferred
Stock shall not be subject to, or conditioned upon, the redemp-
tion of any other series of NationsBank South's Preferred Stock,
including the Series H Preferred Stock.
V. Voting Rights.
A. Except as described in this Section V. and except
as required by applicable law, the holders of the Series 1993A
Preferred Stock will not be entitled to vote for any purpose.
B. So long as any shares of Series 1993A Preferred
Stock are outstanding, NationsBank South will not, without the
consent of the holders of a least two-thirds of the outstanding
shares of Series 1993A Preferred Stock, voting separately as a
class (together with the holders of shares of Parity Stock, if
any, upon which like voting rights have been conferred and are
exercisable), create, authorize, issue or increase the autho-
rized or issued amount of any class or series of any equity
securities of NationsBank South, or any warrants, options or
other rights convertible or exchangeable into any class or se-
ries of any equity securities of NationsBank South, ranking
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<PAGE>
senior to the Series 1993A Preferred Stock either as to dividend
rights or rights upon liquidation, dissolution or winding-up of
NationsBank South.
C. The right of the holders of the Series 1993A Pre-
ferred Stock to approve an amendment that would adversely change
the specific terms of the Series 1993A Preferred Stock shall be
as provided by applicable law and the Rules and Regulations of
the Office of the Comptroller of the Currency and, unless a
greater vote is required by such law or regulations, such
approval shall be by a vote of the holders of a majority of the
outstanding shares of Series 1993A Preferred Stock; provided,
however, that the creation or issuance of Parity Stock or Junior
Stock with respect to the payment of dividends or rights upon
liquidation, dissolution or winding-up of NationsBank South; or
a merger, consolidation, reorganization or other business combi-
nation in which NationsBank South is not the surviving entity;
or an amendment that increases the number of authorized shares
of Preferred Stock or increases the number of authorized shares
of a series of Preferred Stock constituting Junior Stock or
Parity Stock, shall not be considered to be an adverse change to
the terms of the Series 1993A Preferred Stock and shall not
require a vote of or the approval of the holders of the Series
1993A Preferred Stock.
D. If NationsBank South shall fail to pay the
equivalent of six full quarterly dividends payable on the Series
1993A Preferred Stock, the number of directors of NationsBank
South shall be increased by (i) one, if the number of directors
immediately prior to such increase totals nine or less, or (ii)
two, if the number of directors immediately prior to such
increase totals 10 or more, and the holders of the Series 1993A
Preferred Stock, voting separately as a class (together with the
holders of shares of Parity Stock, if any, upon which parity
voting rights with respect to the repayment of dividends have
been conferred and are exercisable), will be entitled to elect
such additional director or directors to fill such vacancy or
vacancies, as the case may be. The director or directors
elected pursuant to this Paragraph V.D. shall be entitled to one
vote per director on any matter presented to the Board of
Directors of NationsBank South, and otherwise shall be entitled
to the same rights and privileges as all other directors of
NationsBank South. Such right to elect such additional director
or directors shall continue until full dividends have been paid
or declared and set apart for payment for four consecutive
Dividend Periods.
E. Whenever the voting right described in Para-
graph V.D. shall vest, it may be exercised initially either at
a special meeting of holders of the Series 1993A Preferred
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<PAGE>
Stock (and Parity Stock, if any, with parity voting rights) or
at any annual stockholders' meeting, but thereafter it shall be
exercised only at annual stockholders' meetings or in accordance
with Paragraph V.F. Any director who shall have been elected by
the holders of the Series 1993A Preferred Stock (and Parity
Stock, if any, with parity voting rights) pursuant to
Paragraph V.D. shall hold office for a term expiring at the
earlier of (i) the next annual meeting of stockholders or (ii)
the date upon which full dividends on the Series 1993A Preferred
Stock shall have been paid, or declared and set apart for
payment, for four consecutive Dividend Periods, and during such
term such director may be removed at any time, either with or
without cause, by the affirmative vote of the holders of record
of a majority of the outstanding shares of the Series 1993A
Preferred Stock (and Parity Stock, if any, with parity voting
rights) given at a special meeting of such holders called for
such purpose, and any vacancy created by such removal may also
be filled at such meeting. Upon the termination of the voting
right described in Paragraph V.D., the term of office of the
director or directors elected pursuant thereto then in office
shall, without further action, thereupon terminate unless
otherwise required by law. Upon such termination, the number of
directors constituting the Board of Directors of NationsBank
South shall, without further action, be reduced by one or by
two, as the case may be, subject always to the subsequent
increase of the number of directors pursuant to Paragraph V.D.
in the event of the future right to elect directors as provided
therein.
F. Unless otherwise required by law, in the event of
any vacancy occurring among the directors elected pursuant to
Paragraph V.D., the remaining director, if any, may appoint a
successor to hold office for the unexpired term of the director
whose place shall be vacant. If all directors so elected shall
cease to serve as directors before their terms shall expire, or
if only one director is elected as provided by Paragraph V.D.,
the holders of the Series 1993A Preferred Stock (and Parity
Stock, if any, with parity voting rights) then outstanding may,
at a meeting of such holders duly held, elect a successor or
successors to hold office for such unexpired term or terms, as
the case may be.
G. Whenever a meeting of the holders of Series 1993A
Preferred Stock (and Parity Stock, if any, with parity voting
rights) is permitted or required to be held pursuant to this
Section V., such meeting shall be held at the earliest practi-
cable date and the Secretary of NationsBank South shall call
such meeting, providing written notice in accordance with law to
all holders of record of shares entitled to vote at such
meeting, upon the earlier of the following:
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<PAGE>
1. as soon as reasonably practicable following
the occurrence of the event or events permitting or
requiring such meeting hereunder; or
2. within 20 days following receipt by the
Secretary of NationsBank South a written request for such
a meeting, signed by the holders of record of at least 20%
of the shares of Series 1993A Preferred Stock (and Parity
Stock, if any, with parity voting rights) then outstanding.
If such meeting shall not be called by the proper corporate officer
within 20 days after the receipt of such request by the Secretary of
NationsBank South, or within 25 days after the mailing of the same
within the United States of America by registered mail addressed to the
Secretary of NationsBank South at its principal executive office, then
the holders of record of at least 20% of the shares of Series 1993A
Preferred Stock (and Parity Stock, if any, with parity voting rights)
then outstanding may designate one of their number to call such a
meeting at the expense of NationsBank South, and such meeting may be
called by such person in the manner and at the place provided in this
Section V. Any holder so designated to call such meeting shall have
access to the stock books of NationsBank South for the purpose of
causing a meeting of such holders to be so called.
H. Any meeting of the holders of all outstanding
Series 1993A Preferred Stock (and Parity Stock, if any, with
parity voting rights) entitled to vote as a class shall be held
at the place at which the last annual meeting of stockholders
was held or in an accessible location in either of the counties
in which the executive or administrative headquarters of
NationsBank South are located. At such meeting, the presence in
person or by proxy of the holders of a majority of the out-
standing shares entitled to vote at such meeting shall be re-
quired to constitute a quorum; in the absence of a quorum, a
majority of the holders present in person or by proxy shall have
the power to adjourn the meeting from time to time without
notice, other than an announcement at the meeting, until a quo-
rum shall be present.
I. Notwithstanding any provision of this Section V.
to the contrary, no special meeting of the holders of shares of
Series 1993A Preferred Stock shall be required to be called or
held in violation of any law, rule or regulation.
VI. Sinking Fund. No sinking fund shall be provided for
the purchase or redemption of shares of the Series 1993A Pre-
ferred Stock.
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<PAGE>
VII. No Other Rights. The shares of Series 1993A Pre-
ferred Stock shall not have any preferences, voting powers or
relative, participating, optional or other special rights,
including, without limitation, preemptive or conversion rights,
except as set forth above and in NationsBank South's Articles of
Association or as otherwise required by law.
VIII. Amendments. The Board of Directors reserves the
right to amend these resolutions in accordance with applicable
law.
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SECOND AMENDMENT TO
THE NATIONSBANK RETIREMENT SAVINGS PLAN
(as restated effective January 1, 1993)
THIS INSTRUMENT is executed as of the 31st day of December, 1994 by
NATIONSBANK CORPORATION, a North Carolina corporation with its principal office
and place of business in Charlotte, North Carolina, hereinafter referred to as
"NationsBank";
Statement of Purpose
The NationsBank Retirement Savings Plan (the "Plan") was amended and
restated effective January 1, 1993 by Instrument dated December 31, 1992 and
further amended by Instrument dated December 31, 1993. By this Instrument,
NationsBank is amending the Plan to reflect the merger of five defined
contribution plans into the Plan and other matters related to corporate
acquisitions and dispositions. These amendments have been authorized by the
Compensation Committee of the Board of Directors of NationsBank, which
Compensation Committee has the authority to amend the Plan on behalf of all
Participating Employers.
NOW, THEREFORE, for the purposes aforesaid, the Plan, as set forth in
said Instrument dated December 31, 1992, as subsequently amended, is amended as
follows:
1. Section 16.10(d) of the Plan is amended by changing the phrase "PAC
Plan" to "CRT Plan" effective as of January 1, 1994.
2. The following Section 16.11 is added to the Plan
effective as of March 1, 1994:
"SECTION 16.11. MERGER OF THE CORPUS CHRISTI
PLAN.
(a) Merger of the Corpus Christi Plan. The Corpus Christi National Bank
Employee Savings Plan (the "Corpus Christi Plan") shall merge with and into the
Plan effective as of July 1, 1994. In connection therewith and effective as of
that date, the Trust under the Corpus Christi Plan shall merge with and into the
Investment Trust for the Plan, and the assets of the Trust under the Corpus
Christi 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
<PAGE>
Trust of the Corpus Christi Plan on June 30, 1994 with and into the Funds being
maintained by the Investment Trustee under the Investment Trust on or after July
1, 1994 pursuant to Article XII of the Plan.
While the Corpus Christi Plan shall merge into the Plan effective July
1, 1994, from and after March 1, 1994, participants in the Corpus Christi Plan
shall accrue benefits under the Plan in accordance with its terms and provisions
rather than the Corpus Christi Plan. See Section 16.11(c) of the Plan.
(b) Accounts Related to Participation in the
Corpus Christi Plan.
(1) Establishment of Accounts. Effective as of July 1, 1994, the
accounts being maintained for participants in the Corpus Christi Plan on June
30, 1994 shall be combined with other accounts, or maintained as separate
accounts, under the Plan as follows:
(i) Deferral Contributions Accounts. The account maintained under the
Corpus Christi Plan for a Participant who participated in the Corpus Christi
Plan representing he Participant's interest in the Participant's "deferral
contributions" thereunder shall become the Participant's Pre-Tax Employee
Contribution Account under the Plan.
(ii) Creation of Former Corpus Christi Plan Accounts. An Account shall be
established under the Plan for each of the accounts maintained under the Corpus
Christi Plan for a Participant who participated in the Corpus Christi Plan other
than the account described in Section 16.11(b)(1)(i) of the Plan. These
Accounts, which are referred to in the Plan as "Former Corpus Christi Plan
Accounts," correspond to the accounts maintained under the Corpus Christi Plan
representing the Participant's interest (if any) in "matching contributions" and
"rollover contributions" thereunder.
The Committee may from time to time after July 1, 1994 combine a Participant's
Former Corpus Christi Plan Accounts with other Accounts of the Participant to
the extent that the Committee determines that the combination of Accounts is
administratively feasible and permitted by the Act and the Code.
2
<PAGE>
(2) Investment of Accounts. The Accounts representing a Participant's
interest in the Corpus Christi Plan (see Section 16.11(b)(1) of the Plan) 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. If a loan made under the Corpus
Christi Plan to a Participant who participated in the Corpus Christi Plan is
outstanding on July 1, 1994, 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
Participant's account(s) under the Corpus Christi Plan that were invested in
such note. The Investment Trustee shall become the successor lender of all such
"earmarked" loans outstanding on July 1, 1994 for all purposes, and the merger
of the Corpus Christi 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
July 1, 1994.
(c) Active Participation in the Plan. The following rules shall apply
for the purpose of determining when persons with "Hours of Service" under the
Corpus Christi Plan before March 1, 1994 for employment with any participating
employer in the Corpus Christi Plan become Participants in the Plan on or after
March 1, 1994:
(i) Prior Participants. With respect to persons who had become
"Participants" in the Corpus Christi Plan by February 28, 1994:
Covered Employee on March 1, 1994. If the person is a Covered
Employee on March 1, 1994, the person shall become a Participant
on that date.
Non-Covered Employee or Former Employee on March 1, 1994. If the
person is not a Covered Employee on March 1, 1994 but one or more
Accounts are established for the person pursuant to Section
16.11(b)(1) of the Plan because of the person's prior Corpus
Christi 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
3
<PAGE>
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.
Other situations. In any other case, the person shall become a
Participant if and when the person becomes a Covered Employee
after March 1, 1994.
(ii) Other Employees. A person who had not become a "Participant"
in the Corpus Christi Plan by February 28, 1994 shall become a
Participant when and as provided in Section 3.2(c) of the Plan (but in
no event before March 1, 1994). For purposes of Section 3.2(c), the
person shall be credited with Months of Service for time prior to
NationsBank's acquisition of the participating employer in the Corpus
Christi Plan determined as if the participating employer and its
affiliates and predecessor companies had been Participating Employers
in the Plan.
(d) Vesting in Former Corpus Christi Plan
Accounts; Vesting Service.
(1) Former Corpus Christi Plan Accounts. A Participant's Former Corpus
Christi Plan Account representing the Participant's "rollover contributions" to
the Corpus Christi Plan shall be fully Vested and nonforfeitable. A
Participant's Former Corpus Christi Plan Accounts that correspond to the
accounts that were maintained under the Corpus Christi Plan to represent the
Participant's interest in "matching contributions" thereunder shall be subject
to the vesting schedule set forth in Section 6.4(b)(iii) of the Plan.
(2) Determination of Vesting Service. For purposes of determining the
Vesting Service of a Participant who had become a "Participant" in the Corpus
Christi Plan by February 28, 1994, the Participant's Vesting Service shall be
determined under the applicable provisions of the Plan other than this Section
16.11(d), except that the person shall be credited with Months of Service for
time prior to NationsBank's acquisition of the participating employer in the
Corpus Christi Plan determined as if the participating employer and its
affiliates and predecessor companies had been Participating Employers in the
Plan. In no event, however, shall the Participant's Vesting Service for time
prior to
4
<PAGE>
January 1, 1994 be less than the sum of Amount A and Amount B, where:
Amount A is the Participant's "Years of Service" for vesting purposes under the
Corpus Christi Plan, determined as of December 31, 1993 (expressed as calendar
months); and
Amount B is the Participant's Vesting Service for 1994 determined under the
rules hereinafter set forth. The Participant will be credited with twelve (12)
months of Vesting Service if the Participant completes 1,000 Hours of Service
during 1994. Otherwise, the Participant will be credited with Vesting Service
for 1994 determined under the applicable provisions of the Plan other than this
Section 16.11(d).
For purposes of determining the Vesting Service of a Participant who
had not become a "Participant" in the Corpus Christi Plan by February 28, 1994
but had "Hours of Service" under the Corpus Christi Plan before March 1, 1994
for employment with any participating employer in the Corpus Christi Plan, the
person's Vesting Service shall be determined under the applicable provisions of
the Plan other than this Section 16.11(d), except that the person shall be
credited with Months of Service for time prior to NationsBank's acquisition of
the participating employer in the Corpus Christi Plan determined as if the
participating employer and its affiliates and predecessor companies had been
Participating Employers in the Plan.
(e) Distribution of Former Corpus Christi Plan
Accounts.
(1) General. While a Participant is in Service, Distributions to a
Participant from the Participant's Former Corpus Christi Plan Accounts shall be
determined, to the extent required by the Act and the Code, as if the Corpus
Christi Plan had remained in effect.
Following separation from Service of a Participant, Distributions from
the Participant's Former Corpus Christi Plan Accounts 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
a method of payment to Participants and Beneficiaries and require an immediate
commencement for
5
<PAGE>
Distributions to Beneficiaries. The following additional payment rule, however,
shall apply with respect to certain Beneficiaries of deceased Participants who
participated in the Corpus Christi Plan:
Deferral Election for Certain Beneficiaries. A Beneficiary of a deceased
Participant with Former Corpus Christi 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 Corpus Christi Plan
Accounts) until such later date (if any) provided in Section 6.02 of the Corpus
Christi Plan, if the requirements and conditions of said Section 6.02 are
satisfied. In such regard, the Participant must have died before the
commencement of benefits in order for the Beneficiary to elect a deferral.
(2) Benefit Payments in Progress. The merger of the Corpus Christi Plan
into the Plan shall not revoke or suspend any Corpus Christi Plan methods of
payment elected before or in progress on July 1, 1994, and any method of payment
in progress under the Corpus Christi Plan on July 1, 1994 with respect to a
Participant's accounts thereunder shall continue in effect with respect to the
Participant's interest under the Plan in such accounts.
(f) Beneficiary Designations. Any Participant's written beneficiary
designation in effect under the Corpus Christi Plan with respect to the
Participant's accounts thereunder shall not be revoked by reason of the merger
of the Corpus Christi Plan into the Plan. Such designation shall be effective
under the Plan from and after July 1, 1994 as designating the Beneficiary of all
of the Participant's Accounts, including any resulting Former Corpus Christi
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."
3. The following Section 16.12 is added to the Plan
effective as of December 8, 1994:
"SECTION 16.12. TEXAS BRANCH EMPLOYEES: 1994.
(a) General. Effective December 8, 1994 (the
"1994 Texas Termination Date"), certain Participants
6
<PAGE>
who were located in the Participating Employers' Texas branch offices known as
the "Chandler" and "Malakoff" branches that were sold to Citizens National Bank
of Henderson, terminated their employment with the Participating Employers as
the result of such sale (the "1994 Texas Affected Participants").
Notwithstanding any provisions of the Plan to the contrary, the provisions of
this Section 16.12 shall control with respect to the 1994 Texas Affected
Participants.
(b) Pre-Tax Employee Contributions. No Pre-Tax Employee Contributions
shall be made for the 1994 Texas Affected Participants with respect to any
payroll periods that begin after the 1994 Texas Termination Date.
(c) Matching Contribution Accounts of 1994 Texas Affected Participants.
The Matching Contribution Accounts of the 1994 Texas Affected Participants shall
be fully vested and nonforfeitable as of the 1994 Texas Termination Date. The
1994 Texas Affected Participants shall not be Participants Eligible for Matching
Contributions for the Plan Year ending December 31, 1994, and in such regard, no
Matching Contributions shall be allocated to their Matching Contribution
Accounts for that Plan Year.
(d) Distribution of Accounts. The 1994 Texas Affected Participants
shall be treated as having separated from Service as of the 1994 Texas
Termination Date for purposes of determining the time and method of the
Distribution of the Accounts pursuant to the Plan."
4. The following Sections 16.13 through 16.15 are added to
the Plan effective as of December 31, 1994:
"SECTION 16.13. MERGER OF THE RHNB PLAN.
(a) Merger of the RHNB Plan. The Rock Hill National Bank Retirement
Savings Plan (the "RHNB Plan") shall merge with and into the Plan effective as
of the close of business on December 31, 1994. In connection therewith and
effective as of that time, the Trust under the RHNB Plan shall merge with and
into the Investment Trust for the Plan, and the assets of the Trust under the
RHNB 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
Trust of the RHNB Plan on December 31, 1994 with and into the Funds being
maintained by the Investment Trustee under the
7
<PAGE>
Investment Trust on or after January 1, 1995 pursuant to Article XII of the
Plan.
(b) Accounts Related to Participation in the RHNB
Plan.
(1) Establishment of Accounts. Effective as of January 1, 1995, the
accounts being maintained for participants in the RHNB Plan on December 31, 1994
shall be combined with other accounts, or maintained as separate accounts, under
the Plan as follows:
(i) Elective Deferral Accounts. For a Participant who participated in
the RHNB Plan, the Participant's "Elective Deferral" account under the RHNB Plan
shall become the Participant's Pre-Tax Employee Contribution Account under the
Plan.
(ii) Creation of Former RHNB Plan Accounts. An Account shall be established
under the Plan for each account maintained under the RHNB Plan for a Participant
who participated in the RHNB Plan other than the Participant's "Elective
Deferral" account. These Accounts, which are referred to in the Plan as "Former
RHNB Plan Accounts," correspond to the accounts maintained under the RHNB Plan
representing the Participant's interest (if any) in "Matching Contributions" and
other employer contributions thereunder (other than "Elective Deferrals") and in
"Rollover Contributions" thereto. (See Section 5.1 of the RHNB Plan.)
The Committee may from time to time after January 1, 1995 combine a
Participant's Former RHNB Plan Accounts with other Accounts of the Participant
to the extent that the Committee determines that the combination of 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 RHNB Plan (see Section 16.13(b)(1) of the Plan) 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.
(c) Active Participation in the Plan. The following rules shall apply
for the purpose of determining when persons with "Hours of Service" under the
RHNB Plan before January 1, 1995 for employment
8
<PAGE>
with any participating employer in the RHNB Plan become Participants in the Plan
on or after January 1, 1995:
(i) Prior Participants. With respect to
persons who had become "Participants" in the RHNB
Plan by December 31, 1994:
Covered Employee on January 1, 1995. If the person is a Covered Employee on
January 1, 1995, the person shall become a Participant on that date.
Non-Covered Employee or Former Employee on January 1, 1995. If the person is not
a Covered Employee on January 1, 1995 but one or more Accounts are established
for the person pursuant to Section 16.13(b)(1) of the Plan because of the
person's prior RHNB 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.
Other situations. In any other case, the person shall become a Participant if
and when the person becomes a Covered Employee after January 1, 1995.
(ii) Other Employees. With respect to persons who had not become
"Participants" in the RHNB Plan by December 31, 1994:
Eligible Covered Employee on January 1, 1995. If the person is a Covered
Employee on January 1, 1995 and would have commenced participation in the RHNB
Plan on January 1, 1995 had it not merged into the Plan, the person shall become
a Participant on January 1, 1995.
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, 1995).
For purposes of Section 3.2(c), the person's Periods of Service and Qualifying
Periods of Severance shall include (without duplication) the following:
9
<PAGE>
The person shall be credited with Months of Service for time prior to
NationsBank's acquisition of the participating employers in the RHNB
Plan determined as if the participating employers and their affiliates
and 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 Service" (for eligibility purposes) that the
person had under the RHNB Plan as of
December 31, 1994.
If the person had in progress on December 31, 1994 a twelve-month
computation period that would be a "Year of Service" under the RHNB
Plan if the person completed 1,000 Hours of Service within it, the
person shall be credited with twelve (12) Months of Service upon the
completion of such computation period during 1995 if the person had
completed 1,000 "Hours of Service" under the RHNB Plan during the
portion of the computation period that had elapsed by December 31,
1994.
(d) Vesting in Former RHNB Plan Accounts; Vesting
Service.
(1) Former RHNB Plan Accounts. A Participant's Former RHNB Plan Account
representing the Participant's "Rollover Contributions" to the RHNB Plan shall
be fully Vested and nonforfeitable. A Participant's Former RHNB Plan Account
that corresponds to the account that was maintained under the RHNB Plan to
represent the Participant's interest in "Matching Contributions" and other
employer contributions thereunder (other than "Elective Deferrals") shall be
subject to the vesting schedule set forth in Section 6.4(b)(iii) of the Plan.
(2) Determination of Vesting Service. For purposes of determining the
Vesting Service of a Participant who had become a "Participant" in the RHNB Plan
by December 31, 1994, the Participant's Vesting Service shall be (without
duplication) the sum of Amount A and Amount B, where:
10
<PAGE>
Amount A is the Participant's "Years of Service" for vesting purposes under the
RHNB Plan, determined as of December 31, 1994 and expressed as calendar months;
and
Amount B is the Participant's Vesting Service determined under the applicable
provisions of the Plan other than this Section 16.13(d) but excluding for such
purpose any time prior to NationsBank's acquisition of the participating
employers in the RHNB Plan.
For purposes of determining the Vesting Service of a Participant who had not
become a "Participant" in the RHNB Plan by December 31, 1994 but who had "Hours
of Service" under the RHNB Plan before January 1, 1995 for employment with any
participating employer in the RHNB Plan, the person's Vesting Service shall be
determined under the applicable provisions of the Plan other than this Section
16.13(d), except that the person shall be credited with Months of Service for
time prior to NationsBank's acquisition of the participating employers in the
RHNB Plan determined as if the participating employers and their affiliates and
predecessor companies had been Participating Employers in the Plan.
(e) Distribution of Former RHNB Plan Accounts.
(1) General. While a Participant is in Service, Distributions to a
Participant from the Participant's Former RHNB Plan Accounts shall be
determined, to the extent required by the Act and the Code, as if the RHNB Plan
had remained in effect.
Following separation from Service of a Participant who has any Former
RHNB Plan Accounts, Distributions from the Participant's Accounts (including
Accounts that are not Former RHNB Plan Accounts) shall be made either (i) when
and as provided in Section 7.3 and 7.4 of the Plan or (ii) if the total Vested
interest in the Participant's Accounts at the time of Distribution exceeds three
thousand five hundred dollars ($3,500), by any one of the installment or annuity
methods of Distribution provided by the RHNB Plan. See the attached RHNB Plan
Supplement. The Committee shall establish the procedures by which Participants
and Beneficiaries may make their related payment elections.
(2) Benefit Payments in Progress. The merger of the RHNB Plan into the
Plan shall not revoke or suspend any RHNB Plan methods of payment elected before
or in
11
<PAGE>
progress on January 1, 1995, and any method of payment in progress under the
RHNB Plan on January 1, 1995 with respect to a Participant's accounts thereunder
shall continue in effect with respect to the Participant's interest under the
Plan in such accounts.
(f) Beneficiary Designations. Any Participant's written beneficiary
designation in effect under the RHNB Plan with respect to the Participant's
accounts thereunder shall not be revoked by reason of the merger of the RHNB
Plan into the Plan. Such designation shall be effective under the Plan from and
after January 1, 1995 as designating the Beneficiary of all of the Participant's
Accounts, including any resulting Former RHNB 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 16.14. MERGER OF THE CONSOLIDATED BANK PLAN.
(a) Merger of the Consolidated Bank Plan. The Consolidated Employee
Investment Plan (the "Consolidated Bank Plan") shall merge with and into the
Plan effective as of the close of business on December 31, 1994. In connection
therewith and effective as of that time, the Trust under the Consolidated Bank
Plan shall merge with and into the Investment Trust for the Plan, and the assets
of the Trust under the Consolidated Bank 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 Trust of the Consolidated Bank Plan on
December 31, 1994 with and into the Funds being maintained by the Investment
Trustee under the Investment Trust on or after January 1, 1995 pursuant to
Article XII of the Plan.
(b) Accounts Related to Participation in the Consolidated Bank Plan.
(1) Establishment of Accounts. Effective as of January 1, 1995, the
accounts being maintained for participants in the Consolidated Bank Plan on
December 31, 1994 shall be combined with other accounts, or maintained as
separate accounts, under the Plan as follows:
12
<PAGE>
(i) Accounts for Elective Deferral Contributions. The account
maintained under the Consolidated Bank Plan for a Participant who participated
in the Consolidated Bank Plan representing the Participant's interest in the
Participant's "Elective Deferral Contributions" thereunder shall become the
Participant's Pre-Tax Employee Contribution Account under the Plan.
(ii) Creation of Former Consolidated Bank Plan Accounts. An Account
shall be established under the Plan for each of the accounts maintained under
the Consolidated Bank Plan for a Participant who participated in the
Consolidated Bank Plan other than the account described in Section
16.14(b)(1)(i) of the Plan. These Accounts, which are referred to in the Plan as
"Former Consolidated Bank Plan Accounts," correspond to the accounts maintained
under the Consolidated Bank Plan representing the Participant's interest (if
any) in "Matching Contributions," "Additional Contributions," "Discretionary
Contributions" and "Rollover Contributions" thereunder. The Committee shall
cause to be maintained such sub- accounts as are necessary to limit or restrict
in- Service distributions as required by the Code.
The Committee may from time to time after January 1, 1995 combine a
Participant's Former Consolidated Bank Plan Accounts with one another or with
other Accounts of the Participant to the extent that the Committee determines
that the combination of Accounts is administratively feasible and permitted by
the Act and the Code.
(2) Investment of Accounts. Except for promissory notes evidencing
Participant loans (see the next paragraph), the Accounts representing a
Participant's interest in the Consolidated Bank Plan (see Section 16.14(b)(1) of
the Plan) 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. If a loan made under the
Consolidated Bank Plan to a Participant who participated in the Consolidated
Bank Plan is outstanding on January 1, 1995, 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 Participant's
13
<PAGE>
account(s) under the Consolidated Bank Plan that were invested in such note. The
Investment Trustee shall become the successor lender of all such "earmarked"
loans outstanding on January 1, 1995 for all purposes, and the merger of the
Consolidated Bank 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, 1995.
(c) Active Participation in the Plan. The following rules shall apply
for the purpose of determining when persons with "Hours of Service" under the
Consolidated Bank Plan before January 1, 1995 for employment with any
participating employer in the Consolidated Bank Plan become Participants in the
Plan on or after January 1, 1995:
(i) Prior Participants. With respect to persons who had become
"Participants" in the Consolidated Bank Plan by December 31, 1994:
Covered Employee on January 1, 1995. If a person is a Covered Employee on
January 1, 1995, the person shall become a Participant on that date.
Non-Covered Employee or Former Employee on January 1, 1995. If the person is not
a Covered Employee on January 1, 1995 but one or more Accounts are established
for the person pursuant to Section 16.14(b)(1) of the Plan because of the
person's Consolidated Bank 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.
Other situations. In any other case, the person shall become a Participant if
and when the person becomes a Covered Employee after January 1, 1995.
(ii) Other Employees. With respect to persons who had not become
"Participants" in the Consolidated Bank Plan by December 31, 1994:
14
<PAGE>
Eligible Covered Employee on January 1, 1995. If the person is a Covered
Employee on January 1, 1995 and would have commenced participation in the
Consolidated Bank Plan on January 1, 1995 had it not merged into the Plan, the
person shall become a Participant on January 1, 1995.
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, 1995).
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
NationsBank's acquisition of the participating employers in the
Consolidated Bank Plan determined as if the participating employers and
their affiliates and 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
Consolidated Bank Plan as of December 31, 1994.
If the person had in progress on December 31, 1994 an "Eligibility
Computation Period" that would be a year of "Eligibility Service" under
the Consolidated Bank Plan if the person completed 1,000 Hours of
Service within it, the person shall be credited with twelve (12) Months
of Service upon the completion of such computation period during 1995
if the person had completed 1,000 "Hours of Service" under the
Consolidated Bank Plan during the portion of the computation period
that had elapsed by December 31, 1994.
(d) Vesting in Former Consolidated Bank Plan
Accounts; Vesting Service.
15
<PAGE>
(1) Former Consolidated Bank Plan Accounts. A
Participant's Former Consolidated Bank Plan Account representing the
Participant's "Rollover Contributions" to the Consolidated Bank Plan shall be
fully Vested and nonforfeitable. The person's other Former Consolidated Bank
Plan Accounts shall vest as follows:
If the person was an employee of any Consolidated Bank Plan
participating employer on November 4, 1994 (the date of NationsBank's
acquisition of the participating employers), the person's Former
Consolidated Bank Plan Accounts shall be fully
Vested and nonforfeitable.
If the person was not an employee of any Consolidated Bank Plan
participating employer on November 4, 1994, the participant's Former
Consolidated Bank Plan Accounts shall be subject to the vesting
schedule set forth in Section 6.4(b)(iii) of the Plan, and the person's
Vesting Service shall be determined under the applicable provisions of
the Plan other than this Section 16.14(d), except that the person shall
be credited with Months of Service for time prior to NationsBank's
acquisition of the participating employers in the Consolidated Bank
Plan determined as if the participating employers and their affiliates
and predecessor companies had been Participating Employers in the Plan.
In no event, however, shall the person's Vesting Service for time prior
to January 1, 1995 be less than the person's "Vesting Service" on
December 31, 1994 under the Consolidated Bank Plan.
(2) Matching Contribution Accounts. The Matching Contribution Accounts
of persons who had "Hours of Service" under the Consolidated Bank Plan on or
before November 4, 1994 for employment with any participating employer in the
Consolidated Bank Plan (including persons who had not become "Participants" in
the Consolidated Bank Plan by November 4, 1994) shall vest as follows:
If the person was an employee of any Consolidated Bank Plan participating
employer on November 4, 1994 (the date of NationsBank's acquisition of the
participating employers), the person's Matching Contribution Account shall be
fully Vested and nonforfeitable.
If the person was not an employee of any Consolidated Bank Plan participating
employer on
16
<PAGE>
November 4, 1994, the person's Matching Contribution Account shall be subject to
the vesting schedule set forth in Section 6.4(b)(iii) of the Plan, and the
person's Vesting Service shall be determined under the applicable provisions of
the Plan other than this Section 16.14(d), except that the person shall be
credited with Months of Service for time prior to NationsBank's acquisition of
the participating employers in the Consolidated Bank Plan determined as if the
participating employers and their affiliates and predecessor companies had been
Participating Employers in the Plan. If the person had become a "Participant" in
the Consolidated Bank Plan by December 31, 1994, however, in no event shall the
person's Vesting Service for time prior to January 1, 1995 be less than the
person's "Vesting Service" on December 31, 1994 under the Consolidated Bank
Plan.
(e) Distribution of Former Consolidated Bank Plan
Accounts.
(1) General. While a Participant is in Service, Distributions to a
Participant from the Participant's Former Consolidated Bank Plan Accounts shall
be determined, to the extent required by the Act and the Code, as if the
Consolidated Bank Plan had remained in effect.
Following separation from Service of a Participant who has any Former
Consolidated Bank Plan Accounts, Distributions from the Participant's Accounts
(including Accounts that are not Former Consolidated Bank Plan Accounts) shall
be made either (i) when and as provided in Section 7.3 and 7.4 of the Plan or
(ii) if the total Vested interest in the Participant's Accounts at the time of
Distribution exceeds three thousand five hundred dollars ($3,500), by any one of
the installment or annuity methods of Distribution provided by the Consolidated
Bank Plan. See the attached Consolidated Bank Plan Supplement. The Committee
shall establish the procedures by which Participants and Beneficiaries may make
their related payment elections.
(2) Benefit Payments in Progress. The merger of the Consolidated Bank
Plan into the Plan shall not revoke or suspend any Consolidated Bank Plan
methods of payment elected before or in progress on January 1, 1995, and any
method of payment in progress under the
17
<PAGE>
Consolidated Bank Plan on January 1, 1995 with respect to a Participant's
accounts thereunder shall continue in effect with respect to the Participant's
interest under the Plan in such accounts.
(f) Beneficiary Designations. Any Participant's written beneficiary
designation in effect under the Consolidated Bank Plan with respect to the
Participant's accounts thereunder shall not be revoked by reason of the merger
of the Consolidated Bank Plan into the Plan. Such designation shall be effective
under the Plan from and after January 1, 1995 as designating the Beneficiary of
all of the Participant's Accounts, including any resulting Former Consolidated
Bank 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 16.15. MERGER OF THE CYPRESS PLANS.
(a) Merger of the Cypress Plans. The Cypress Financial Corporation
401(k) Salary Reduction Plan and the Rancho Santa Margarita Mortgage Corp.
401(k) Salary Reduction Plan (individually a "Cypress Plan" and collectively the
"Cypress Plans") shall merge with and into the Plan effective as of the close of
business on December 31, 1994. In connection therewith and effective as of that
time, the Trusts under the Cypress Plans shall merge with and into the
Investment Trust for the Plan, and the assets of the Trusts under the Cypress
Plans 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
Trusts of the Cypress Plans on December 31, 1994 with and into the Funds being
maintained by the Investment Trustee under the Investment Trust on or after
January 1, 1995 pursuant to Article XII of the Plan.
(b) Accounts Related to Participation in the
Cypress Plans.
(1) Establishment of Accounts. Effective as of January 1, 1995, the
accounts being maintained for participants in the Cypress Plans on December 31,
1994 shall be combined with other accounts, or maintained as separate accounts,
under the Plan as follows:
(i) Elective Contribution Accounts. The account maintained under a
Cypress Plan for a
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Participant who participated in such Cypress Plan representing the Participant's
interest in the Participant's "Elective Deferrals" thereunder shall become the
Participant's Pre-Tax Employee Contribution Account under the Plan.
(ii) Creation of Former Cypress Plan Accounts. An Account shall be
established under the Plan for each of the accounts maintained under a Cypress
Plan for a Participant who participated in such Cypress Plan other than the
Participant's "Elective Contribution Account." These Accounts, which are
referred to in the Plan as "Former Cypress Plan Accounts," correspond to the
accounts maintained under the Cypress Plan representing the Participant's
interest in employer contributions (other than "Elective Deferrals") and
"rollover" contributions. The Committee shall cause to be maintained such
sub-accounts within Former Cypress Plan Accounts as are necessary to limit or
restrict in-Service distributions as required by the Code.
The Committee may from time to time after January 1, 1995 combine a
Participant's Former Cypress Plan Accounts with one another or with other
Accounts of the Participant to the extent that the Committee determines that the
combination of Accounts is administratively feasible and permitted by the Act
and the Code.
(2) Investment of Accounts. Except for promissory notes evidencing
Participant loans (see the next paragraph), the Accounts representing a
Participant's interest in a Cypress Plan (see Section 16.15(b)(1) of the Plan)
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. If a loan made under a Cypress
Plan to a Participant who participated in such Cypress Plan is outstanding on
January 1, 1995, 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 Participant's
account(s) under such Cypress Plan that were invested in such note. The
Investment Trustee shall become the successor lender of all such "earmarked"
loans outstanding on January 1, 1995 for all purposes, and the merger of the
Cypress Plans into the Plan shall not affect the terms of the
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<PAGE>
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, 1995.
(c) Active Participation in the Plan. The following rules shall apply
for the purpose of determining when persons with any "Service" under the Cypress
Plans before January 1, 1995 for employment with any participating employer in a
Cypress Plan become participants in the Plan on or after January 1, 1995:
(1) Prior Participants. With respect to persons who had become
"Participants" in a Cypress Plan by December 31, 1994:
Covered Employee on January 1, 1995. If a person is a Covered Employee on
January 1, 1995, the person shall become a Participant on that date.
Non-Covered Employee or Former Employee on January 1, 1995. If the person is not
a Covered Employee on January 1, 1995 but one or more Accounts are established
for the person pursuant to Section 16.15(b)(1) of the Plan because of the
person's Cypress 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.
Other situations. In any other case, the person shall become a Participant if
and when the person becomes a Covered Employee after January 1, 1995.
(2) Other Employees. With respect to persons who had not become
"Participants" in a Cypress Plan by December 31, 1994:
Eligible Covered Employee on January 1, 1995. If the person is a Covered
Employee on January 1, 1995 and would have commenced participation in a Cypress
Plan on January 1, 1995 had the Cypress Plans not merged into
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<PAGE>
the Plan, the person shall become a Participant on January 1, 1995.
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, 1995).
For purposes of Section 3.2(c), the person's Periods of Service and Qualifying
Periods of Severance shall include the following: the person shall be credited
with Months of Service for time prior to NationsBank's acquisition of the
participating employers in the Cypress Plans determined as if those
participating employers had been Participating Employers in the Plan.
(d) Vesting in Former Cypress Plan Accounts; Vesting Service.
(1) Former Cypress Plan Accounts. A Participant's Former Cypress Plan
Account representing the Participant's "rollover contributions" to a Cypress
Plan shall be fully Vested and nonforfeitable. A Participant's Former Cypress
Plan Accounts that correspond to the accounts that were maintained under a
Cypress Plan to represent the Participant's interest in employer contributions
(other than "Elective Deferrals") shall (i) prior to the consolidation of the
recordkeeping of the Cypress Plans with this Plan (which may occur after January
1, 1995), be subject to the vesting schedule and rules for determining vesting
service set forth in the applicable Cypress Plan and (ii) from and after the
consolidation of such recordkeeping, be subject to the vesting schedule set
forth in Section 6.4(b)(iii) of the Plan.
(2) Determination of Vesting Service. For purposes of determining the
Vesting Service of a Participant who had become a "Participant" in a Cypress
Plan by December 31, 1994, (but subject to clause (i) of Section 16.15(d)(1) as
to Former Cypress Plan Accounts) the Participant's Vesting Service shall be
determined under the applicable provisions of the Plan other than this Section
16.15(d), except that the person shall be credited with Months of Service for
time prior to NationsBank's acquisition of the participating employers in the
Cypress Plans determined as if the participating employers and their affiliates
and predecessor companies had been Participating Employers in the Plan. For a
Participant who had become a "Participant" in a Cypress Plan, in no event
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shall the Participant's Vested percentage in any Account that is subject to the
vesting schedule set forth in Section 6.4(b)(iii) of the Plan be less at any
time than the Vested percentage that would result had the vesting provisions of
the Cypress Plans remained in effect.
For purposes of determining the Vesting Service of a Participant who had not
become a "Participant" in a Cypress Plan by December 31, 1994 but had any
"Service" under the Cypress Plan before January 1, 1995 for employment with any
participating employer in a Cypress Plan, the person's Vesting Service shall be
determined under the applicable provisions of the Plan other than this Section
16.15(d), except that the person shall be credited with Months of Service for
time prior to NationsBank's acquisition of the participating employers in the
Cypress Plans determined as if the participating employers and their affiliates
and predecessor companies had been Participating Employers in the Plan.
(e) Distribution of Former Cypress Plan Accounts.
(1) General. While a Participant is in Service, Distributions to a
Participant from the Participant's Former Cypress Plan Accounts shall be
determined, to the extent required by the Act and the Code, as if the Cypress
Plans had remained in effect.
Following separation from Service of a Participant who has any Former
Cypress Plan Accounts, Distributions from the Participant's Accounts (including
Accounts that are not Former Cypress Plan Accounts) shall be made either (i)
when and as provided in Section 7.3 and 7.4 of the Plan or (ii) if the total
Vested interest in the Participant's Accounts at the time of Distribution
exceeds three thousand five hundred dollars ($3,500), by any one of the
installment or annuity methods of Distribution provided by the Cypress Plans.
See the attached Cypress Plan Supplement. The Committee shall establish the
procedures by which Participants and Beneficiaries may make their related
payment elections.
(2) Benefit Payments in Progress. The merger of the Cypress Plans into
the Plan shall not revoke or suspend any Cypress Plan methods of payment elected
before or in progress on January 1, 1995, and any method of payment in progress
under a Cypress Plan on January 1, 1995 with respect to a Participant's accounts
thereunder shall continue in effect with
22
<PAGE>
respect to the Participant's interest under the Plan in such accounts.
(f) Beneficiary Designations. Any Participant's written beneficiary
designation in effect under a Cypress Plan with respect to the Participant's
accounts thereunder shall not be revoked by reason of the merger of the Cypress
Plan into the Plan. Such designation shall be effective under the Plan from and
after January 1, 1995 as designating the Beneficiary of all of the Participant's
Accounts, including any resulting Former Cypress 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."
5. The following "RHNB Plan Supplement," "Consolidated Bank Plan
Supplement" and "Cypress Plan Supplement" are added to the end of the Plan
immediately following the "C&S/Sovran Plan Supplement" effective as of December
31, 1994:
"RHNB PLAN SUPPLEMENT TO THE
NATIONSBANK RETIREMENT SAVINGS PLAN
This RHNB Plan Supplement forms a part of The NationsBank
Retirement Savings Plan as amended and restated effective January 1,
1993 (the "Plan"). This RHNB Plan Supplement shall apply only to those
Participants in the Plan who were participants in the Rock Hill
National Bank Retirement Savings Plan as in effect prior to January 1,
1995 (the "RHNB Plan"), and only to the extent expressly provided in
the Plan. In such regard, Section 16.13 of the Plan captioned "Merger
of the RHNB Plan" makes reference to certain provisions of the RHNB
Plan as in effect on December 31, 1994, which provisions are set forth
below for historical reference purposes:
ADOPTION AGREEMENT
. . .
21. DISTRIBUTION OPTIONS
. . .
(b) Optional Forms of Payment:
[XX] (i) Lump Sum.
[XX] (ii) Installment Payments.
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[XX] (iii) Life Annuity*.
[XX] (iv) Life Annuity Term Certain*. Life
annuity with payments guaranteed
for 10 payments (not to exceed 20
years, specify all applicable).
[XX] (v) Joint and [XX] 50%, [ ] 66-2/3%, [ ] 75%
or [XX] 100% survivor annuity* (specify all
applicable).
[n/a] (vi) Other form(s) specified: n/a
* Not available in Plan meeting provisions of paragraph 8.7 of Basic
Plan Document #01.
BASIC PLAN DOCUMENT
. . .
ARTICLE VI
RETIREMENT BENEFITS AND DISTRIBUTIONS
. . .
6.5. Normal Form Of Payment - The normal form of payment for a profit-sharing
plan satisfying the requirements of paragraph 8.7 hereof shall be a lump sum
with no option for annuity payments. For all other plans, the normal form of
payment hereunder shall be a Qualified Joint and Survivor Annuity as provided
under Article VIII. However, a Participant whose Vested Account Balance derived
from Employer and Employee contributions exceeds $3,500, or if at the time of
any prior distribution it exceeds $3,500, shall (with the consent of his or her
Spouse) have the right to receive his or her benefit in a lump sum or in
monthly, quarterly, semi-annual or annual payments from the Fund over any period
not extending beyond the life expectancy of the Participant and his or her
Beneficiary. For Plan Years beginning prior to 1989, a Participant's Vested
Account Balance shall not include Qualified Voluntary Contributions. The normal
form of payment shall be automatic, unless the Participant files a written
request with the Employer prior to the date on which the benefit is
automatically payable, electing a lump sum or installment payment option. No
amendment to the Plan may eliminate one of the optional distribution forms
listed above.
. . .
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<PAGE>
ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 Applicability Of Provisions - The provisions of this Article shall apply to
any Participant who is credited with at least one Hour of Service with the
Employer on or after August 23, 1984 and such other Participants as provided in
paragraph 8.8.
8.2 Payment Of Qualified Joint and Survivor - Annuity Unless an optional form
of benefit is selected pursuant to a Qualified Election within the 90-day period
ending on the Annuity Starting Date, a married Participant's Vested Account
Balance will be paid in the form of a Qualified Joint and Survivor Annuity and
an unmarried Participant's Vested Account Balance will be paid in the form of a
life annuity. The Participant may elect to have such annuity distributed upon
attainment of the Early Retirement Age under the Plan.
8.3 Payment Of Qualified Pre-Retirement Survivor Annuity - Unless an optional
form of benefit has been selected within the Election Period pursuant to a
Qualified Election, if a Participant dies before the Annuity Starting Date then
the Participant's Vested Account Balance shall be applied towards the purchase
of an annuity for the life of the Surviving Spouse. The Surviving Spouse may
elect to have such annuity distributed within a reasonable period after the
Participant's death.
A Participant who does not meet the age 35 requirement set forth in the Election
Period as of the end of any current Plan Year may make a special qualified
election to waive the qualified Pre-retirement Survivor annuity for the period
beginning on the date of such election and ending on the first day of the Plan
Year in which the Participant will attain age 35. Such election shall not be
valid unless the Participant receives a written explanation of the Qualified
Pre-retirement Survivor Annuity in such terms as are comparable to the
explanation required under paragraph 8.5. Qualified Pre-retirement Survivor
Annuity coverage will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age 35. Any new waiver on or after
such date shall be subject to the full requirements of this Article.
8.4. Qualified Election - A Qualified Election is an election to either waive a
Qualified Joint and Survivor Annuity or a Qualified Pre-retirement Survivor
Annuity. Any such election shall not be effective unless:
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<PAGE>
(a) the Participant's Spouse consents in writing
to the election;
(b) the election designates a specific
beneficiary, including any class of
beneficiaries or any contingent
beneficiaries, which may not be changed
without spousal consent (or the Spouse
expressly permits designations by the
Participant without any further spousal
consent);
(c) the Spouse's consent acknowledges the effect
of the election; and
(d) the Spouse's consent is witnessed by a Plan
representative or notary public.
Additionally, a Participant's waiver of the Qualified Joint and Survivor Annuity
shall not be effective unless the election designates a form of benefit payment
which may not be changed without spousal consent (or the Spouse expressly
permits designations by the Participant without any further spousal consent). If
it is established to the satisfaction of the Plan Administrator that there is no
Spouse or that the Spouse cannot be located, a waiver will be deemed a Qualified
Election. Any consent by a Spouse obtained under this provision (or
establishment that the consent of a Spouse may not be obtained) shall be
effective only with respect to such Spouse. A consent that permits designations
by the Participant without any requirement of further consent by such Spouse
must acknowledge that the Spouse has the right to limit consent to a specific
beneficiary, and a specific form of benefit where applicable, and that the
Spouse voluntarily elects to relinquish either or both of such rights. A
revocation of a prior waiver 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. No consent obtained under this provision shall
be valid unless the Participant has received notice as provided in paragraphs
8.5 and 8.6 below.
8.5. Notice Requirements For Qualified Joint and Survivor Annuity - The Plan
Administrator shall provide each Participant a written explanation of:
(a) the terms and conditions of a Qualified Joint
and Survivor Annuity;
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<PAGE>
(b) The Participant's right to make and the
effect of an election to waive the Qualified
Joint and Survivor Annuity form of benefits;
(c) the rights of a Participant's Spouse; and
(d) the right to make, and the effect of, a
revocation of a previous election to waive
the Qualified Joint and Survivor Annuity.
Such notice shall be provided not less than 30 days and no more than 90 days
prior to the Annuity Starting Date.
8.6. Notice Requirements For Qualified Pre-Retirement Survivor Annuity - The
Plan Administrator shall provide each Participant a written explanation of the
Qualified Pre-retirement Survivor Annuity in such terms and in such manner as
would be comparable to the explanation provided for meeting the requirements of
paragraph 8.5 applicable to a Qualified Joint and Survivor Annuity. Such
explanation shall be provided within whichever of the following periods ends
last:
(a) the period beginning with the first day of the Plan Year in
which the Participant attains age 32 and ending with the close
of the Plan Year preceding the Plan Year in which the
Participant attains age 35;
(b) a reasonable period ending after the
individual becomes a Participant;
(c) a reasonable period ending after this Article
first applies to the Participant.
Notwithstanding the foregoing, notice must be provided within a reasonable
period ending after separation from Service in the case of a Participant who
separates from Service before attaining age 35.
For purposes of applying the preceding paragraph, a reasonable period ending
after the enumerated events described in (b) and (c) is the end of the two-year
period beginning one-year prior to the date the applicable event occurs, and
ending one-year after that date. In the case of a Participant who separates from
Service before the Plan year in which age 35 is attained, notice shall be
provided within the two-year period beginning one year prior to the separation
and ending one year after separation. If such a Participant subsequently returns
to employment with the
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<PAGE>
Employer, the applicable period for such Participant shall be redetermined.
. . .
8.8. Transitional Joint and Survivor Annuity Rules Special transition rules
apply to Participants who were not receiving benefits on August 23, 1984.
(a) Any living Participant not receiving benefits
on August 23, 1984 who would otherwise not
receive the benefits prescribed by the
previous paragraphs of this Article, must be
given the opportunity to elect to have the
prior paragraphs of this Article apply if
such Participant is credited with at least
one Hour of Service under this Plan or a
predecessor Plan in a Plan Year beginning on
or after January 1, 1976 and such Participant
had at least 10 Years of Service for vesting
purposes when he or she separated from
Service.
(b) Any living Participant not receiving benefits
on August 23, 1984, who was credited with at
least one Hour of Service under this Plan or
a predecessor Plan on or after September 2,
1974, and who is not otherwise credited with
any Service in a Plan Year beginning on or
after January 1, 1976, must be given the
opportunity to have his or her benefits paid
in accordance with paragraph 8.8.
(c) The respective opportunities to elect [as described in (a) and
(b) above] must be afforded to the appropriate Participants
during the period commending on August 23, 1984 and ending on
the date benefits would otherwise commence to said
Participants.
8.9. Automatic Joint and Survivor Annuity and Early Survivor Annuity - Any
Participant who has elected pursuant to paragraph 8.8(b) and any Participant who
does not elect under paragraph 8.8(a) or who meets the requirements of paragraph
8.8(a), except that such Participant does not have at least 10 years of vesting
Service when he or she separates from Service, shall have his or her benefits
distributed in accordance with all of the following requirements if benefits
would have been payable in the form of a life annuity.
28
<PAGE>
(a) Automatic Joint and Survivor Annuity. If
benefits in the form of a life annuity become
payable to a married Participant who:
(1) begins to receive payments under the
Plan on or after Normal Retirement Age,
or
(2) dies on or after Normal Retirement Age
while still working for the Employer, or
(3) begins to receive payments on or after
the Qualified Early Retirement Age, or
(4) separates from Service on or after attaining Normal
Retirement (or the Qualified Early Retirement Age)
and after satisfying the eligibility requirements for
the payment of benefits under the Plan and thereafter
dies before beginning to receive such benefits, then
such benefits will be received under this Plan in the
form of a Qualified Joint and Survivor Annuity,
unless the Participant has elected otherwise during
the Election Period. The Election Period must begin
at least 6 months before the Participant attains
Qualified Early Retirement Age and end not more than
90 days before the commencement of benefits. Any such
election will be in writing and may be changed by the
Participant at any time.
(b) Election of Early Survivor Annuity. A
Participant who is employed after attaining
the Qualified Early Retirement Age will be
given the opportunity to elect, during the
Election Period, to have a survivor annuity
payable on death. If the Participant elects
the survivor annuity, payments under such
annuity must not be less than the payments
which would have been made to the Spouse
under the Qualified Joint and Survivor
Annuity if the Participant had retired on the
day before his or her death. Any election
under this provision will be in writing and
may be changed by the Participant at any
time. The Election Period begins on the
later of:
29
<PAGE>
(1) the 90th day before the Participant
attains the Qualified Retirement Age, or
(2) the date on which the participation
begins.
and ends on the date the Participant
terminates employment.
8.10. Annuity Contracts - Any annuity contract distributed under this Plan must
be nontransferable. The terms of any annuity contract purchased and distributed
to the Plan to a Participant or Spouse shall comply with the requirements of
this Plan.
* * * * * * * * *
CONSOLIDATED BANK PLAN SUPPLEMENT TO THE
NATIONSBANK RETIREMENT SAVINGS PLAN
This Consolidated Bank Plan Supplement forms a part of The
NationsBank Retirement Savings Plan as amended and restated effective
January 1, 1993 (the "Plan"). This Consolidated Bank Plan Supplement
shall apply only to those Participants in the Plan who were
participants in the Consolidated Employee Investment Plan as in effect
prior to January 1, 1995 (the "Consolidated Bank Plan"), and only to
the extent expressly provided in the Plan. In such regard, Section
16.14 of the Plan captioned "Merger of the Consolidated Bank Plan"
makes reference to certain provisions of the Consolidated Bank Plan as
in effect on December 31, 1994, which provisions are set forth below
for historical reference purposes:
ARTICLE VI
DISTRIBUTION OF BENEFITS
SECTION 6.01--AUTOMATIC FORMS OF DISTRIBUTION.
Unless a qualified election of an optional form of benefit has been
made with the election period (see the ELECTION PROCEDURES SECTION of Article
VI), the automatic form of benefit payable to or on behalf of a Participant is
determined as follows:
a) The automatic form of retirement benefit for
a Participant who does not die before his
Annuity Starting date shall be the Qualified
Joint and Survivor Form.
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<PAGE>
b) The automatic form of death benefit for a
Participant who dies before his Annuity
Starting date shall be:
1. A Qualified Preretirement Survivor
Annuity for a Participant who has a
spouse to whom he has been continuously
married throughout the one-year period
ending on the date of the death. The
spouse may elect to start receiving the
death benefit on any first day of the
month on or after the Participant dies
and before the date the Participant
would have been age 70 1/2. If the spouse
dies before benefits start the
Participant's Vested Account, determined
as of the date of the spouse's death,
shall be paid to the spouse's
Beneficiary.
2. A single-sum payment to the
Participant's Beneficiary for a
Participant who does not have a spouse
who is entitled to a Qualified
Preretirement Survivor Annuity.
Before a death benefit will be paid on account of the death of
a Participant who does not have a spouse who is entitled to a
Qualified Preretirement Survivor Annuity, it must be
established to the satisfaction of a plan representative that
the Participant does not have such a spouse.
SECTION 6.02-- OPTIONAL FORMS OF DISTRIBUTION AND
DISTRIBUTION REQUIREMENTS
a) For purposes of this section the following terms
are defined:
Applicable Life Expectancy means Life Expectancy (or Joint and Last
Survivor Expectancy) calculated using the attained age of the
Participant (or Designated Beneficiary) as of the Participant's (or
Designated Beneficiary's) birthday in the applicable calendar year
reduced by one for each calendar year which has elapsed since the date
Life Expectancy was first calculated. If Life Expectancy is being
recalculated, the Applicable Life Expectancy shall be the Life
Expectancy so recalculated. The applicable calendar year shall be the
first Distribution Calendar Year, and if
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<PAGE>
Life Expectancy is being recalculated such succeeding calendar year.
Designated Beneficiary means the individual who is designated as the
beneficiary under the Plan in accordance with Code Section 401(a)(9)
and the regulations thereunder.
Distribution Calendar Year means a calendar year for which a minimum
distribution is required. For distributions before the Participant's
death, the first Distribution Calendar Year is the calendar year
immediately preceding the calendar year which contains the
Participant's Required Beginning Date. For distributions beginning
after the Participant's death, the first Distribution Calendar Year is
the calendar year in which distributions are required to begin pursuant
to (e) below.
Joint and Last Survivor Expectancy means joint and last survivor
expectancy computed by use of the expected return multiples in Table VI
of section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the Participant (or spouse in the case of
distributions described in (e)(2)(ii) below) by the time distributions
are required to begin, life expectancies shall be recalculated
annually. Such election shall be irrevocable as to the Participant (or
spouse) and shall apply to all subsequent years. The life expectancy of
a nonspouse Beneficiary may not be recalculated.
Life Expectancy means life expectancy computed by use of the expected
return multiples in Tables V of section 1.72-9 of the Income Tax
Regulations.
Unless otherwise elected by the Participant (or spouse, in the case of
distributions described in (e)(2)(ii) below) by the time distributions
are required to begin, life expectancies shall be recalculated
annually. Such election shall be irrevocable as to the Participant (or
spouse) and shall apply to all subsequent years. The life expectancy of
a nonspouse Beneficiary may not be recalculated.
Participant's Benefit means
32
<PAGE>
1. The Account Balances as of the last
evaluation date in the calendar year
immediately preceding the Distribution
Calendar Year (valuation calendar year)
increased by the amount of any contributions
or forfeitures allocated to the Account
balance as of the dates in the valuation
calendar year after the valuation date and
decreased by distributions made in the
valuation calendar year after the valuation
date.
2. For purposes of (1) above, if any portion of
the minimum distribution for the first
Distribution Calendar Year is made in the
second Distribution Calendar Year on or
before the Required Beginning Date, the
amount of the minimum distribution made in
the second Distribution Calendar Year shall
be treated as if it had been made in the
immediately preceding Distribution Calendar
Year.
Required Beginning Date means, for a Participant, the first day of
April of the calendar year following the calendar year in which the
Participant attains age 70 1/2, unless otherwise provided in (1), (2)
or (3) below:
1. The Required Beginning date for a Participant who attains age
70 1/2 before January 1, 1988, and who is not a 5-percent
owner is the first day of April of the calendar year following
the calendar year in which the later of retirement or
attainment of age 70 1/2 occurs.
2. The Required Beginning Date for a Participant
who attains age 70 1/2 before January 1, 1988,
and who is a 5-percent owner is the first day
of April of the calendar year following the
later of
i. the calendar year in which the
Participant attains age 70 1/2, or
ii. the earlier of the calendar year with or
within which ends the Plan Year in which
the Participant becomes a 5-percent
owner, or the calendar year in which the
Participant retires.
33
<PAGE>
3. The Required Beginning Date of a Participant who is not a
5-percent owner and who attains age 70 1/2 during 1988 and who
has not returned as of January 1, 1989, is April 1, 1990.
A Participant is treated as a 5-percent owner for purposes of this
section if such Participant is a 5-percent owner as defined in Code
Section 416(i) (determined in accordance with Code Section 416 but
without regard to whether the Plan is top-heavy) at any time during the
Plan Year ending with or within the calendar year in which such owner
attains age 66 1/2 or any subsequent Plan Year.
Once distributions have begun to a 5-percent owner under this section,
they must continue to be distributed, even if the Participant ceases to
be a 5-percent owner in a subsequent year.
b) The optional forms of retirement benefit shall be
the following: a straight life annuity; single
life annuities with certain periods of five, ten
or fifteen years; a single life annuity with
installment refund; survivorship life annuities
with installment refund and survivorship
percentages of 50, 62 2/3 or 100; fixed period
annuities for any period of whole months which is
not less than 60 and does not exceed the Life
Expectancy of the Participant and the named
Beneficiary as provided in (d) below where the
Life Expectancy is not recalculated; and a series
of installments chosen by the Participant with a
minimum payment each year beginning with the year
the Participant turns age 70 1/2. The payment for
the first year in which a minimum payment is
required will be made by April 1 of the following
calendar year. The payment for the second year
and each successive year will be made by
December 31 of that year. The minimum payment
will be based on a period equal to the Joint and
Last Survivor Expectancy of the Participant and
the Participant's spouse, if any, as provided in
(d) below where the Joint and Last Survivor
Expectancy is recalculated. The balance of the
Participant's Vested Account, if any, will be
payable on the Participant's death to his
Beneficiary in a single sum. The Participant may
also elect to receive his Vested Account in a
single-sum payment.
Election of an optional form is subject to the qualified election
provisions of Article VI.
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Any annuity contract distributed shall be nontransferable. The terms of
any annuity contract purchased and distributed by the Plan to a
Participant or spouse shall comply with the requirements of this Plan.
c) The optional forms of death benefit are a single- sum payment and any
annuity that is an optional form of retirement benefit. However, a
series of installments shall not be available if the Beneficiary is not
the spouse of the deceased Participant.
d) Subject to the AUTOMATIC FORMS OF DISTRIBUTION
SECTION of Article VI, joint and survivor annuity
requirements, the requirements of this section
shall apply to any distribution of a Participant's
interest and will take precedence over any
inconsistent provisions of the Plan. Unless
otherwise specified, the provisions of this
section apply to calendar years beginning after
December 31, 1984.
All distributions required under this section shall be determined and
made in accordance with the proposed regulations under Code Section
401(a)(9), including the minimum distribution incidental benefit
requirement of section 1.40(a)(9)-2 of the proposed regulations.
The entire interest of a Participant must be distributed or begin to be
distributed no later than the Participant's Required Beginning Date.
As of the first Distribution Calendar Year distributions if not made in
a single sum may only be made over one of the following periods (or
combination thereof);
1. the life of the Participant,
2. the life of the Participant and a Designated
Beneficiary,
3. a period certain not extending beyond the
Life Expectancy of the Participant, or
4. a period certain not extending beyond the
Joint and Last Survivor Expectancy of the
Participant and a Designated Beneficiary.
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If the Participant's interest is to be distributed in other than a
single sum, the following minimum distribution rules shall apply on or
after the Required Beginning Date:
5. Individual account:
i. If a Participant's Benefits to be
distributed over
1) a period not extending beyond the
Life Expectancy of the Participant
or the Joint Life and Last Survivor
Expectancy of the Participant and
the Participant's Designated
Beneficiary or
2) a period not extending beyond the
Life Expectancy of the Designated
Beneficiary,
the amount required to be distributed for each
calendar year beginning with the distributions for
the first Distribution Calendar Year, must be at
least equal to the quotient obtained by dividing the
Participant's Benefit by the Applicable Life
Expectancy.
ii. For calendar years beginning before January 1,
1989, if the Participant's spouse is not the
Designated Beneficiary, the method of distribution
selected must assure that at least 50% of the present
value of the amount available for distribution is
paid within the Life Expectancy of the Participant.
iii. For calendar years beginning after
December 31, 1988, the amount to be
distributed each year, beginning with
distributions for the first Distribution
Calendar Year shall not be less than the
quotient obtained by dividing the
Participant's Benefit by the lesser of
1) the Applicable Life Expectancy or
2) if the Participant's spouse is not
the Designated Beneficiary, the
applicable divisor determined from
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<PAGE>
the table set forth in Q&A-4 of
section 1.401(a)(9)-2 of the
proposed regulations.
Distributions after the date of the Participant shall
be distributed using the Applicable Life Expectancy
in (5)(i) above as the relevant divisor without
regard to proposed regulations section 1.401(a)(9)-2.
iv. The minimum distribution required for
the Participant's first Distribution
Calendar Year must be made on or before
the Participant's Required Beginning
Date. The minimum distribution for the
Distribution Calendar Year for other
calendar years, including the minimum
distribution for the Distribution
Calendar Year in which the Participant's
Required Beginning Date occurs, must be
made on or before December 31 of that
Distribution Calendar Year.
6. Other forms:
i. If the Participant's Benefit is distributed in the
form of an annuity purchased from an insurance
company, distributions thereunder shall be made in
accordance with the requirements of Code Section
401(a)(9) and the proposed regulations thereunder.
e) Death distribution provisions:
1. Distribution beginning before death. If the Participant dies
after distribution of his interest has begun, the remaining
portion of such interest will continue to be distributed at
least as rapidly as under the method of distribution being
used prior to the Participant's death.
2. Distribution beginning after death. If the Participant dies
before distribution of his interest begins, distribution of
the Participant's entire interest shall be completed by
December 31 of the calendar year containing the fifth
anniversary of the Participant's death except to the extent
that
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<PAGE>
an election is made to receive distributions
in accordance with (i) or (ii) below:
i. if any portion of the Participant's
interest is payable to a Designated
Beneficiary, distributions may be made
over the life or over a period certain
not greater than the Life Expectancy of
the Designated Beneficiary commencing on
or before December 31 of the calendar
year immediately following the calendar
year in which the Participant died;
ii. if the Designated Beneficiary is the
Participant's surviving spouse, the date
distributions are required to begin in
accordance with (i) above shall not be
earlier than the later of
1) December 31 of the calendar year
immediately following the calendar
year in which the Participant died
and
2) December 31 of the calendar year in
which the Participant would have
attained age 70 1/2.
If the Participant has not made an election pursuant
to this (e)(2) by the time of his death, the
Participant's Designated Beneficiary must elect the
method of distribution no later than the earlier of
iii. December 31 of the calendar year in
which distributions would be required to
begin under this subparagraph, or
iv. December 31 of the calendar year which
contains the fifth anniversary of the
date of death of the Participant.
If the Participant has no Designated Beneficiary, or if the
Designated Beneficiary does not elect a method of
distribution, distribution of the Participant's entire
interest must be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death.
38
<PAGE>
3. For purposes of (e)(2) above, if the surviving spouse dies
after the Participant, but before payments to such spouse
begin, the provisions of (e)(2) above, with the exception of
(e)(2)(ii) therein, shall be applied as if the surviving
spouse were the Participant.
4. For purposes of this (e), any amount paid to a child of the
Participant will be treated as if it had been paid to the
surviving spouse if the amount becomes payable to the
surviving spouse when the child reaches the age of majority.
5. For purposes of this (e), distribution of a
Participant's interest is considered to begin
on the Participant's Required Beginning date
(or if (e)(3) above is applicable, the date
distribution is required to begin to the
surviving spouse pursuant to (e)(2) above).
If distribution in the form of an annuity
irrevocably commences to the Participant
before the Required Beginning Date, the date
distribution is considered to begin is the
date distribution actually commences.
SECTION 6.03--ELECTION PROCEDURES.
The Participant, Beneficiary, or spouse shall make any election under
this section in writing. The Plan Administrator may require such individual to
complete and sign any necessary documents as to the provisions to be made. Any
election permitted under (a) and (b) below shall be subject to the qualified
election provisions of (c) below.
a) Retirement Benefits. A Participant may elect
his Beneficiary or Contingent Annuitant and
may elect to have retirement benefits
distributed under any of the optional forms
of retirement benefit described in the
OPTIONAL FORMS OF DISTRIBUTION AND
DISTRIBUTION REQUIREMENTS SECTION of Article
VI.
b) Death Benefits. A Participant may elect his
Beneficiary and may elect to have death
benefits distributed under any of the
optional forms of death benefit described in
OPTIONAL FORMS OF DISTRIBUTION AND
39
<PAGE>
DISTRIBUTION REQUIREMENTS SECTION of Article
VI.
If the Participant has not elected an optional form of
distribution for the death benefit payable to his Beneficiary,
the Beneficiary may, for his own benefit, elect the form of
distribution, in like manner as a Participant.
The Participant may waive the Qualified Preretirement Survivor
Annuity by naming someone other than his spouse as
Beneficiary.
In lieu of the Qualified preretirement Survivor Annuity
described in the AUTOMATIC FORMS OF DISTRIBUTION SECTION of
Article VI, the spouse may, for his own benefit, waive the
Qualified Preretirement Survivor Annuity by electing to have
the benefit distributed under any of the optional forms of
death benefit described in the OPTIONAL FORMS OF DISTRIBUTION
AND DISTRIBUTION REQUIREMENTS SECTION of Article VI.
c) Qualified Election. The Participant,
Beneficiary or spouse may make an election at
any time during the election period. The
Participant, Beneficiary, or spouse may
revoke the election made (or make a new
election) at any time and any number of times
during the election period. An election is
effective only if it meets the consent
requirements below.
The election period as to retirement benefits is the 90-day
period ending on the Annuity Starting Date. An election to
waive the Qualified Joint and Survivor Form may not be made
before the date he is provided with the notice of the ability
to waive the Qualified Joint and Survivor Form. If the
Participant elects the series of installments, he may elect on
any later date to have the balance of his Vested Account paid
under any of the optional forms of retirement benefit
available under the Plan. His election period for this
election is the 90-day period ending on the Annuity Starting
Date for the optional form of retirement benefit elected.
40
<PAGE>
A Participant may make an election as to death benefits at any
time before he dies. The spouse's election period begins on
the date the Participant dies and ends on the date benefits
begin. The Beneficiary's election period begins on the date
the Participant dies and ends on the date benefits begin. An
election to waive the Qualified Preretirement Survivor Annuity
may not be made by the Participant before the date he is
provided with the notice of the ability to waive the Qualified
Preretirement Survivor Annuity. A Participant's election to
waive the Qualified Preretirement Survivor Annuity which is
made before the first day of the Plan Year in which he reached
age 35 shall become invalid on such date. An election made by
a Participant after he ceases to be an Employee will not
become invalid on the first day of the Plan Year in which he
reaches age 35 with respect to death benefits from that part
of his Account resulting from Contributions made before he
ceased to be an Employee.
If the Participant's Vested Account has at any time exceeded
$3,500, any benefit which is (1) immediately distributable or
(2) payable in a form other than a Qualified Joint and
Survivor Form or a Qualified Preretirement Survivor Annuity
requires the consent of the Participant and the Participant's
spouse (or where either the Participant or spouse has died,
the survivor). The consent of the Participant or spouse to a
benefit which is immediately distributable must not be made
before the date the Participant or spouse is provided with the
notice of the ability to defer the distribution. Such consent
shall be made in writing. The consent shall not be made more
than 90 days before the Annuity Starting Date. Spousal consent
is not required for a benefit which is immediately
distributable in a Qualified Joint and Survivor Form.
Furthermore, if spousal consent is not required because the
Participant is electing an optional form of retirement benefit
that is not a life annuity pursuant to (d) below, only the
Participant need consent to the distribution of a benefit
payable in a form that is not a life annuity and which is
41
<PAGE>
immediately distributable. Neither the consent of the
Participant nor the Participant's spouse shall be required to
the extent that a distribution is required to satisfy Code
Section 401(a)(9) or Code Section 415. In addition, upon
termination of this Plan if the Plan does not offer an annuity
option (purchased from a commercial provider), the
Participant's Account balance may, without the Participant's
consent, be distributed to the Participant or transferred to
another defined contribution plan (other than an employee
stock ownership plan as defined in Code Section 4975(e)(7))
within the same Controlled Group. A benefit is immediately
distributable if any part of the benefit could be distributed
to the Participant (or surviving spouse) before the
Participant attains (or would have attained if not deceased)
the older of Normal Retirement Age or age 62. If the Qualified
Joint and Survivor Form is waived, the spouse has the right to
consent only to a specific Beneficiary or a specific form of
benefit. The spouse can relinquish one or both such rights.
Such consent shall be made in writing. the consent shall not
be made more than 90 days before the Annuity Starting Date. If
the qualified preretirement Survivor Annuity is waived, the
spouse has the right to limit consent only to a specific
Beneficiary. Such consent shall be in writing. The spouse's
consent shall be witnessed by a plan representative or notary
public. The spouse's consent must acknowledge the effect of
the election, including that the spouse had the right to limit
consent only to a specific Beneficiary or a specific form of
benefit, if applicable, and that the relinquishment of one or
both such rights was voluntary. Unless the consent of the
spouse expressly permits designation by the Participant
without a requirement of further consent by the spouse, the
spouse's consent must be limited to the form of benefit, if
applicable, and the Beneficiary (including any Contingent
Annuitant), class of Beneficiaries, or contingent Beneficiary
named in the election. Spousal consent is not required,
however, if the Participant established to the satisfaction of
the plan representative that
42
<PAGE>
the consent of the spouse cannot be obtained because there is
no spouse or the spouse cannot be located. A spouse's consent
under this paragraph shall not be valid with respect to any
other spouse. A Participant may revoke a prior election
without the consent of the spouse. Any new election will
require a new spousal consent, unless the consent of the
spouse expressly permits such election by the Participant
without further consent by the spouse. A spouse's consent may
be revoked at any time within the Participant's election
period.
d) Special Rule for Profit Sharing Plan. As
provided in the proceeding provisions of the
Plan, if a Participant has a spouse to whom
he has been continuously married throughout
the one-year period ending on the date of his
death, the Participant's Vested Account,
including the proceeds payable under any
Insurance Policy on the Participant's life,
shall be paid to such spouse. However, if
there is no such spouse or if the surviving
spouse has already consented in a manner
conforming to the qualified election
requirements in (c) above, the Vested Account
shall be payable to the Participant's
Beneficiary in the event of the Participant's
death.
The Participant may waive the spousal death benefit described
above at any time provided that no such waiver shall be
effective unless it satisfies the condition of (c) above
(other than the notification requirement referred to therein)
that would apply to the Participant's waiver of the Qualified
Preretirement Survivor Annuity.
Because this is a profit sharing plan which pays death
benefits as described above, this subsection (d) applies if
the following condition is met: with respect to the
Participant, this Plan is not a direct or indirect transferee
after December 31, 1984, of a defined benefit plan, money
purchase plan (including a target plan), stock bonus plan or
profit sharing plan which is subject to the survivor annuity
requirements of Code Section 401(a)(11) and Code Section 417.
If the above condition is met, spousal consent
43
<PAGE>
is not required for electing a benefit payable in a form that
is not a life annuity. If the above condition is not met, the
consent requirements of this article shall be operative.
SECTION 6.04--NOTICE REQUIREMENTS.
a) Optional forms of retirement benefit. The
Plan Administrator shall furnish to the
Participant and the Participant's spouse a
written explanation of the optional forms of
retirement benefit in the OPTIONAL FORMS OF
DISTRIBUTION AND DISTRIBUTION REQUIREMENTS
SECTION of Article VI, including the material
features and relative values of these
options, in a manner that would satisfy the
notice requirements of Code Section 417(a)(3)
and the right of the Participant and the
Participant's spouse to defer distribution
until the benefit is no longer immediately
distributable. The Plan Administrator shall
furnish the written explanation by a method
reasonably calculated to reach the attention
of the Participant and the Participant's
spouse no less than 30 days and no more than
90 days before the Annuity Starting Date.
b) Qualified Joint and Survivor Form. The Plan
Administrator shall furnish to the
Participant a written explanation of the
following: the terms and conditions of the
Qualified Joint and Survivor Form; the
Participant's right to make, and the effect
of, an election to waive the Qualified Joint
and Survivor Form; the rights of the
Participant's spouse; and the right to revoke
an election and the effect of such a
revocation. The Plan Administrator shall
furnish written explanation by a method
reasonably calculated to reach the attention
of the Participant no less than 30 days and
no more than 90 days before the Annuity
Starting Date.
After the written explanation is given, a Participant or
spouse may make written request for additional information.
The written explanation must be personally delivered or mailed
(first class mail, postage prepaid) to the Participant or
spouse within 30 days from the date of the written
44
<PAGE>
request. The Plan Administrator does not need to comply with
more than one such request by a Participant or spouse.
The Plan Administrator's explanation shall be written in
nontechnical language and will explain the terms and
conditions of the Qualified Joint and Survivor Form and the
final effect upon the Participant's benefit (in terms of
dollars per benefit payment) of electing not to have benefits
distributed in accordance with the Qualified Joint and
Survivor Form.
c) Qualified Preretirement Survivor Annuity. As
required by the Code and Federal regulation,
the Plan Administrator shall furnish to the
Participant a written explanation of the
following: the terms and conditions of the
Qualified Preretirement Survivor Annuity; the
Participant's right to make, and the effect
of, an election to waive the Qualified
Preretirement Survivor Annuity; the rights of
the Participant's spouse; and the right to
revoke an election and the effect of such a
revocation. The Plan Administrator shall
furnish the written explanation by a method
reasonably calculated to reach the attention
of the Participant within the applicable
period. The applicable period for a
Participant is whichever of the following
periods ends last:
1. the period beginning one year before the
date the individual becomes a
Participant and ending one year after
such date; or
2. the period beginning one year before the
date the Participant's spouse is first
entitled to a Qualified Preretirement
Survivor Annuity and ending one year after such date.
If such notice is given before the period beginning with the
first day of the Plan Year in which the Participant attains
age 32 and ending with the close of the Plan Year preceding
the Plan Year in which the Participant attains age 35, an
additional notice shall be given within such period. If a
Participant ceases to be an Employee before
45
<PAGE>
attaining age 35, an additional notice shall be given within
the period beginning one year before the date he ceases to be
an Employee and ending one year after such date.
After the written explanation is given, a Participant or
spouse may make written request for additional information.
The written explanation must be personally delivered or mailed
(first class mail, postage prepaid) to the Participant or
spouse within 30 days from the date of the written request.
The Plan Administrator does not need to comply with more than
one such request by a Participant or spouse.
The Plan Administrator's explanation shall be written in
nontechnical language and will explain the terms and
conditions of the Qualified Preretirement Survivor Annuity and
the financial effect upon the spouse's benefit (in terms of
dollars per benefit payment) of electing not to have benefits
distributed in accordance with the Qualified Preretirement
Survivor Annuity.
* * * * * * * * *
CYPRESS PLAN SUPPLEMENT TO THE
NATIONSBANK RETIREMENT SAVINGS PLAN
This Cypress Plan Supplement forms a part of The NationsBank Retirement
Savings Plan as amended and restated effective January 1, 1993 (the "Plan").
This Cypress Plan Supplement shall apply only to those Participants in the Plan
who were participants in either the Cypress Financial Corporation 401(k) Salary
Reduction Plan or the Rancho Santa Margarita Mortgage Corp. 401(k) Salary
Reduction Plan as in effect prior to January 1, 1995 (individually a "Cypress
Plan" and collectively the "Cypress Plans"), and only to the extent expressly
provided in the Plan. In such regard, Section 16.15 of the Plan captioned
"Merger of the Cypress Plan" makes reference to certain provisions of the
Cypress Plans as in effect on December 31, 1994, which provisions are set forth
below for historical reference purposes:
ARTICLE VIII
BENEFITS
. . .
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<PAGE>
8.08 OPTIONAL FORMS OF BENEFIT
Subject to the Joint and Survivor Annuity Requirements of Article IX
and the Distribution Requirements of Article X optional forms of
benefit distribution are available subject to a written request by the
Participant and the provisions of this Section.
The optional forms for benefits attributable to Service performed on
and after the date this Plan is adopted are as follows:
-One lump-sum payment in cash or in property.
-Life Annuity.
-Life Annuity with a period certain of 10, 15
or 20 years.
-Joint and 50%, 66 2/3% or 100% Survivor
Annuity.
-Any combination of the above.
For benefits attributable to Service performed before the date this
Plan is adopted the optional forms available are those listed above
plus any other forms which were available immediately prior to the
adoption date.
Any annuity contract purchased and distributed by the Plan to a
Participant or Spouse shall be nontransferable, and its terms shall
comply with the requirements of this Plan.
. . .
ARTICLE IX
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
9.01 The provisions of this Article shall take precedence over any conflicting
provision in this Plan.
The provisions of this Article shall apply to any Participant who is credited
with at least one Hour of Service with the Employer on or after August 23, 1984,
and such other Participants as provided in Section 9.06.
9.02 Qualified Joint and Survivor Annuity:
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<PAGE>
Unless an optional form of benefit is selected pursuant to a Qualified Election
within the 90-day period ending on the Annuity Starting Date, a married
Participant's Vested Account Balance shall be paid in the form of a Qualified
Joint and Survivor Annuity and an unmarried Participant's Vested Account Balance
shall be paid in the form of a life annuity. The Participant may elect to have
such annuity distributed upon attainment of the Earliest Retirement Age under
the Plan.
9.03 Qualified Preretirement Survivor Annuity:
Unless an optional form of benefit has been selected within the Election Period
pursuant to a Qualified Election, if a Participant dies before the Annuity
Starting Date then the Participant's Vested Account Balance shall be applied
toward the purchase of an annuity for the life of the Surviving Spouse. The
Surviving Spouse may elect to have such annuity distributed within a reasonable
period after the Participant's death.
9.04 Notice Requirements:
(a) In the case of a Qualified Joint and Survivor Annuity, the
Plan Administrator shall, no less than 30 days and no more
than 90 days prior to the Annuity starting Date, provide each
Participant a written explanation of:
(1) the terms and conditions of a Qualified
Joint and Survivor Annuity; and
(2) the Participant's right to make, and the
effect of, an election to waive the
Qualified Joint and Survivor Annuity
form of benefit; and
(3) the rights of a Participant's Spouse;
and
(4) the right to make, and the effect of, a
revocation of a previous election to
waive the Qualified Joint and Survivor
Annuity.
(b) In the case of a Qualified Preretirement Survivor Annuity as
described in Section 9.03 of this Article, the Plan
Administrator shall provide each Participant within the
applicable period for such Participant a written explanation
of the Qualified
48
<PAGE>
Preretirement Survivor Annuity in such terms and in such
manner as would be comparable to the explanation provided for
meeting the requirements of Section 9.04(a) applicable to a
Qualified Joint and Survivor Annuity.
The applicable period for a Participant is whichever of the
following periods ends last:
(1) The period beginning with the first day of the Plan
Year in which the Participant attains age 32 and
ending with the close of the Plan Year preceding the
Plan Year in which the Participant attains age 35.
(2) A reasonable period ending after the
individual becomes a Participant.
(3) A reasonable period ending after Section
9.04(c) ceases to apply to the
Participant.
(4) A reasonable period ending after this
Article first applies to the
Participant.
Notwithstanding the foregoing, notice must be provided within
a reasonable period ending after separation from Service in
the case of a Participant who separates from Service before
attaining age 35.
For purposes of applying the preceding paragraph, a reasonable
period ending after the enumerated events described in (2),
(3) and (4) is the end of the two (2) year period beginning
one (1) year prior to the date the applicable event occurs,
and ending one (1) year after that date. In the case of a
Participant who separates from Service before the Plan Year in
which age 35 is attained, notice shall be provided within the
two (2) year period beginning one (1) year prior to separation
and ending one (1) year after separation. If such a
Participant thereafter returns to employment with the
Employer, the applicable period for such Participant shall be
redetermined.
(c) Notwithstanding the other requirements of
this Section 9.04, the respective notices
49
<PAGE>
prescribed by this Section need not be given
to a Participant if:
(1) the Plan "fully subsidizes" the costs of
a Qualified Joint and Survivor Annuity
or Qualified Preretirement Survivor
Annuity; and
(2) the Plan does not allow the Participant to waive the
Qualified Joint and Survivor Annuity or Qualified
Preretirement Survivor Annuity and does not allow a
married Participant to designate a nonspouse
Beneficiary.
For purposes of this Section 9.04(c), a Plan fully subsidizes
the costs of a benefit if no increase in cost, or decrease in
benefits to the Participant may result from the Participant's
failure to elect another benefit.
9.05 Safe Harbor Rules:
(a) This Section shall apply to a Participant in
a profit sharing plan, and to any
distribution, made on or after the first day
of the first Plan Year beginning after
December 31, 1988, from or under a separate
account attributable solely to accumulated
deductible Employee contributions, as defined
in Section 72(o)(5)(B) of the Code, and
maintained on behalf of a Participant in a
money purchase pension plan, (including a
target benefit plan) if the following
conditions are satisfied:
(1) the Participant does not or cannot elect
payments in the form of a life annuity;
and
(2) on the death of a Participant, the Participant's
Vested Account Balance shall be paid to the
Participant's Surviving Spouse, but if there is no
Surviving Spouse, or if the Surviving Spouse has
consented in a manner conforming to a Qualified
Election, then to the Participant's designated
Beneficiary.
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<PAGE>
The Surviving Spouse may elect to have distribution of the
Vested Account Balance commence within the 90-day period
following the date of the Participant's death. The Account
balance shall be adjusted for gains or losses occurring after
the Participant's death in accordance with the provisions of
the Plan governing the adjustment of Account balances for
other types of distributions. This Section 9.05 shall not be
operative with respect to a Participant in a profit sharing
plan if the Plan is a direct or indirect transferee of a
defined benefit plan, money purchase plan, a target benefit
plan, stock bonus, or profit sharing plan which is subject to
the Survivor Annuity requirements of Section 401(a)(11) and
Section 417 of the Code. If this Section 9.05 is operative,
then the provisions of this Article, other than Section 9.06,
shall be inoperative.
(b) The Participant may waive the spousal death
benefit described in this Section at any time
provided that no such waiver shall be
effective unless it satisfies the conditions
of Section 1.57 (other than the notification
requirement referred to therein) that would
apply to the Participant's waiver of the
Qualified Preretirement Survivor Annuity.
(c) For purposes of this Section 9.05, Vested
Account Balance shall mean, in the case of a
money purchase pension plan or a target
benefit plan, the Participant's separate
Account balance attributable solely to
accumulated deductible Employee contributions
within the meaning of Section 72(o)(5)(B) of
the Code. In the case of a profit sharing
plan, Vested Account Balance shall have the
same meaning as provided in Section 1.72.
9.06 Transitional Rules:
(a) Any living Participant not receiving benefits
on August 23, 1984, who would otherwise not
receive the benefits prescribed by the
previous Sections of this Article must be
given the opportunity to elect to have the
prior Sections of this Article apply if such
Participant is credited with at least one
Hour of Service under this Plan or a
predecessor Plan in a Plan Year beginning on
51
<PAGE>
or after January 1, 1976, and such Participant had at least
ten (10) years of Vesting Service when he or she separated
from Service.
(b) Any living Participant not receiving benefits
on August 23, 1984, who was credited with at
least one Hour of Service under this Plan or
a predecessor Plan on or after September 2,
1974, and who is not otherwise credited with
any Service in a Plan Year beginning on or
after January 1, 1976, must be given the
opportunity to have his or her benefits paid
in accordance with Section 9.06(d) of this
Article.
(c) The respective opportunities to elect [as described in
Sections 9.06(a) and (b) above] must be afforded to the
appropriate Participants during the period commencing on
August 23, 1984, and ending on the date benefits would
otherwise commence to said Participants.
(d) Any Participant who has elected pursuant to
Section 9.06(b) of this Article and any
Participant who does not elect under Section
9.06(a) or who meets the requirements of
Section 9.06(a) except that such participant
does not have at least 10 years of Vesting
Service when he or she separates from
Service, shall have his or her benefits
distributed in accordance with all of the
following requirements if benefits would have
been payable in the form of a life annuity:
(1) Automatic Joint and Survivor Annuity:
If benefits in the form of a life
annuity become payable to a married
Participant who:
(i) begins to receive payments under
the Plan on or after Normal
Retirement Age; or
(ii) dies on or after Normal Retirement
Age while still working for the
Employer; or
(iii) begins to receive payments on or
after the Qualified Early
Retirement Age; or
52
<PAGE>
(iv) separates from Service on or after
attaining Normal Retirement Age (or
the Qualified Early Retirement Age)
and after satisfying the
eligibility requirements for the
payment of benefits under the Plan
and thereafter dies before
beginning to receive such benefits,
then such benefits shall be received
under this Plan in the form of a
Qualified Joint and Survivor Annuity,
unless the Participant has elected
otherwise during the election period.
The election period must begin at least
six (6) months before the Participant
attains Qualified Early Retirement Age
and end not more than 90 days before the
commencement of benefits. Any election
hereunder shall be in writing and may be
changed by the Participant at any time.
(2) Election of Early Survivor Annuity: A Participant who
is employed after attaining the Qualified Early
Retirement Age shall be given the opportunity to
elect, during the election period, to have a survivor
annuity payable on death. If the Participant elects
the survivor annuity, payments under such annuity
must not be less than the payments which would have
been made to the Spouse under the Qualified Joint and
Survivor Annuity if the Participant had retired on
the day before his or her death. Any election under
this provision shall be in writing and may be changed
by the Participant at any time. The election period
begins on the later of:
(i) the 90th day before the Participant
attains the Qualified Early
Retirement Age; or
(ii) the date on which participation
begins, and ends on the date the
Participant terminates employment.
(3) For purposes of this Section
53
<PAGE>
(i) Qualified Early Retirement Age is
the latest of:
-the earliest date, under the Plan,
on which the participant may elect
to receive retirement benefits; or
-the first day of the 120th month
beginning before the Participant
reaches Normal Retirement Age; or
-the date the Participant begins
Participation.
(ii) Qualified Joint and Survivor Annuity is an
annuity for the life of the Participant with
a survivor annuity for the life of the
Spouse as described in Section 1.58.
ARTICLE X
DISTRIBUTION REQUIREMENTS
10.01 General Rules
(a) Subject to Article IX, Joint and Survivor
Annuity Requirements, the requirements of
this Article shall apply to any distribution
of a Participant's interest and shall take
precedence over any inconsistent provisions
of this Plan. Unless otherwise specified,
the provisions of this Article apply to
calendar years beginning after December 31,
1984.
(b) All distributions required under this Article shall be
determined and made in accordance with the proposed
regulations under Section 401(a)(9), including the minimum
distribution incidental benefit requirement of Section
1.401(a)(9)-2 of the proposed regulations.
10.02 Required Beginning Date
The entire interest of a Participant must be distributed or begin to be
distributed no later than the Participant's Required Beginning Date as defined
in Section 1.62.
10.03 Limits on Distribution Periods
54
<PAGE>
As of the first Distribution Calendar Year, distributions, if not made in one
lump-sum payment, may only be made over one of the following periods (or a
combination thereof):
(a) the life of the Participant; or
(b) the life of the Participant and a Designated
Beneficiary; or
(c) a period certain not extending beyond the
Life Expectancy of the Participant; or
(d) a period certain not extending beyond the
joint and last survivor expectancy of the
Participant and a Designated Beneficiary.
10.04 Determination of Amount to be Distributed Each
Year
If the Participant's interest is to be distributed in other than one lump-sum
payment, the following minimum distribution rules shall apply on or after the
Required Beginning Date:
(a) Individual Account
(1) If a Participant's Benefit is to be
distributed over:
(i) a period not extending beyond the
Life Expectancy of the Participant
or the joint life and last survivor
expectancy of the Participant and
the Participant's Designated
Beneficiary; or
(ii) a period not extending beyond the
Life Expectancy of the Designated
Beneficiary,
the amount required to be distributed
for each calendar year, beginning with
distributions for the first Distribution
Calendar Year, must at least equal the
quotient obtained by dividing the
Participant's Benefit by the applicable
Life Expectancy.
(2) For calendar years beginning before
January 1, 1989, if the Participant's
Spouse is not the Designated
55
<PAGE>
Beneficiary, the method of distribution
selected must assure that at least 50
percent of the present value of the
amount available for distribution is
paid within the Life Expectancy of the
Participant.
(3) For calendar years beginning after December 31, 1988,
the amount to be distributed each year, beginning
with distributions for the first Distribution
Calendar Year shall not be less than the quotient
obtained by dividing the Participant's Benefit by the
lesser of:
(i) the applicable Life Expectancy; or
(ii) if the Participant's Spouse is not the
Designated Beneficiary, the applicable
divisor determined from the table set forth
in Q&A-4 of Section l.401(a)(9)-2 of the
proposed regulations.
Distributions after the death of the
Participant shall be distributed using
the applicable Life Expectancy in
Section 10.04(a)(1) above as the
relevant divisor without regard to
proposed regulations Section
1.401(a)(9)-2.
(4) The minimum distribution required for the
Participant's first Distribution Calendar Year must
be made on or before the Participant's Required
Beginning Date. The minimum distribution for other
calendar years, including the minimum distribution
for the Distribution Calendar Year in which the
Employee's Required Beginning Date occurs, must be
made on or before December 31 of that Distribution
Calendar Year.
(b) Other Forms
If the Participant's Benefit is distributed in the form of an
annuity purchased from an insurance company, distributions
thereunder shall be made in accordance with the
56
<PAGE>
requirements of Section 401(a)(9) of the Code
and the proposed regulations thereunder.
10.05 Death Distribution Provisions
(a) Distribution beginning before death.
If the Participant dies after distribution of his or her
interest has begun, the remaining portion of such interest
shall continue to be distributed at least as rapidly as under
the method of distribution being used prior to the
Participant's death.
(b) Distribution beginning after death.
If the Participant dies before distribution of his or her
interest begins, distribution of the Participant's entire
interest shall be completed by December 31 of the calendar
year containing the fifth anniversary of the Participant's
death except to the extent that an election is made to receive
distributions in accordance with (1) or (2) below:
(1) If any portion of the Participant's interest is
payable to a Designated Beneficiary, distributions
may be made over the life or over a period certain
not greater than the Life Expectancy of the
Designated Beneficiary commencing on or before
December 31 of the calendar year immediately
following the calendar year in which the Participant
died.
(2) If the Designated Beneficiary is the Participant's
surviving Spouse, the date distributions are required
to begin in accordance with (1) above shall not be
earlier than the later of:
(i) December 31 of the calendar year
immediately following the calendar
year in which the Participant died;
or
(ii) December 31 of the calendar year in
which the Participant would have
attained age 70 1/2.
If the Participant has not made an election
pursuant to this Section 10.05(b) by the time
57
<PAGE>
of his or her death, the Participant's Designated Beneficiary
must elect the method of distribution no later than the
earlier of:
-December 31 of the calendar year in
which distributions would be required to
begin under this Section; or
-December 31 of the calendar year which
contains the fifth anniversary of the
date of death of the Participant.
If the Participant has no Designated Beneficiary, or if the
Designated Beneficiary does not elect a method of
distribution, distribution of the Participant's entire
interest must be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death.
(c) For purposes of Section 10.05(b) above, if the Surviving
Spouse dies after the Participant, but before payments to such
Spouse begin, the provisions of Section 10.05(b), with the
exception of paragraph (2) therein, shall be applied as if the
Surviving Spouse were the Participant.
(d) For purposes of this Section 10.05, any amount paid to a child
of the Participant shall be treated as if it had been paid to
the Surviving Spouse if the amount becomes payable to the
Surviving Spouse when the child reaches the age of majority.
(e) For purposes of this Section 10.05,
distribution of a Participant's interest is
considered to begin on the Participant's
Required Beginning Date [or, if Section
10.05(c) above is applicable, the date
distribution is required to begin to the
Surviving Spouse pursuant to Section 10.05(b)
above]. If distribution in the form of an
annuity irrevocably commences to the
Participant before the Required Beginning
Date, the date distribution is considered to
begin is the date distribution actually
commences.
10.06 Transitional Rule
58
<PAGE>
(a) Notwithstanding the other requirements of
this Article and subject to the requirements
of Article IX, Joint and Survivor Annuity
Requirements, distribution on behalf of any
Employee, including a 5-percent owner, may be
made in accordance with all of the following
requirements (regardless of when such
distribution commences):
(1) The distribution by the trust is one which would not
have disqualified such trust under Section 401(a)(9)
of the Code as in effect prior to amendment by the
Deficit Reduction Act of 1984.
(2) The distribution is in accordance with a method of
distribution designated by the Employee whose
interest in the trust is being distributed or, if the
Employee is deceased, by a Beneficiary of such
Employee.
(3) Such designation was in writing, was
signed by the Employee or the
Beneficiary, and was made before January 1, 1984.
(4) The Employee had accrued a benefit under
the Plan as of December 31, 1983.
(5) The method of distribution designated by the Employee
or the Beneficiary specifies the time at which
distribution shall commence, the period over which
distributions shall be made, and in the case of any
distribution upon the Employee's death, the
Beneficiaries of the Employee listed in order of
priority.
(b) A distribution upon death shall not be covered by this
transitional rule unless the information in the designation
contains the required information described above with respect
to the distributions to be made upon the death of the
Employee.
(c) For any distribution which commences before January 1, 1984,
but continues after December 31, 1983, the Employee, or the
Beneficiary, to whom such distribution is being made, shall be
presumed to have designated the
59
<PAGE>
method of distribution under which the distribution is being
made if the method of distribution was specified in writing
and the distribution satisfies the requirements in subsections
10.06(a)(1) and (5).
(d) If a designation is revoked any subsequent
distribution must satisfy the requirements of
Section 401(a)(9) of the Code and the
proposed regulations thereunder. If a
designation is revoked subsequent to the date
distributions are required to begin, the
trust must distribute by the end of the
calendar year following the calendar year in
which the revocation occurs the total amount
not yet distributed which would have been
required to have been distributed to satisfy
Section 401(a)(9) of the Code and the
proposed regulations thereunder, but for the
Section 242(b)(2) election. For calendar
years beginning after December 31, 1988, such
distributions must meet the minimum
distribution incidental benefit requirements
in Section 1.401(a) (9)-2 of the proposed
regulations. Any changes in the designation
shall be considered to be a revocation of the
designation. However, the mere substitution
or addition of another Beneficiary (one not
named in the designation) under the
designation shall not be considered to be a
revocation of the designation, so long as
such substitution or addition does not alter
the period over which distributions are to be
made under the designation, directly or
indirectly (for example, by altering the
relevant measuring life). In the case in
which an amount is transferred or rolled over
from one plan to another plan, the rules in
Q&A J-2 and Q&A J-3 of Section 1.401(a)(9)-1
of the proposed regulations shall apply."
IN WITNESS WHEREOF, NationsBank Corporation, on behalf of the
Participating Employers, has caused this Instrument to be executed by its duly
authorized officer, as of the day and year first above written.
60
<PAGE>
NATIONSBANK CORPORATION
By: /s/ Susan B. Waldkirch
Name: Susan B. Waldkirch
Title: Vice President
61
<PAGE>
THIRD AMENDMENT TO
THE NATIONSBANK RETIREMENT SAVINGS PLAN
(as restated effective January 1, 1993)
THIS INSTRUMENT is executed as of the 1st day of August,
1995 by NATIONSBANK CORPORATION, a North Carolina corporation with its
principal office and place of business in Charlotte, North Carolina,
hereinafter referred to as "NationsBank";
Statement of Purpose
NationsBank sponsors The NationsBank Retirement Savings
Plan (the "Plan") pursuant to an Instrument dated December 31, 1992
which amended and restated the Plan effective January 1, 1993, as
subsequently amended. By this Instrument, NationsBank is amending the
Plan to incorporate certain amendments requested by the Internal
Revenue Service as a condition to its issuance of a favorable
determination of the Plan's tax-qualified status. NOW, THEREFORE, for
the purposes aforesaid, the Plan, as set forth in said Instrument dated
December 31, 1992, as subsequently amended, is amended as follows:
1. Section 2.1(c)(21) of the Plan is amended effective as of
January 1, 1993 to read as follows:
"(21) Covered Employee means any Employee other than:
(A) any Employee whose terms and
conditions of employment with the Participating
Employers expressly preclude such Employee's
participation in the Plan; or
(B) any Employee who is regularly employed
outside of the United States by any one or more of
the Participating Employers and who is on the
payroll of a facility located outside of the United
States."
2. Except as expressly or by necessary implication
amended hereby, the Plan shall continue in full force and effect.
<PAGE>
IN WITNESS WHEREOF, NationsBank Corporation, on behalf
of the Participating Employers, has caused this Instrument to be
executed by its duly authorized officer, as of the day and year first
above written.
NATIONSBANK CORPORATION
By: /s/ Susan B. Waldkirch
Name: Susan B. Waldkirch
Title: Vice President
2
<PAGE>
Exhibit A
FIFTH AMENDMENT TO
THE NATIONSBANK PENSION PLAN
THIS AGREEMENT is made and entered into as of the 28th day
of June, 1995 by and between NATIONSBANK CORPORATION, a North
Carolina corporation ("NationsBank"), and NATIONSBANK, N.A.
(CAROLINAS), a national banking association (the "Trustee").
W I T N E S S E T H:
WHEREAS, NationsBank and certain of its subsidiary
corporations (collectively with NationsBank, the "Participating
Employers") maintain The NationsBank Pension Plan (the "Plan"); and
WHEREAS, NationsBank desires to amend the Plan to specify the
"lookback month" and the "stability period" for determining and
applying the "applicable interest rate" to the calculation of lump sum
benefit payments by the Plan, all in accordance with Section 417(e)(3)
of the Internal Revenue Code of 1986, as amended by the Retirement
Protection Act of 1994, and the regulations thereunder; and
WHEREAS, in Section 11.1 of the Plan, the Participating
Employers reserved the right to amend the Plan at any time, in whole or
in part, and have delegated to the Compensation Committee of the Board
of Directors of NationsBank the right to make the amendments set forth
below on behalf of all Participating Employers; and
WHEREAS, the amendments set forth below have been authorized
and approved by the Compensation Committee;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, NationsBank and the Trustee hereby
agree as follows:
1. Section 5.5(d)(2) of the Plan is amended effective as
of December 31, 1994 to read as follows:
"(2) Lump Sum Payments. The assumptions used for
purposes of computing lump sum payments under the Plan shall be
as follows:
(A) For lump sum payments made before Decem-
ber 31, 1994:
<PAGE>
Mortality: A unisex rate that is fifty per-
cent (50%) male, fifty percent (50%) female,
taken from the 1971 Group Annuity Mortality
Table.
Interest: The rate(s) which would be used by
the Pension Benefit Guaranty Corporation as
of the first day of the Plan Year in which
the payment is made to determine the present
value of a lump sum distribution on plan
termination.
(B) For lump sum payments made on or after
December 31, 1994:
Mortality: The "applicable mortality table,"
as such term is defined in Section 417(e)(3)
of the Code, as amended by the Retirement
Protection Act of 1994.
Interest: The "applicable interest rate",
as such term is defined in Section 417(e)(3)
of the Code, as amended by the Retirement
Protection Act of 1994. The "lookback month"
(within the meaning of Treasury
Regulations ss. 1.417(e)-1T(d)(4)(iii))
for the determination of the applicable
interest rate for the calculation of lump
sum payments made on or after December 31,
1994 and prior to January 1, 1996 shall be
December. The "lookback month" for
the determination of the applicable interest
rate for the calculation of lump sum
payments made on or after January 1, 1996
shall be September; provided, however,
in no event shall the applicable interest
rate for the calculation of lump sum
payments made during the Plan Year beginning
January 1, 1996 exceed the applicable
interest rate for December 1995. The
"stability period" (within the meaning of
Treasury Regulations ss.
1.417(e)-1T(d)(4)(ii)) during which the
applicable interest rate remains constant
shall be the Plan Year immediately succeeding
the lookback month."
2. Except as expressly or by necessary implication amended
hereby, the Plan shall continue in full force and effect.
IN WITNESS WHEREOF, NationsBank Corporation, on behalf of the Participating
Employers, and the Trustee have caused this
2
<PAGE>
Agreement to be executed by their respective duly authorized officers,
all as of the day and year first above written.
NATIONSBANK CORPORATION
By: /s/ C. J. Cooley
C. J. Cooley, Executive
Vice President
NATIONSBANK, N.A. (CAROLINAS)
By: /s/ Deborah T. Williams
Name: Deborah T. Williams
Title: Senior Vice President
3
<PAGE>
SUPERSEDED IN ITS ENTIRETY BY THE SEVENTH AMENDMENT
SIXTH AMENDMENT TO
THE NATIONSBANK PENSION PLAN
THIS AGREEMENT is made and entered into as of the 5th day of July, 1995
by and between NATIONSBANK CORPORATION, a North Carolina corporation
("NationsBank"), and NATIONSBANK, N.A. (CAROLINAS), a national banking
association (the "Trustee").
Statement of Purpose
This amendment to The NationsBank Pension Plan (the "Plan") relates to
the First United Bancorporation Pension Trust (the "FUBI Plan"), which was
previously maintained by First United Bancorporation, Inc. ("FUBI") and certain
of its subsidiaries (collectively with FUBI, the "FUBI Plan participating
employers"). The FUBI Plan was merged into the InterFirst Corporation Pension
Plan (the "InterFirst Plan"), which was sponsored by InterFirst Corporation
("InterFirst"). Subsequently, the InterFirst Plan was merged into this Plan.
InterFirst acquired FUBI in 1983. InterFirst determined as part of a
corporate-wide benefits consolidation program to merge the FUBI Plan into the
InterFirst Plan effective January 1, 1985, after which time eligible employees
of the FUBI Plan participating employers would accrue benefits under the
InterFirst Plan rather than the FUBI Plan. During 1984 FUBI Plan participants
received written notices and attended employee meetings describing the January
1, 1985 plan merger and the InterFirst Plan. In the fall of 1984, FUBI Plan
participants also received a copy of the InterFirst Plan summary plan
description. The written notices, employee meetings and a special insert to the
InterFirst Plan summary plan description advised FUBI Plan participants that
they would never receive a benefit under the InterFirst Plan less than the
benefit they had earned under the FUBI Plan as of December 31, 1984. In
addition, on or before February 20, 1985 the respective boards of directors of
the FUBI Plan participating employers passed resolutions adopting the InterFirst
Plan. From and after January 1, 1985, former FUBI Plan participants accrued
benefits under the InterFirst Plan, taking into account for such purpose their
<PAGE>
benefit service under the FUBI Plan. Each such participant's December 31, 1984
FUBI Plan benefit was maintained as a stand-alone alternative benefit under the
InterFirst Plan.
Prior to its merger into the InterFirst Plan, the terms of the FUBI
Plan provided a "basic retirement benefit" and a special unreduced early
retirement benefit known as the "agreed retirement benefit." The FUBI Plan
provided that both benefits would be subject to cost-of-living adjustments
following commencement of a participant's retirement benefit annuity payments
(the "FUBI Plan COLAs").
In August 1984, FUBI, in its capacity as sponsor of the FUBI Plan,
amended the FUBI Plan to limit eligibility for the FUBI Plan COLAs to
participants in the FUBI Plan who retired before January 1, 1985. Such amendment
was also included in a restated FUBI Plan document that was submitted to the
Internal Revenue Service and that subsequently received a favorable
determination letter from the Internal Revenue Service as to its qualified
status under Section 401 of the Internal Revenue Code. In addition, the "agreed
retirement benefit" ceased to be available to active plan participants effective
after December 31, 1984 in connection with the adoption of the InterFirst Plan.
As a result, the December 31, 1984 FUBI Plan benefit preserved under the
InterFirst Plan was administered without FUBI Plan COLAs or the "agreed
retirement benefit."
In 1987 a claim was brought by a former FUBI Plan participant related
to the elimination of the "agreed retirement benefit" under the FUBI Plan. As a
result of consideration of that claim, a plan amendment was made which restored
the "agreed retirement benefit" as an additional stand-alone alternative benefit
for former FUBI Plan participants who had not terminated employment before
January 1, 1985. The "agreed retirement benefit" was preserved effective as of
February 20, 1985, which was the latest date that any of the respective boards
of directors of the FUBI Plan participating employers adopted the resolutions
described above.
2
<PAGE>
Since the mid-1980s there have been two appealed claims and several
inquiries by former FUBI Plan participants as to whether the August 1984
amendment to the FUBI Plan was proper and whether FUBI Plan COLAs constituted a
"protected benefit" under the Employee Retirement Income Security Act of 1974
and the Internal Revenue Code with respect to the December 31, 1984 FUBI Plan
benefit preserved as a stand-alone alternative benefit under the InterFirst
Plan. In addition, a civil action has been brought in the United States District
Court for the Northern District of Texas, Fort Worth Division, (Civil Action No.
4-94CV-104A) as a class action entitled "Sam L. Gill, Jr. et al. v. NationsBank
Corporation and The NationsBank Pension Plan" pursuant to which a claim has been
made to reinstate the FUBI Plan COLAs.
While NationsBank was not involved in the amendments to the FUBI Plan
which are the subject of the civil action described above, because the FUBI Plan
was previously merged into the InterFirst Plan and the InterFirst Plan was
merged into this Plan, this Plan is the successor to the rights and obligations
of the FUBI Plan.
While NationsBank believes that the August 1984 amendment was valid
prospectively with respect to benefits earned after December 31, 1984,
NationsBank has determined to reinstate the FUBI Plan COLAs in a manner
consistent with the 1984 employee communications, the post-1984 administration
of the InterFirst Plan and the determination previously made to reinstate the
FUBI Plan "agreed retirement benefit."
Accordingly, NationsBank desires to amend the Plan to (i) provide
certain Participants who formerly participated in the FUBI Plan a stand-alone
alternative benefit under the Plan that is subject to FUBI Plan COLAs, (ii)
provide the method by which such stand-alone alternative benefit shall be
calculated and thereafter adjusted from time to time for FUBI Plan COLAs, (iii)
set forth the effective date as of which such stand-alone alternative benefit
shall be calculated and (iv) provide such affected participants who are
currently in pay status a single
3
<PAGE>
cash payment equal to any additional benefits that would have been paid to such
participants in excess of the retirement benefit annuity payments already
received if the stand-alone alternative benefit provided for herein with FUBI
Plan COLAs had been in effect throughout their period of payment.
In Section 11.1 of the Plan the "Participating Employers" under the
Plan have reserved the right to amend the Plan at any time, in whole or in part,
and have delegated to the Compensation Committee of the Board of Directors of
NationsBank the right to make the amendments set forth below on behalf of all
Participating Employers. The undersigned has been authorized by the Compensation
Committee to make the amendments set forth below.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, NationsBank and the Trustee hereby agree as follows:
1. The following new Section 15.13 is added to the Plan
effective as of the date hereof:
"SECTION 15.13. FUBI PLAN PRESERVED BENEFITS.
(a) General. The Plan is the successor by way of plan merger
to the rights and obligations of the First United Bancorporation
Pension Trust (the "FUBI Plan"). The provisions of this Section 15.13
establish a stand-alone alternative benefit under the Plan for "former
FUBI Plan participants" (as defined below) which is subject to certain
post-retirement cost-of-living adjustments previously provided under
the FUBI Plan ("FUBI Plan COLAs"). The provisions of this Section 15.13
shall apply with respect to the former FUBI Plan participants
notwithstanding any provision of the Plan to the contrary.
(b) Former FUBI Plan Participants Defined. The
reinstatement of FUBI Plan COLAs as set forth herein
applies to the "FUBI Plan preserved benefit" (as
defined below) of Participants who were active
participants in the FUBI Plan as of December 31, 1984
or "transferred employees" (as defined below),
excluding (i) those former Participants who have
terminated employment under the Plan (or a predecessor
plan) and received a single sum payment of their
retirement benefit and (ii) those former Participants
4
<PAGE>
who have terminated employment under the Plan (or a predecessor plan)
with no vested interest in their retirement benefit at the time of
termination. For purposes of this subparagraph, a "transferred
employee" is an individual who (A) was an active participant in the
FUBI Plan as of June 30, 1982, and (B) transferred employment from FUBI
or a FUBI subsidiary or affiliate to InterFirst Corporation or an
InterFirst Corporation subsidiary or affiliate during the period
between June 30, 1982 and December 31, 1984, and (C) was an active
participant in the InterFirst Corporation Pension Plan as of December
31, 1984. The individuals to whom this Section 15.13 applies are
referred to herein as "former FUBI Plan participants."
(c) FUBI Plan Preserved Benefit Defined. The
"FUBI Plan preserved benefit" means the greater of:
(i) the FUBI Plan "basic retirement benefit"
(as reduced for payment commencement prior to age
sixty-five (65) as described in subparagraph (e)
below), or
(ii) the FUBI Plan "agreed retirement benefit," but only
with respect to former FUBI Plan participants who qualify in
accordance with the provisions of subparagraph (d) below.
The FUBI Plan preserved benefit shall be subject to the FUBI Plan COLAs
as provided in subparagraph (h) below. The amount of the FUBI Plan
"basic retirement benefit" for a former FUBI Plan participant (which
amount is subject to reduction for payment commencement prior to age
sixty-five (65) as described in subparagraph (e) below) shall be the
greater of such benefit determined as of December 31, 1984, or February
20, 1985, based on such Participant's "credited service," "pension
compensation base" and "social security benefit" (as those terms were
defined in the FUBI Plan) as of such dates. The amount of the FUBI Plan
"agreed retirement benefit" for a former FUBI Plan participant (which
amount is not subject to reduction for payment commencement prior to
age sixty-five (65)) shall be the greater of such benefit determined as
of December 31, 1984, or February 20, 1985, based on such Participant's
"credited service," "pension compensation base" and "social security
benefit" (as those terms were defined in the FUBI Plan) as of such
dates.
(d) Eligibility for FUBI Plan Agreed Retirement
Benefit. Former FUBI Plan participants shall be
eligible for the FUBI Plan "agreed retirement benefit"
5
<PAGE>
upon both (i) completion of at least twenty (20) years of service
(within the meaning of the FUBI Plan) with NationsBank Corporation and
predecessor plan sponsors (or their respective subsidiaries and
affiliates) and (ii) attainment of age fifty (50) on or before
termination of employment with NationsBank Corporation and predecessor
plan sponsors (or their respective subsidiaries and affiliates).
(e) Reductions for Early Commencement. The amount of the FUBI
Plan "agreed retirement benefit" shall be determined with no reduction
for early commencement of retirement benefit annuity payments prior to
age sixty-five (65). The amount of the FUBI Plan "basic retirement
benefit" shall be reduced for early commencement prior to age
sixty-five (65) in accordance with the reduction factors in the FUBI
Plan applicable to benefits commencing at age fifty-five (55) or later.
The actuarial reduction factors under the Plan applicable to former
FUBI Plan participants shall apply to determine the additional amount
of early commencement reduction if benefits commence earlier than age
fifty-five (55).
(f) FUBI Plan Preserved Benefit as a Protected Benefit. From
and after the effective date of this Section 15.13, the FUBI Plan
preserved benefit (including the right to a single cash payment of
prior retirement benefit annuity payments as provided in subparagraph
(l) below) shall be a benefit protected by Section 411(d)(6) of the
Code and Section 204(g) of the Act, subject only to the right of the
Participating Employers to further amend this Section 15.13 in order to
secure a determination letter from the Internal Revenue Service that
the provisions of this Section 15.13 do not adversely affect the
continued qualification of the Plan under Section 401 of the Code.
(g) FUBI Plan Preserved Benefit as a Stand-Alone Alternative
Benefit. Following commencement of retirement benefit annuity payments,
each former FUBI Plan participant shall receive the greatest benefit
amount determined from time to time under the alternative benefit
formulae applicable to such former FUBI Plan participant under this
Plan. In that regard, the amount of the FUBI Plan preserved benefit for
each former FUBI Plan participant (as adjusted to reflect the form of
benefit payment and as adjusted pursuant to subparagraph (h) below)
shall be treated as a separate stand-alone alternative benefit formula
under this Plan.
6
<PAGE>
(h) COLA Adjustments for FUBI Plan Preserved Benefit. The FUBI
Plan preserved benefit of a former FUBI Plan participant, regardless of
whether that benefit is the greatest benefit amount at the time of
commencement of retirement benefit annuity payments, shall be increased
or decreased for changes in the cost of living (the "COLA") as of
January 1 of each Plan Year following commencement of such payments by
such former FUBI Plan participant under this Plan (or any applicable
predecessor plan). The COLA amount shall be based on the percentage
increase or decrease in the cost of living, if any, based on a
comparison of the U. S. Consumer Price Index for the September 30 next
preceding the January of the determination, with such U. S. Consumer
Price Index for the September 30 one year earlier; provided, however,
that such yearly increase or decrease, if any, shall be limited to a
maximum of four percent (4%); and provided further, that such yearly
decrease, if any, shall not reduce the amount of the FUBI Plan
preserved benefit of such former FUBI Plan participant below the
initial amount of such former FUBI Plan participant's FUBI Plan
preserved benefit at the time of commencement of retirement benefit
annuity payments. The "Consumer Price Index for All Urban Wage Earners
and Clerical Workers" (or such other table determined to be acceptable
to the Administrator of the Plan) shall be used in determining the
percentage increases or decreases for each Plan Year.
(i) Payment of FUBI Plan Preserved Benefit. Each
former FUBI Plan participant shall receive the FUBI
Plan preserved benefit amount as such Participant's
retirement benefit when that amount (as adjusted each
Plan Year for COLA) is the greatest amount available to
such former FUBI Plan participant under the alternative
retirement benefit formulae under the Plan applicable
to such former FUBI Plan participant.
(j) Application of Other Alternative Benefit Formulae. Except
as provided in subparagraph (iii) below, the provisions of this Section
15.13 shall not in any manner change, modify or otherwise affect the
continued application of any other alternative benefit formulae under
the Plan applicable to former FUBI Plan participants, including without
limitation the Plan's basic retirement benefit formula and the Texas
Plan's hybrid formula. In such regard:
(i) Continued Credit for FUBI Plan Benefit
Service under the Plan's Basic Retirement Benefit
Formula. For any former FUBI Plan participant who
7
<PAGE>
is eligible for a benefit determined under the Plan's basic
retirement benefit formula set forth in Articles V and VI,
such Participant shall continue to receive credit for such
Participant's benefit service under the FUBI Plan prior to
1985 for purposes of such benefit formula.
(ii) Texas Plan's Hybrid Formula. Section 15.1(b)(iii) of
the Plan provides in part that the benefit under the Plan for
a Texas Plan Participant who participated in the Texas Plan
(or any predecessor plan) before 1989 shall not be less than
the sum of (A) such Participant's "December 31st, 1988
Benefit" as defined in the Texas Plan and (B) such
Participant's benefit determined under the Plan's basic
retirement benefit formula set forth in Articles V and VI with
respect to Benefit Service earned after 1988 (the "hybrid
formula"). For a former FUBI Plan participant, the December
31st, 1988 Benefit under the Texas Plan generally means the
greater of (x) the Participant's benefit as of such date
determined under the InterFirst Corporation Pension Plan's
"all-service" benefit formula (which was calculated taking
into account such former FUBI Plan participant's benefit
service under the FUBI Plan prior to 1985) or (y) the
Participant's "basic retirement benefit" determined as of
December 31, 1984 under the FUBI Plan benefit formula without
adjustment for the FUBI Plan COLAs. The provisions of this
Section 15.13 shall have no effect on the provisions of
Section 15.1(b)(iii) as described herein.
(iii) Agreed Retirement Benefit. In 1987, the FUBI Plan
"agreed retirement benefit" without adjustment for the FUBI
Plan COLAs was added as a stand-alone alternative benefit
formula under the InterFirst Corporation Pension Plan and has
been continued as a stand-alone alternative benefit formula
under this Plan for former FUBI Plan participants who qualify
as provided in subparagraph (d) above. Notwithstanding any
provision of this Section 15.13 to the contrary, such
stand-alone alternative benefit formula shall be replaced by
the stand-alone alternative benefit formula for FUBI Plan
preserved benefits as set forth in this Section 15.13 (which
includes the FUBI Plan "agreed retirement benefit" as adjusted
for the FUBI Plan COLAs) for former FUBI Plan participants who
qualify as provided in subparagraph (d) above.
8
<PAGE>
(k) Application of Code Section 415. The provisions of Article
VII of the Plan that limit payment of annuity benefits in accordance
with the requirements of Section 415 of the Code shall be subject to
annual cost of living adjustments pursuant to Section 415(d) of the
Code with respect to the FUBI Plan preserved benefit. Notwithstanding
the foregoing, the FUBI Plan preserved benefit (as adjusted for the
FUBI Plan COLAs) of a former FUBI Plan participant shall not be paid to
the extent such annual annuity amount exceeds the greater of (i) the
amount of the limit referred to in the preceding sentence (as adjusted
pursuant to Code Section 415(d)), or (ii) the amount of the "current
accrued benefit" of the former FUBI Plan participant. In that regard, a
former FUBI Plan participant's "current accrued benefit" shall be
determined as a fixed dollar annual annuity amount as provided in
Section 1106(i)(3)(B) of the Tax Reform Act of 1986, without regard to
adjustments pursuant to Section 415(d) of the Code or the FUBI Plan
COLAs.
(l) Payment of Prior Benefits. The provisions of this Section
15.13 shall apply retroactively for all former FUBI Plan participants.
Accordingly, retirement benefit annuity payments for former FUBI Plan
participants who have been in pay status prior to the "determination
date" (defined below) shall be adjusted in accordance with the
provisions of this Section 15.13. Such adjustments shall be based on
the form of benefit payment previously elected, subject to reduction,
if any, pursuant to subparagraph (e) above. The adjustments shall be
made as of a date selected by NationsBank Corporation that is as soon
as practicable following receipt of a favorable determination letter
from the Internal Revenue Service with respect to this Section 15.13
(the "determination date"). As soon as practicable after the
determination date, any past benefit annuity amounts payable to each
affected former FUBI Plan participant as provided by this Section 15.13
in excess of the benefit annuity amounts actually received by each such
former FUBI Plan participant (whether from the Plan or a predecessor
plan) shall be calculated and paid, together with interest at the rate
of nine percent (9%), compounded annually, to each such former FUBI
Plan participant in a single cash payment (less any applicable
withholding amounts). For purposes of determining the amount of
interest to be paid, such interest shall accrue from the end of the
Plan Year to which such additional benefit annuity amounts relate
through the last day of the month immediately preceding the date of
such single cash payment."
9
<PAGE>
2. The effective date of the amendment set forth herein is July 5,
1995, subject only to receipt from the Internal Revenue Service of a
determination letter that such amendment does not adversely affect the continued
qualification of the Plan under Section 401 of the Internal Revenue Code.
NationsBank shall apply for such determination letter as soon as practicable
after the date hereof, and NationsBank reserves the right to make such further
amendments to the Plan as may be necessary to secure such favorable
determination letter.
3. No payment shall be made by the Participating Employers or any
employee benefit plan maintained by the Participating Employers with respect to
the amount, if any, by which the "FUBI Plan preserved benefit" of a "former FUBI
Plan participant" as adjusted for the "FUBI Plan COLAs" (as those terms are
defined in this amendment) exceeds the applicable Internal Revenue Code Section
415 limitations as set forth in this amendment.
4. Except as expressly or by necessary implication amended
hereby, the Plan shall continue in full force and effect.
IN WITNESS WHEREOF, NationsBank Corporation, on behalf of the
Participating Employers, and the Trustee have caused this Agreement to be
executed by their respective duly authorized officers, all as of the day and
year first above written.
NATIONSBANK CORPORATION
By: /s/ C. J. Cooley
C. J. Cooley, Executive
Vice President
"NationsBank"
NATIONSBANK, N.A. (CAROLINAS)
By: /s/ Deborah T. Williams
Name: Deborah T. Williams
Title: Senior Vice President
"Trustee"
10
<PAGE>
FOURTH AMENDMENT TO
THE NATIONSBANK PENSION PLAN
THIS AGREEMENT is made and entered into as of the 24th day of August,
1995 by and between NATIONSBANK CORPORATION, a North Carolina corporation
("NationsBank"), and NATIONSBANK, N.A. (CAROLINAS), a national banking
association (the "Trustee").
W I T N E S S E T H:
WHEREAS, NationsBank and certain of its subsidiary corporations
(collectively with NationsBank, the "Participating Employers") maintain The
NationsBank Pension Plan (the "Plan"); and
WHEREAS, NationsBank desires to amend the Plan to (i) incorporate
certain amendments requested by the Internal Revenue Service as a condition to
its issuance of a favorable determination of the Pension Plan's tax-qualified
status; and (ii) reflect the merger of the NationsSecurities Pension Plan into
the Plan; and
WHEREAS, in Section 11.1 of the Plan, the Participating Employers
reserved the right to amend the Plan at any time, in whole or in part, and have
delegated to the Compensation Committee of the Board of Directors of NationsBank
the right to make the amendments set forth below on behalf of all Participating
Employers; and
WHEREAS, the amendments set forth below have been authorized
and approved by the Compensation Committee;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, NationsBank and the Trustee hereby agree as follows:
1. Section 2.1(c)(14) of the Plan is amended effective as of
June 7, 1993 by deleting the first sentence of the last paragraph
thereof ("If a Participant is employed by NationsSecurities . . .
such employment.") and substituting the following sentence in lieu
thereof:
"Notwithstanding the preceding provisions of this Section
2.1(c)(14), if a Participant is employed by NationsSecurities, a Dean
Witter/NationsBank Company ("NationsSecurities"), "Compensation" of
such Participant
<PAGE>
for a particular period of time shall mean the total remuneration
payable by NationsSecurities to the Participant for employment with
NationsSecurities during such period, including without limitation all
bonuses (contractual, discretionary or otherwise), overtime pay or any
extra or special remuneration of any kind (including commissions),
prior to any salary or wage reduction pursuant to Sections 125 or
401(k) of the Code, but excluding the items set forth in subparagraphs
(B) through (E) above."
2. Section 2.1(c)(17) of the Plan is amended
effective as of January 1, 1993 to read as follows:
"(17) Covered Employee means any Employee other
than:
(A) any Employee whose terms and conditions of
employment with the Participating Employers expressly preclude
such Employee's participation in the Plan; or
(B) 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."
3. Section 2.1(c)(38) of the Plan is amended effective as of
January 1, 1993 to read as follows:
"(38) 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
(C) those successor corporations which,
pursuant to Section 11.5, continue the Plan as
provided in Section 11.5."
4. Section 15.6 of the Plan is amended effective as of June
7, 1993 to read as follows:
"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
2
<PAGE>
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 establish its own
defined benefit pension plan by adopting the terms and provisions of
the Plan as modified by this Section 15.6, and NationsBank Corporation
hereby consents to such adoption and use of the Plan by
NationsSecurities. Due to the level of ownership interest by
NationsBank Corporation in NationsSecurities, it is appropriate to
provide limited common service credit for employment with the
Participating Employers and NationsSecurities. The provisions of this
Section 15.6 are intended to contain the service crediting provisions
and to provide for the calculation of benefits under the Plan of
Participants with NationsSecurities Service and Service with the
Participating Employers.
(b) Service Credit and Separate Trust 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
3
<PAGE>
maintaining a separate plan known as the "NationsSecurities Pension
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 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 Participating Employers under the Plan. Upon any
termination of the NationsSecurities Pension Plan, only the assets held
in the separate 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 any Participating
Employer 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 the
Participating Employers 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
4
<PAGE>
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 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."
5. The following new Section 15.12 is added to the end of
Article XV of the Plan effective as of March 31, 1995:
"SECTION 15.12. MERGER OF THE NATIONSSECURITIES
PENSION PLAN.
(a) General. In October 1994, a Subsidiary of NationsBank
Corporation purchased the interest of Dean Witter Financial Services
Group, Inc. in NationsSecurities. As the result of said purchase
transaction, NationsSecurities became a member of the Affiliated Group,
and it was determined that NationsSecurities no longer needed to
maintain a separate defined benefit pension plan for its eligible
employees. Therefore, effective as of March 31, 1995, the
NationsSecurities Pension Plan maintained in accordance
5
<PAGE>
with the provisions of Section 15.6 was merged with and into the Plan
and the assets and liabilities of the separate sub-account maintained
under the Trust for the NationsSecurities Pension Plan merged with the
separate sub-account maintained under the Trust for the Plan. In
addition, NationsSecurities adopted the terms and provisions of the
Plan and became a Participating Employer hereunder effective April 1,
1995.
(b) Determination of Retirement Income for Participants with
NationsBank and NationsSecurities Service. Notwithstanding the merger
of the NationsSecurities Pension Plan with the Plan and the adoption of
the Plan by NationsSecurities, NationsSecurities wishes to continue to
maintain the methodology of Section 15.6 for determining the Plan
benefit for a Participant who has Service with NationsSecurities and
any Participating Employer other than NationsSecurities. Therefore,
notwithstanding any other provision 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 purposes of this
Section 15.12, the terms "NationsSecurities Service,"
"NationsSecurities Compensation," "NationsBank Service" and
"NationsBank Compensation" shall have the meanings set forth
in Section 15.6(c)(1).
(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.
6
<PAGE>
(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 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."
6. Except as expressly or by necessary implication amended
hereby, the Plan shall continue in full force and effect.
IN WITNESS WHEREOF, NationsBank Corporation, on behalf of the
Participating Employers, and the Trustee have caused this Agreement to be
executed by their respective duly authorized officers, all as of the day and
year first above written.
NATIONSBANK CORPORATION
By: /s/ Susan B. Waldkirch
Susan B. Waldkirch
Vice President
7
<PAGE>
NATIONSBANK, N.A. (CAROLINAS)
By: /s/ Deborah T. Williams
Name: Deborah T. Willams
Title: Senior Vice President
8
<PAGE>
SEVENTH AMENDMENT TO
THE NATIONSBANK PENSION PLAN
THIS AGREEMENT is made and entered into as of the 28th day of
September , 1995 by and between NATIONSBANK CORPORATION, a North
Carolina corporation ("NationsBank"), and NATIONSBANK, N.A.
(CAROLINAS), a national banking association (the "Trustee").
Statement of Purpose
This amendment to The NationsBank Pension Plan (the "Plan") relates to
the First United Bancorporation Pension Trust (the "FUBI Plan"),
which was previously maintained by First United Bancorporation, Inc.
("FUBI") and certain of its subsidiaries. The FUBI Plan was merged
into the InterFirst Corporation Pension Plan (the "InterFirst Plan"),
which was sponsored by InterFirst Corporation. Subsequently, the
InterFirst Plan was merged into this Plan.
Prior to its merger into the InterFirst Plan, the terms of the FUBI
Plan provided a "basic retirement benefit" and a special unreduced
early retirement benefit known as the "agreed retirement benefit."
The FUBI Plan provided that both benefits would be subject to
cost-of-living adjustments following commencement of a participant's
retirement benefit annuity payments (the "FUBI Plan COLAs").
When the FUBI Plan was merged into the InterFirst Plan, the FUBI Plan
"basic retirement benefit" was preserved as a stand-alone alternative
benefit under the InterFirst Plan. However, the FUBI Plan COLAs
and the "agreed retirement benefit" were not also preserved at that
time. The "agreed retirement benefit" was later restored by an amendment
to the InterFirst Plan, but without the FUBI Plan COLAs.
In 1994 a civil action was brought in the United States District Court
for the Northern District of Texas, Fort Worth Division, (Civil Action
No. 4-94CV-104A) as a class action entitled "Sam L. Gill, Jr. et al. v.
NationsBank Corporation and The NationsBank Pension Plan" regarding the
FUBI Plan COLAs and the merger of the FUBI Plan into the InterFirst
Plan. NationsBank amended the Plan in response to such civil suit to
<PAGE>
reinstate the FUBI Plan COLAs. NationsBank now desires to further amend
the Plan in order to effect the settlement of such civil suit.
Accordingly, NationsBank desires to amend the Plan to (i) provide
certain Participants who were formerly employed by a participating employer in
the FUBI Plan with a stand-alone alternative benefit under the Plan that is
subject, in part, to the FUBI Plan COLAs, (ii) provide the method by which such
stand-alone alternative benefit shall be calculated and thereafter adjusted from
time to time for the FUBI Plan COLAs, (iii) set forth the effective date as of
which such stand-alone alternative benefit shall be calculated and (iv) provide
such affected Participants who are currently in pay status a single cash payment
equal to any additional retirement benefit annuity payments that would have been
paid to such Participants in excess of the retirement benefit annuity payments
already received if the stand-alone alternative benefit provided for herein with
the FUBI Plan COLAs had been in effect throughout their period of payment, all
in a manner consistent with the Plan's status as a tax-qualified plan under
Section 401(a) of the Internal Revenue Code.
In Section 11.1 of the Plan the "Participating Employers" under the
Plan have reserved the right to amend the Plan at any time, in whole or in part,
and have delegated to the Compensation Committee of the Board of Directors of
NationsBank the right to make the amendments set forth below on behalf of all
Participating Employers. The undersigned has been authorized by the Compensation
Committee to make the amendments set forth below.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, NationsBank and the Trustee hereby agree as follows:
1. Section 15.13 of the Plan, which was previously added
to the Plan effective as of July 5, 1995 by the Sixth Amendment
2
<PAGE>
to the Plan, is hereby amended and restated in its entirety to
read as follows:
"SECTION 15.13. FUBI PLAN SPECIAL BENEFIT.
(a) General. The Plan is the successor by way of
plan merger to the rights and obligations of the First
United Bancorporation Pension Trust which was last amended
and restated by an instrument dated August 30, 1985 and
effective January 1, 1984, as further amended by an instrument
dated July 1, 1986 (collectively, the "FUBI Plan"). The
provisions of this Section 15.13 establish a
stand-alone alternative benefit under the Plan for "Eligible
Former FUBI Plan Participants" (as defined below), a portion
of which shall be subject to certain post-retirement
cost-of-living adjustments previously provided under the
FUBI Plan ("FUBI Plan COLAs"). The provisions of this
Section 15.13 shall apply with respect to the Eligible Former
FUBI Plan Participants notwithstanding any provision of
the Plan to the contrary.
(b) Eligible Former FUBI Plan Participants
Defined. The provisions of this Section 15.13 shall apply to
each of the following:
(i) any Participant who was an active
participant in the FUBI Plan as of December 31, 1984;
(ii) any "Transferred FUBI Employee" (as
defined below);
(iii) any Participant who was employed by one of
the FUBI Plan participating employers and who would
have first become a participant in the FUBI Plan
during the period from January 1, 1985 through July 1,
1986, inclusive, in accordance with the terms and
provisions of the FUBI Plan assuming for such
purpose that the FUBI Plan had remained in effect
during such period; and
(iv) the Beneficiary of any deceased
individual described in clauses (i), (ii) and (iii)
above;
provided, however, that the provisions of this Section 15.13
shall not apply to any of the following:
(A) a former Participant who terminated
employment under the Plan (or a predecessor plan)
and received on or before June 28, 1995 a single
3
<PAGE>
cash payment of such Participant's retirement benefit;
or
(B) a former Participant who terminated
employment under the Plan (or a predecessor plan) with
no vested interest in such Participant's retirement
benefit at the time of termination.
For purposes of this Section 15.13, a "Transferred FUBI
Employee" is an individual who (x) was an active participant
in the FUBI Plan as of June 30, 1982, (y) transferred
employment from FUBI or a FUBI subsidiary or affiliate to
InterFirst Corporation or an InterFirst Corporation
subsidiary or affiliate during the period between June 30, 1982
and December 31, 1984, and (z) was an active participant in
the InterFirst Corporation Pension Plan (the "InterFirst
Plan") as of December 31, 1984.
The individuals to whom this Section 15.13 applies are
referred to herein as the "Eligible Former FUBI Plan
Participants."
(c) FUBI Plan Special Benefit Defined. The "FUBI
Plan Special Benefit" means, with respect to an Eligible Former
FUBI Plan Participant, the sum of (A) plus (B) plus (C), where:
(A) is the "FUBI Portion" of such
Eligible Former FUBI Plan
Participant's FUBI Plan Special
Benefit (as defined in subparagraph
(d) below);
(B) is the "InterFirst Portion," if any,
of such Eligible Former FUBI Plan
Participant's FUBI Plan Special
Benefit (as defined in
subparagraph (e) below); and
(C) is the "NationsBank Portion," if
any, of such Eligible Former FUBI
Plan Participant's FUBI Plan Special
Benefit (as defined in
subparagraph (f) below).
The FUBI Portion of an Eligible Former FUBI Plan
Participant's FUBI Plan Special Benefit shall be subject
to the FUBI Plan COLAs as provided in subparagraph (k)
below. For purposes of determining the FUBI Plan Special
Benefit for an Eligible Former FUBI Plan Participant, both the
FUBI Portion and the InterFirst Portion, if any, of such FUBI
Plan Special Benefit shall be converted to a single life
annuity as
4
<PAGE>
provided below. An Eligible Former FUBI Plan Participant's
Special FUBI Plan Benefit shall be stated as a monthly
benefit and may be paid pursuant to any optional form of
benefit set forth in Section 5.4 which such Participant elects
(to the extent eligible) in accordance with the terms and
provisions of the Plan other than this Section 15.13.
(d) FUBI Portion Defined. The FUBI Portion of an
Eligible Former FUBI Plan Participant's FUBI Plan Special
Benefit means the greater of (A) or (B), multiplied by (C),
where:
(A) is such Participant's FUBI Plan
"basic retirement benefit," as
defined below;
(B) is such Participant's FUBI Plan
"agreed retirement benefit," if
any, as defined below, if such
Participant is eligible for such
"agreed retirement benefit"
in accordance with subparagraph (g)
below; and
(C) is a factor for converting the
applicable benefit amount from a
five year certain and life annuity
to a single life annuity of
equivalent actuarial value. Such
factor shall be determined using the
actuarial equivalence assumptions
preserved from the FUBI Plan.
The amount of the FUBI Plan "basic retirement benefit" for an
Eligible Former FUBI Plan Participant (which amount is subject
to reduction for payment commencement prior to age sixty-five
(65) as described in subparagraph (h) below) shall be such
benefit determined under Article VII or, to the extent
applicable, Article VIII of the FUBI Plan as of the earliest
of
(i) such Participant's termination of
employment,
(ii) the date of such Participant's transfer of
employment from FUBI or a FUBI subsidiary or
affiliate to InterFirst Corporation or an
InterFirst Corporation subsidiary or affiliate,
or
(iii) July 1, 1986,
5
<PAGE>
based on such Participant's "credited service"
attributable to employment with a FUBI Plan participating
employer, "pension compensation base" and "social security
benefit" (as those terms were defined in the FUBI Plan) as of
such determination date assuming for such purpose that the
FUBI Plan had continued in effect through such date.
The amount, if any, of the FUBI Plan "agreed retirement
benefit" for an Eligible Former FUBI Plan Participant (which
amount is not subject to reduction for payment commencement
prior to age sixty-five (65)) shall be such benefit determined
under Article VII of the FUBI Plan as of the earliest of
(i) such Participant's termination of
employment,
(ii) the date of such Participant's transfer of
employment from FUBI or a FUBI subsidiary or
affiliate to InterFirst Corporation or an
InterFirst Corporation subsidiary or affiliate,
or
(iii) July 1, 1986,
based on such Participant's "credited service"
attributable to employment with a FUBI Plan participating
employer, "pension compensation base" and "social security
benefit" (as those terms were defined in the FUBI Plan) as of
such determination date assuming for such purpose that the
FUBI Plan had continued in effect through such date. Whether
an Eligible Former FUBI Plan Participant is eligible for the
FUBI Plan "agreed retirement benefit" shall be determined
in accordance with subparagraph (g) below.
(e) InterFirst Portion Defined. The InterFirst
Portion of an Eligible Former FUBI Plan Participant's FUBI Plan
Special Benefit, if any, means the product of (A), (B) and (C),
where:
(A) is such Participant's "December
31st, 1988 Benefit," if any, as
defined in the Texas Plan (i.e., the
"(A)" portion of the Texas Plan
"hybrid formula" set forth in
Section 15.1(b)(iii) of this Plan);
(B) is a fraction, the numerator of
which is the difference between (x)
such Participant's "Years of
Benefit Service" as defined under
the InterFirst Plan
6
<PAGE>
(which definition includes
fractional years) taken into
account for purposes of
determining such Participant's
"December 31st, 1988 Benefit" minus
(y) the portion of such years
included for purposes of
determining the FUBI Portion
of such Participant's FUBI Plan
Special Benefit, and the denominator
of which is such Participant's
"Years of Benefit Service" taken
into account for purposes of
determining such Participant's
"December 31st, 1988 Benefit"; and
(C) is a factor for converting the
product of (A) and (B) from a ten
year certain and life annuity to a
single life annuity of
equivalent actuarial value. Such
factor shall be determined using
the actuarial equivalence
assumptions preserved from the
InterFirst Plan.
The amount of the InterFirst Portion for an Eligible Former
FUBI Plan Participant shall be subject to reduction for
payment commencement prior to age sixty-five (65) as described
in subparagraph (h) below.
(f) NationsBank Portion Defined. The NationsBank
Portion of an Eligible Former FUBI Plan Participant's FUBI
Plan Special Benefit, if any, means the "(B)" portion of the
Texas Plan "hybrid formula" set forth in Section 15.1(b)(iii)
of this Plan, that is, the amount of such Participant's benefit
determined under the Plan other than this Section 15.13, but
using only Benefit Service earned after December 31, 1988 not
in excess of three hundred sixty (360) months, subject to
the limitations of Section 15.1(b)(iii) of this Plan. The
amount of the NationsBank Portion for an Eligible Former FUBI
Plan Participant shall be subject to reduction for payment
commencement prior to age sixty-five (65) as described in
subparagraph (h) below.
(g) Eligibility for FUBI Plan Agreed Retirement
Benefit. Prior to January 1, 1989, any Eligible Former FUBI
Plan Participant who had terminated employment and received
the FUBI Plan "agreed retirement benefit" shall be eligible
for the FUBI Plan "agreed retirement benefit" for purposes
of determining such Participant's FUBI Plan Special Benefit
hereunder. From and after January 1, 1989, an Eligible Former
FUBI Plan Participant shall be eligible for the FUBI Plan
"agreed retirement benefit" upon both (i) completion of at
least twenty (20) years of service (within the meaning
7
<PAGE>
of the FUBI Plan) with NationsBank Corporation and
predecessor plan sponsors (or their respective subsidiaries
and affiliates) and (ii) attainment of age fifty (50) on or
before termination of employment with NationsBank
Corporation and predecessor plan sponsors (or their respective
subsidiaries and affiliates).
(h) Reductions for Early Commencement. Each
portion of an Eligible Former FUBI Plan Participant's FUBI Plan
Special Benefit shall be reduced for early commencement as
follows:
(i) With respect to the FUBI Portion of
such Participant's FUBI Plan Special Benefit, each of
the following shall apply:
(A) The amount of the FUBI Plan
"agreed retirement benefit" shall be
determined with no reduction for
early commencement of retirement
benefit annuity payments prior to
age sixty-five (65); and
(B) The amount of the FUBI Plan "basic
retirement benefit" shall be reduced
for early commencement prior to age
sixty- five (65) in accordance with
the reduction factors in the FUBI
Plan applicable to benefits
commencing at age fifty-five (55) or
later. The actuarial reduction
factors applicable to Eligible
Former FUBI Plan Participants to
determine the additional amount of
early commencement reduction if
benefits commence earlier than age
fifty-five (55) shall be based on
the actuarial reduction factors
preserved from the FUBI Plan.
(ii) With respect to the InterFirst Portion
of such Participant's FUBI Plan Special Benefit,
the amount of such InterFirst Portion shall be
reduced for early commencement prior to age
sixty-five (65) in accordance with the reduction
factors in the InterFirst Plan applicable to
benefits commencing at age fifty-five (55) or
later. The actuarial reduction factors applicable
to Eligible Former FUBI Plan Participants to
determine the additional amount of early
commencement reduction if benefits commence earlier
than age fifty-five (55) shall be based on the
actuarial reduction factors preserved from the
InterFirst Plan.
8
<PAGE>
(iii) With respect to the NationsBank Portion
of such Participant's FUBI Plan Special Benefit, the
amount of such NationsBank Portion shall be reduced
for early commencement prior to age sixty-five (65)
in accordance with the terms of the Plan other than
this Section 15.13.
(i) FUBI Plan Special Benefit as a Protected Benefit.
From and after (i) receipt by the Participating Employers of
a determination letter from the Internal Revenue Service
that the provisions of this Section 15.13 do not adversely
affect the continued qualification of the Plan under Section
401 of the Code and (ii) the entering of an "Order of
Dismissal with Prejudice" which has become final and
nonappealable in accordance with the terms of that certain
"First Amended Compromise Settlement Agreement & Release"
dated August 16, 1995 to which this Plan is a party, the
FUBI Plan Special Benefit (including the right to a single
cash payment with respect to prior retirement benefit
annuity payments as provided in subparagraph (o) below)
shall be a benefit protected by Section 411(d)(6) of the
Code and Section 204(g) of the Act.
(j) FUBI Plan Special Benefit as a Stand-Alone
Alternative Benefit. Following commencement of retirement
benefit annuity payments, each Eligible Former FUBI Plan
Participant shall receive the greatest benefit amount
determined from time to time under the alternative benefit
formulas applicable to such Eligible Former FUBI Plan
Participant under this Plan. In that regard, the amount of
the FUBI Plan Special Benefit for each Eligible Former FUBI
Plan Participant (as adjusted to reflect the form of
benefit payment and as adjusted pursuant to subparagraph
(k) below) shall be treated as a separate stand-alone
alternative benefit formula under this Plan.
(k) COLA Adjustments for FUBI Portion. The FUBI
Portion of an Eligible Former FUBI Plan Participant's FUBI
Plan Special Benefit, regardless of whether such
Participant's FUBI Plan Special Benefit is the greatest
benefit amount at the time of commencement of retirement
benefit annuity payments, shall be increased or decreased for
changes in the cost of living (the "COLA") as of January 1
of each Plan Year following commencement of such payments by
such Eligible Former FUBI Plan Participant under this Plan (or
any applicable predecessor plan). The COLA amount shall be
based on the percentage increase or decrease in the cost of
living, if any, based on a comparison of the
9
<PAGE>
U. S. Consumer Price Index for the September 30 next
preceding the January of the determination, with such U. S.
Consumer Price Index for the September 30 one year earlier;
provided, however, that such yearly increase or decrease, if
any, shall be limited to a maximum of four percent (4%); and
provided further, that such yearly decrease, if any, shall not
reduce the amount of the FUBI Portion of such Eligible Former
FUBI Plan Participant's FUBI Plan Special Benefit below the
initial amount of such FUBI Portion at the time of commencement
of retirement benefit annuity payments. The "Consumer Price
Index for All Urban Wage Earners and Clerical Workers" (or the
appropriate replacement table that is published by the Bureau
of Labor Statistics, or its successor, or if there is none,
then such other table determined to be acceptable to the
Administrator of the Plan) shall be used in determining the
percentage increases or decreases for each Plan Year.
(l) Payment of FUBI Plan Special Benefit. Each
Eligible Former FUBI Plan Participant shall
receive the FUBI Plan Special Benefit amount as
such Participant's retirement benefit when that
amount (as adjusted from time to time as
provided in subparagraph (k) above) is the
greatest amount available to such Eligible
Former FUBI Plan Participant under the
alternative retirement benefit formulas under
the Plan applicable to such Eligible Former
FUBI Plan Participant.
(m) Application of Other Alternative Benefit
Formulas. The provisions of this Section 15.13 shall not in
any manner change, modify or otherwise affect the continued
application of any other alternative benefit formulas under the
Plan applicable to Eligible Former FUBI Plan Participants,
including without limitation the Plan's basic retirement
benefit formula and the Texas Plan's hybrid formula. In such
regard:
(i) Continued Credit for FUBI Plan and
InterFirst Plan Benefit Service under this Plan's
Basic Retirement Benefit Formula. For any Eligible
Former FUBI Plan Participant who is eligible for a
benefit determined under this Plan's basic
"all-service" retirement benefit formula set forth
in Articles V and VI, such Participant shall continue
to receive credit under such benefit formula
(pursuant to the terms and provisions of the Plan
other than this Section 15.13) for all of such
Participant's benefit service under (i) the FUBI Plan
prior to its merger into the InterFirst Plan and (ii)
the
10
<PAGE>
InterFirst Plan prior to its merger into this Plan.
(ii) Texas Plan's Hybrid Formula. Section
15.1(b)(iii) of this Plan provides in part that the
benefit under the Plan for a Texas Plan Participant
who participated in the Texas Plan (or any
predecessor plan) before 1989 shall not be less than
the sum of (A) such Participant's "December
31st, 1988 Benefit" as defined in the Texas
Plan and (B) such Participant's benefit
determined under the Plan's basic retirement
benefit formula set forth in Articles V and VI with
respect to Benefit Service earned after 1988 (the
"hybrid formula"). For an Eligible Former FUBI Plan
Participant, the December 31st, 1988 Benefit under
the Texas Plan generally means the greater of (x) the
Participant's benefit as of such date determined
under the InterFirst Plan's "all-service" benefit
formula (which was calculated taking into account such
Eligible Former FUBI Plan Participant's benefit
service under the FUBI Plan prior to 1985) or (y) the
Participant's "basic retirement benefit" determined
as of December 31, 1984 under the FUBI Plan benefit
formula without adjustment for the FUBI Plan COLAs.
In addition, for certain Eligible Former FUBI Plan
Participants who, as of January 1, 1985, were age 55
or older and who, as of December 31, 1984, were
employed by a FUBI Plan participating employer, the
December 31st, 1988 Benefit is (under the terms of
the Texas Plan) not less than such Participant's
benefit determined as of December 31, 1988 using the
FUBI Plan's "basic retirement benefit" formula as
adopted under and provided in the InterFirst Plan
without adjustment for the FUBI Plan COLAs. The
provisions of this Section 15.13 shall have no effect
on the provisions of Section 15.1(b)(iii) of this Plan
as described herein.
(n) Application of Code Section 415. The provisions of
Article VII of the Plan that limit payment of annuity benefits
in accordance with the requirements of Section 415 of the
Code (including without limitation the "stated dollar"
limitation set forth in Section 7.1(a)(i) of the Plan and
the "compensation-based" limitation set forth in Section
7.1(a)(ii) of the Plan) shall be subject to annual cost of
living adjustments pursuant to Section 415(d) of the Code with
respect to the FUBI Plan Special Benefit. Notwithstanding the
foregoing, the FUBI Plan Special
11
<PAGE>
Benefit (as adjusted from time to time as provided in
subparagraph (k) above) of an Eligible Former FUBI Plan
Participant shall not be paid to the extent such annual annuity
amount exceeds the greater of (i) the amount of the limit
referred to in the preceding sentence (as adjusted pursuant to
Code Section 415(d)), or (ii) the amount of the "current
accrued benefit" of the Eligible Former FUBI Plan Participant.
In that regard, an Eligible Former FUBI Plan Participant's
"current accrued benefit" shall be determined as a fixed
dollar annual annuity amount as provided in Section
1106(i)(3)(B) of the Tax Reform Act of 1986, without regard
to adjustments pursuant to Section 415(d) of the Code or the
FUBI Plan COLAs. For this purpose, the "current accrued
benefit" of an Eligible Former FUBI Plan Participant shall
equal the sum of (A) the FUBI Portion of such Participant's
FUBI Plan Special Benefit (without adjustment for the FUBI
Plan COLAs) plus (B) the portion of the InterFirst Portion
of such Participant's FUBI Plan Special Benefit, if any,
earned through December 31, 1986. No provision of
this subparagraph shall affect an Eligible Former FUBI Plan
Participant's "current accrued benefit" within the meaning of
Section 235(g)(4) of the Tax Equity and Fiscal
Responsibility Act of 1982, which such "current accrued
benefit" is also determined as a fixed dollar annual annuity
amount without regard to adjustments pursuant to Section 415(d)
of the Code or the FUBI Plan COLAs.
(o) Payment of Prior Benefits. The provisions of this
Section 15.13 shall apply retroactively for all Eligible
Former FUBI Plan Participants. Accordingly, retirement
benefit annuity payments for Eligible Former FUBI Plan
Participants who have been in pay status prior to the
"determination date" (defined below) shall be adjusted in
accordance with the provisions of this Section 15.13. Such
adjustments shall be based on the form of benefit payment
previously elected, subject to reduction, if any, pursuant
to subparagraph (h) above. The adjustments shall be made as
of a date selected by NationsBank Corporation (the
"determination date") that is as soon as practicable following
both (i) receipt of a favorable determination letter from the
Internal Revenue Service with respect to this Section 15.13
and (ii) the entering of an "Order of Dismissal with Prejudice"
which has become final and nonappealable in accordance with
the terms of that certain "First Amended Compromise Settlement
Agreement & Release" dated August 16, 1995 to which this Plan
is a party. As soon as practicable after the determination
date, any past benefit annuity amounts payable to each
12
<PAGE>
affected Eligible Former FUBI Plan Participant as provided
by this Section 15.13 in excess of the benefit annuity
amounts actually received by each such Eligible Former FUBI
Plan Participant (whether from the Plan or a predecessor
plan) shall be calculated and paid, together with interest
at the rate of nine percent (9%), compounded annually, to
each such Eligible Former FUBI Plan Participant in a
single cash payment (less any applicable withholding
amounts). For purposes of determining the amount of
interest to be paid, such interest shall accrue from the
end of the Plan Year to which such additional benefit
annuity amounts relate through the last day of the month
immediately preceding the date of such single cash payment.
(p) Death and Disability Benefits. The FUBI Plan
Special Benefit of an Eligible Former FUBI Plan Participant
shall be applicable in determining any death or disability
benefits that may be payable to or with respect to such
Participant under the Plan or any applicable predecessor plan."
2. The effective date of the amendment set forth
herein shall be July 5, 1995, subject, however, to both (i) receipt
from the Internal Revenue Service of a determination letter that such
amendment does not adversely affect the continued qualification of the
Plan under Section 401 of the Internal Revenue Code and (ii) the
entering of an "Order of Dismissal with Prejudice" which has become
final and nonappealable in accordance with the terms of that certain
"First Amended Compromise Settlement Agreement & Release" dated August
16, 1995 to which this Plan is a party (the "Settlement
Agreement"). In addition, the timing of the implementation of the
provisions of the amendment set forth herein shall be subject to the
terms and provisions of the Settlement Agreement. NationsBank shall
submit the amendment set forth herein for such a determination letter
as soon as practicable following the execution of this Agreement. If
such a determination letter is not received or if such "Order of
Dismissal with Prejudice" is not entered or does not become
final and nonappealable, the amendment set forth herein shall be null
and void.
13
<PAGE>
3. No payment shall be made by the Participating Employers
or any employee benefit plan maintained by the Participating Employers
with respect to the amount, if any, by which the "FUBI Plan Special
Benefit" of an "Eligible Former FUBI Plan Participant" as adjusted
for the "FUBI Plan COLAs" (as those terms are defined in this amendment)
exceeds either (i) the applicable Internal Revenue Code Section 415
limitations as set forth in this amendment or (ii) the benefit amount
that results from application of the compensation limitation of
Internal Revenue Code Section 401(a)(17) as set forth in the Plan
(as such compensation limitation is periodically adjusted pursuant to
Section 401(a)(17) of the Internal Revenue Code).
4. Except as expressly or by necessary implication amended
hereby, the Plan shall continue in full force and effect.
IN WITNESS WHEREOF, NationsBank Corporation, on behalf
of the Participating Employers, and the Trustee have caused this
Agreement to be executed by their respective duly authorized officers,
all as of the day and year first above written.
NATIONSBANK CORPORATION
By: /s/ C. J. Cooley
C. J. Cooley, Executive
Vice President
"NationsBank"
NATIONSBANK, N.A. (CAROLINAS)
By: /s/ Deborah T. Williams
Name: Deborah T. Williams
Title: Senior Vice President
"Trustee"
14
<PAGE>
AMENDMENT TO THE
NATIONSBANK CORPORATION AND DESIGNATED SUBSIDIARIES
SUPPLEMENTAL RETIREMENT PLAN
WHEREAS, NationsBank Corporation ("NationsBank") and certain
of its subsidiary corporations (collectively with NationsBank,
the "Participating Employers") maintain the NationsBank
Corporation and Designated Subsidiaries Supplemental Retirement
Plan (the "Plan"); and
WHEREAS, effective as of the date hereof, an amendment is
being made to The NationsBank Pension Plan establishing a stand-
alone alternative benefit for certain participants who formerly
participated in the First United Bancorporation Pension Trust
(the "FUBI Plan") called the "FUBI Plan Special Benefit" as
defined in such amendment; and
WHEREAS, the Participating Employers desire to amend the
Plan to (i) provide that any FUBI Plan Special Benefit that
cannot be paid under The NationsBank Pension Plan from time to
time as a result of the application of the limitations set forth
in Internal Revenue Code Sections 415 and 401(a)(17) shall not be
paid under the provisions of the Plan and (ii) otherwise meet
current needs; and
WHEREAS, the undersigned has been authorized by the
Compensation Committee of the Board of Directors of NationsBank
to make the amendment set forth below;
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Section 2.6 of the Plan entitled "Additional Benefits"
is redesignated as Section 2.7, and Section 2.7 of the Plan
entitled "Effect of Certain Benefits" is redesignated as Section
2.8, all effective as of December 31, 1991.
2. The following new Section 2.9 is added to the Plan
effective as of the date hereof:
"Section 2.9. FUBI Plan Special Benefits.
Section 15.13 of the Retirement Plan provides a stand-
alone alternative benefit called the "FUBI Plan Special
Benefit" for certain participants in the Retirement
Plan called the "Eligible Former FUBI Plan
Participants," which such stand-alone alternative
benefit is to be adjusted from time to time for the
"FUBI Plan COLAs," as those terms are defined in said
<PAGE>
Section 15.13 of the Retirement Plan. Notwithstanding
any provision of this Plan to the contrary, an Eligible
Former FUBI Plan Participant's FUBI Plan Special
Benefit (as adjusted for FUBI Plan COLAs) shall be
disregarded for purposes of determining such
participant's benefits (if any) under this Plan, and in
no event shall any amounts be payable under this Plan
with respect to any FUBI Plan Special Benefits (as
adjusted for FUBI Plan COLAs)."
3. Except as expressly or by necessary implication amended
hereby, the Plan is continued in full force and effect.
IN WITNESS WHEREOF, NationsBank Corporation has caused this
instrument to be executed by its duly authorized officer as of
July 5, 1995.
NATIONSBANK CORPORATION
By: /s/ C. J. Cooley
C. J. Cooley, Executive
Vice President
2
<PAGE>
NATIONSBANK CORPORATION
BENEFIT SECURITY TRUST
Trustee Removal/Appointment Agreement
THIS TRUSTEE REMOVAL/APPOINTMENT AGREEMENT (the "Agreement")
is made and entered into as of the 19th day of December, 1995 by
and between NATIONSBANK CORPORATION, a North Carolina corporation
(the "Company"), THE CHASE MANHATTAN BANK, N.A., a national
banking association (the "Current Trustee"), and STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company (the
"Successor Trustee").
Statement of Purpose
The Company maintains the NationsBank Corporation Benefit
Security Trust (the "Trust") pursuant to an agreement dated June
27, 1990 between NCNB Corporation (which subsequently changed its
name to NationsBank Corporation) and United States Trust Company
of New York (the "Trust Agreement") to provide additional
security with respect to the Company's benefit obligations under
certain nonqualified employee benefit plans sponsored by the
Company and its subsidiaries. The Current Trustee became the
trustee of the Trust during 1995 when it acquired the corporate
trust business of United States Trust Company of New York. The
purpose of this Agreement is to evidence, in accordance with
Article X of the Trust Agreement, the replacement of the Current
Trustee with the Successor Trustee as the trustee of the Trust
effective as of January 1, 1996.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto hereby agree as
follows:
1. Removal of Current Trustee. In accordance with Section
10.1 of the Trust Agreement, the Company hereby removes the
Current Trustee as trustee of the Trust effective as of January
1, 1996. In that regard, the Company and the Current Trustee
hereby waive the ninety (90) day advance written notice
requirement otherwise required by Section 10.1. The removal of
the Current Trustee is conditioned on the appointment of the
Successor Trustee as set forth herein. As soon as practicable
after January 1, 1996, the Current Trustee shall, in accordance
with Section 10.3 of the Trust Agreement, assign, transfer,
deliver and pay over to the Successor Trustee, in conformity with
the requirements of applicable law, the "Trust Fund" under the
Trust, less reserves for reasonable and necessary closing fees
and expenses as they pertain to the Trust and as approved by the
Company, and copies of all records and materials pertaining to
the Trust and the Trust Agreement in its control or possession.
2. Appointment of Successor Trustee. The Company hereby
appoints the Successor Trustee as trustee of the Trust effective
<PAGE>
as of January 1, 1996, and the Successor Trustee hereby accepts
such appointment.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized
officers.
NATIONSBANK CORPORATION
By: /s/ Lawrence E. McCray
Name: Lawrence E. McCray
Title: Executive Vice President
"Company"
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Martha Dolan
Name: Martha Dolan
Title: Vice President
"Current Trustee"
STATE STREET BANK AND TRUST COMPANY
By: /s/ Harry Ostrander
Name: Harry Ostrander
Title: Vice President
"Successor Trustee"
2
<PAGE>
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (the "Agreement") is made and entered
into as of January 31, 1996 by and between NATIONSBANK CORPORATION, a North
Carolina corporation ("NationsBank"), and JAMES W. THOMPSON ("Executive").
W I T N E S S E T H:
WHEREAS, as of the date hereof, Executive is retiring from
NationsBank; and
WHEREAS, Executive has been employed by NationsBank for over thirty-two
years and during his period of employment has served NationsBank in numerous
executive capacities, including most recently as its Vice Chairman with
operational responsibility for many of NationsBank's business units; and
WHEREAS, Executive has acquired extensive knowledge of
NationsBank's business methods, customers and employees; and
WHEREAS, the parties hereto desire to enter into this Agreement
restricting the activities of Executive in retirement in an effort to protect
the Company's legitimate business interests;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms used herein shall
have the meanings set forth below:
"Affiliate" means (i) any entity directly or indirectly
controlling (including without limitation an entity for which Executive serves
as an officer, director, employee, consultant or other agent), controlled by, or
under common control with Executive, and (ii) each other entity in which
Executive, directly or indirectly, owns any controlling interest or of which
Executive serves as a general partner.
"Agreement" means this Noncompetition Agreement, including any
amendments hereto made in accordance with paragraph 8(d) hereof.
"Company" means (i) NationsBank, (ii) any corporation,
partnership or other business entity that is, directly or indirectly, controlled
by or under common control with NationsBank and (iii) their respective
successors.
"Covenant Period" means the period beginning on the date of
the Agreement and ending on June 30, 2001, or if earlier, the date of
Executive's death.
<PAGE>
2. Consideration. During the Covenant Period, so long as
Executive is complying with the terms and conditions of this Agreement, the
Company shall pay to Executive the sum of Thirty- Five Thousand Five Hundred
Dollars ($35,500) per month on the last day of each month commencing January 31,
1996.
3. Executive's Obligations in Connection with His
Termination of Employment with the Company.
(a) Nonsolicitation of Employees. During the
Covenant Period, Executive agrees not to hire, directly or indirectly, or entice
or participate in any efforts to entice to leave the Company's employ, any
person who was or is a "key employee" (as hereinafter defined) of the Company at
any time during the twelve (12) month period immediately preceding January 31,
1996. For purposes of this Agreement, "key employee" means an employee who has
an annualized rate of base salary equaling or exceeding fifty thousand dollars
($50,000).
(b) Noncompetition. During the Covenant Period,
Executive agrees not to engage in any manner, whether as an officer, employee,
owner, partner, stockholder, director, consultant or otherwise -- directly or
indirectly -- in any business which engages or attempts to engage, directly or
indirectly, in any business in which the Company engages within the United
States, as determined by NationsBank in its reasonable discretion; provided,
however, that Executive may (i) acquire an interest in a business entity so long
as such interest is a passive investment of Executive not exceeding five percent
(5%) of the total ownership interest in such entity or (ii) engage in any other
activities as approved in writing in advance by NationsBank.
(c) Trade Secrets and Confidential Information.
Executive hereby agrees that he will hold in a fiduciary capacity for the
benefit of the Company, and shall not directly or indirectly use or disclose any
Trade Secret, as defined hereinafter, that Executive may have acquired during
the term of his employment by the Company for so long as such information
remains a Trade Secret. The term "Trade Secret" as used in this Agreement shall
mean information including, but not limited to, technical or nontechnical data,
a formula, a pattern, a compilation, a program, a device, a method, a technique,
a drawing, a process, financial data, financial plans, product plans, or a list
of actual or potential customers or suppliers which derives economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use; and is the subject of reasonable efforts by the
Company to maintain its secrecy.
In addition to the foregoing and not in limitation thereof,
Executive agrees that during the Covenant Period he will
2
<PAGE>
hold in a fiduciary capacity for the benefit of the Company and shall not
directly or indirectly use or disclose, any Confidential or Proprietary
Information, as defined hereinafter, that Executive may have acquired (whether
or not developed or compiled by Executive and whether or not Executive was
authorized to have access to such Information) during the term of, in the course
of or as a result of his employment by the Company. The term "Confidential or
Proprietary Information" as used in this Agreement means any secret,
confidential or proprietary information of the Company not otherwise included in
the definition of "Trade Secret" above. The term "Confidential and Proprietary
Information" does not include information that has become generally available to
the public by the act of one who has the right to disclose such information
without violating any right of the Company.
4. Reasonable and Necessary Restrictions. Executive
acknowledges that the restrictions, prohibitions and other provisions of this
Agreement, including without limitation the Covenant Period, are reasonable,
fair and equitable in scope, term and duration, are necessary to protect the
legitimate business interests of NationsBank, and are a material inducement to
NationsBank to enter into this Agreement. Executive covenants that Executive
will not challenge the enforceability of this Agreement nor will Executive raise
any equitable defense to its enforcement.
5. Remedies. Executive acknowledges that the obligations
undertaken by Executive pursuant to this Agreement are unique and that
NationsBank likely will have no adequate remedy at law if Executive shall fail
to perform any of Executive's obligations hereunder, and Executive therefore
confirms that NationsBank's right to specific performance of the terms of this
Agreement is essential to protect the rights and interests of NationsBank.
Accordingly, in addition to any other remedies that NationsBank may have at law
or in equity, NationsBank shall have the right to have all obligations,
covenants, agreements and other provisions of this Agreement specifically
performed by Executive, and NationsBank shall have the right to obtain
preliminary and permanent injunctive relief to secure specific performance and
to prevent a breach or contemplated breach of this Agreement by Executive, and
Executive submits to the jurisdiction of the courts of the State of North
Carolina for this purpose. In addition, in the event Executive breaches any
provision of this Agreement, Executive shall forfeit and have no right to
receive any benefits under this Agreement from and after the date of such
breach.
6. Operations of Affiliates. Executive agrees that he will
refrain from (i) authorizing any Affiliate to perform or (ii) assisting in any
manner any Affiliate in performing any activities that would be prohibited by
the terms of this Agreement if they were performed by Executive.
3
<PAGE>
7. Withholding. Any payments to Executive hereunder
shall be less any applicable payroll or withholding taxes.
8. Miscellaneous Provisions.
(a) Binding Effect. Subject to any provisions
hereof restricting assignment, all covenants and agreements in this Agreement by
or on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors, assigns, heirs, and personal representatives. None of
the parties hereto may assign any of its rights under this Agreement or attempt
to have any other person or entity assume any of its obligations hereunder.
(b) Severability. If fulfillment of any provision
of this Agreement, at the time such fulfillment shall be due, shall transcend
the limit of validity prescribed by law, then the obligation to be fulfilled
shall be reduced to the limit of such validity; and if any clause or provision
contained in this Agreement operates or would operate to invalidate this
Agreement, in whole or in part, then such clause or provision only shall be held
ineffective, as though not herein contained, and the remainder of this Agreement
shall remain operative and in full force and effect.
(c) Governing Law. This Agreement, the rights and
obligations of the parties hereto, and any claims or disputes relating thereto
shall be governed by and construed in accordance with the laws of the State of
North Carolina, not including the choice-of-law rules thereof.
(d) Amendment; Waiver. Except as otherwise
expressly provided in this Agreement, no amendment, modification or discharge of
this Agreement shall be valid or binding unless set forth in writing and duly
executed by each of the parties hereto. Any waiver by any party or consent by
any party to any variation from any provision of this Agreement shall be valid
only if in writing and only in the specific instance in which it is given, and
such waiver or consent shall not be construed as a waiver of any other provision
or as a consent with respect to any similar instance or circumstance.
(e) Headings. Paragraph and subparagraph headings
contained in this Agreement are inserted for convenience of reference only,
shall not be deemed to be a part of this Agreement for any purpose, and shall
not in any way define or affect the meaning, construction or scope of any of the
provisions hereof.
(f) Pronouns. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular or
plural, as the identity of the person or entity may require.
4
<PAGE>
(g) Execution in Counterparts. This Agreement may
be executed in two or more counterparts, none of which need contain the
signatures of all parties hereto and each of which shall be deemed an original.
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first set forth above.
NATIONSBANK CORPORATION
By: /s/ C. J. Cooley
Name: C. J. Cooley
Title: Executive Vice Pres.
"NationsBank"
/s/ James W. Thompson [SEAL]
James W. Thompson
"Executive"
5
<PAGE>
SUPPLEMENTAL RETIREMENT AGREEMENT
THIS SUPPLEMENTAL RETIREMENT AGREEMENT (the "Agreement") is made and
entered into as of January 31, 1996 by and between NATIONSBANK CORPORATION, a
North Carolina corporation ("NationsBank"), and JAMES W. THOMPSON ("Executive").
W I T N E S S E T H:
WHEREAS, as of the date hereof, Executive is retiring from
NationsBank; and
WHEREAS, Executive has been employed by NationsBank or its subsidiaries
for over thirty-two years and has contributed materially to the success which
NationsBank has enjoyed during his period of employment; and
WHEREAS, contemporaneously with the execution of this Agreement
NationsBank and Executive are entering into a Noncompetition Agreement pursuant
to which Executive has agreed to certain restrictions on his business activities
between the date hereof and June 30, 2001; and
WHEREAS, in consideration of Executive's prior service to NationsBank
and his entering into the Noncompetition Agreement, NationsBank desires to
provide Executive with certain supplemental retirement benefits in accordance
with the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto agree as follows:
1. Enhanced Retirement Benefits. In consideration of
Executive's prior services to NationsBank and Executive's
compliance with the terms and conditions of the Noncompetition
Agreement, NationsBank shall pay to Executive the following
enhanced retirement benefits subject to the provisions of paragraph
2 below:
(a) A monthly benefit in the amount of Thirty-Five Thousand
Five Hundred Dollars ($35,500) for the remainder of Executive's life
commencing on July 31, 2001 and continuing on the last day of each
calendar month thereafter through the last day of the calendar month in
which the death of Executive occurs. In addition, upon Executive's
death (whether such death occurs before or after July 31, 2001), in the
event Executive is survived by Executive's spouse on the date of this
Agreement, NationsBank shall pay to Executive's surviving spouse a
monthly benefit in the amount of Twenty-Six Thousand Five Hundred
Dollars ($26,500) commencing on the last day of the calendar month
following the calendar month in which Executive dies and continuing on
the last day of each
<PAGE>
subsequent calendar month thereafter through the last day of the
calendar month in which such spouse dies.
(b) A monthly benefit in the amount of Six Thousand Three
Hundred Dollars ($6,300) beginning on January 31, 1997 and continuing
on the last day of each month thereafter for a period of fifteen (15)
years. If Executive dies prior to the end of such fifteen (15) year
period, NationsBank shall continue to pay any remaining unpaid monthly
installments to the "beneficiary" of Executive designated under the
NationsBank Corporation Deferred Compensation Plan for Key Employees.
2. Compliance With Noncompetition Agreement. The payment to Executive
and his spouse or other beneficiary of enhanced retirement benefits under this
Agreement is conditioned on and subject to Executive's compliance with the
Noncompetition Agreement and the covenant set forth in paragraph 3 below. In the
event Executive breaches the Noncompetition Agreement or the covenant set forth
in paragraph 3 below, Executive and his spouse or other beneficiary shall
forfeit and have no right to receive any benefits under this Agreement from and
after the date of such breach.
3. Noncompetition Covenant. During the period that Executive is
receiving payments under this Agreement, Executive agrees not to engage in any
manner, whether as an officer, employee, owner, partner, stockholder, director,
consultant or otherwise -- directly or indirectly -- in any business which is
(i) a bank holding company, (ii) an operating commercial bank or (iii) a member
of a group of trades or businesses under common control that includes a bank
holding company or an operating commercial bank, all as determined by
NationsBank in its reasonable discretion; provided, however, that Executive may
(A) acquire an interest in a business entity so long as such interest is a
passive investment of Executive not exceeding five percent (5%) of the total
ownership interest in such entity or (B) engage in any other activities as
approved in writing in advance by NationsBank. Executive agrees that he will
refrain from (x) authorizing any Affiliate to perform or (y) assisting in any
manner any Affiliate in performing any activities that would be prohibited by
the terms of this paragraph 3 if they were performed by Executive. For purposes
of this paragraph, "Affiliate" means (i) any entity directly or indirectly
controlling (including without limitation an entity for which Executive serves
as an officer, director, employee, consultant or other agent), controlled by, or
under common control with Executive, and (ii) each other entity in which
Executive, directly or indirectly, owns any controlling interest or of which
Executive serves as a general partner.
4. Withholding. Any payments to Executive hereunder shall
be less any applicable payroll or withholding taxes.
2
<PAGE>
5. Miscellaneous Provisions.
(a) Binding Effect. Subject to any provisions hereof
restricting assignment, all covenants and agreements in this Agreement
by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors, assigns, heirs, and personal
representatives. None of the parties hereto may assign any of its
rights under this Agreement or attempt to have any other person or
entity assume any of its obligations hereunder.
(b) Severability. If fulfillment of any provision of this
Agreement, at the time such fulfillment shall be due, shall transcend
the limit of validity prescribed by law, then the obligation to be
fulfilled shall be reduced to the limit of such validity; and if any
clause or provision contained in this Agreement operates or would
operate to invalidate this Agreement, in whole or in part, then such
clause or provision only shall be held ineffective, as though not
herein contained, and the remainder of this Agreement shall remain
operative and in full force and effect.
(c) Governing Law. This Agreement, the rights and obligations
of the parties hereto, and any claims or disputes relating thereto
shall be governed by and construed in accordance with the laws of the
State of North Carolina, not including the choice-of-law rules thereof.
(d) Amendment; Waiver. Except as otherwise expressly provided
in this Agreement, no amendment, modification or discharge of this
Agreement shall be valid or binding unless set forth in writing and
duly executed by each of the parties hereto. Any waiver by any party or
consent by any party to any variation from any provision of this
Agreement shall be valid only if in writing and only in the specific
instance in which it is given, and such waiver or consent shall not be
construed as a waiver of any other provision or as a consent with
respect to any similar instance or circumstance.
(e) Headings. Paragraph and subparagraph headings contained in
this Agreement are inserted for convenience of reference only, shall
not be deemed to be a part of this Agreement for any purpose, and shall
not in any way define or affect the meaning, construction or scope of
any of the provisions hereof.
(f) Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural,
as the identity of the person or entity may require.
3
<PAGE>
(g) Execution in Counterparts. This Agreement may be executed
in two or more counterparts, none of which need contain the signatures
of all parties hereto and each of which shall be deemed an original.
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first set forth above.
NATIONSBANK CORPORATION
By: /s/ C. J. Cooley
Name: C. J. Cooley
Title: Executive Vice Pres.
"NationsBank"
/s/ James W. Thompson [SEAL]
James W. Thompson
"Executive"
4
<PAGE>
Exhibit 11
Fully Diluted Earnings Per Common Share and Fully Diluted Average Common Shares
Outstanding
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 outstanding and the dilution resulting from the conversion of
the registrant's convertible preferred stock, if applicable. The effect of
convertible preferred stock is excluded from the computation of fully diluted
earnings per common share in periods in which the 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
1995 1994 1993
<S> <C> <C> <C>
Average common shares outstanding....................................... 272,480 274,656 257,969
Dilutive effect of
Convertible preferred stock............................................. 2,291 2,513 2,453
Stock options........................................................... 2,363 1,404 2,031
Total fully dilutive shares............................................. 277,134 278,573 262,453
Income available to common shareholders before effect
of change in method of accounting for income taxes...................... $ 1,942 $ 1,680 $ 1,291
Preferred dividends paid on dilutive convertible
preferred stock......................................................... 8 10 10
Income available to common shareholders adjusted for
full dilution and before effect of change in method
of accounting for income taxes.......................................... 1,950 1,690 1,301
Effect of change in method of accounting for income taxes............... - - 200
Total net income available for common shareholders
adjusted for full dilution.............................................. $ 1,950 $ 1,690 $ 1,501
Fully diluted earnings per common share before effect
of change in method of accounting for income taxes...................... $ 7.04 $ 6.06 $ 4.95
Fully diluted earnings per common share................................. $ 7.04 $ 6.06 $ 5.72
</TABLE>
<PAGE>
Exhibit 12(a)
NationsBank Corporation and Subsidiaries
Ratio of Earnings to Fixed Charges
(Dollars in Millions)
<TABLE>
<CAPTION>
Year ended December 31
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Excluding Interest on Deposits
Income before taxes ..................... $ 2,991 $ 2,555 $ 1,991 $ 1,396 $ 109
Equity in undistributed earnings
of unconsolidated subsidiaries ........ (7) (3) (5) (1) (1)
Fixed charges:
Interest expense (including
capitalized interest) ............ 4,480 2,896 1,421 916 1,291
Amortization of debt discount and
appropriate issuance costs ....... 12 8 6 3 2
1/3 of net rent expense ............ 125 114 96 91 82
Total fixed charges ............. 4,617 3,018 1,523 1,010 1,375
Earnings (excluding capitalized interest) $ 7,601 $ 5,570 $ 3,509 $ 2,398 $ 1,471
Fixed charges ........................... $ 4,617 $ 3,018 $ 1,523 $ 1,010 $ 1,375
Ratio of Earnings to Fixed Charges ...... 1.65 1.85 2.30 2.38 1.07
Including Interest on Deposits
Income before taxes ..................... $ 2,991 $ 2,555 $ 1,991 $ 1,396 $ 109
Equity in undistributed earnings
of unconsolidated subsidiaries ........ (7) (3) (5) (1) (1)
Fixed charges:
Interest expense (including
capitalized interest) ............ 7,761 5,310 3,570 3,688 5,611
Amortization of debt discount and
appropriate issuance costs ....... 12 8 6 3 2
1/3 of net rent expense ............ 125 114 96 91 82
Total fixed charges ............. 7,898 5,432 3,672 3,782 5,695
Earnings (excluding capitalized interest) $ 10,882 $ 7,984 $ 5,658 $ 5,170 $ 5,791
Fixed charges ........................... $ 7,898 $ 5,432 $ 3,672 $ 3,782 $ 5,695
Ratio of Earnings to Fixed Charges ...... 1.38 1.47 1.54 1.37 1.02
</TABLE>
<PAGE>
Exhibit 12(b)
NationsBank Corporation and Subsidiaries
Ratio of Earnings to Fixed Charges and Preferred Dividends
(Dollars in Millions)
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Excluding Interest on Deposits
Income before taxes .............................. $ 2,991 $ 2,555 $ 1,991 $ 1,396 $ 109
Equity in undistributed earnings
of unconsolidated subsidiaries ................. (7) (3) (5) (1) (1)
Fixed charges:
Interest expense (including
capitalized interest) ..................... 4,480 2,896 1,421 916 1,291
Amortization of debt discount and
appropriate issuance costs ................ 12 8 6 3 2
1/3 of net rent expense ..................... 125 114 96 91 82
Total fixed charges ...................... 4,617 3,018 1,523 1,010 1,375
Preferred dividend requirements .................. 13 15 16 29 31
Earnings (excluding capitalized interest) ........ $ 7,601 $ 5,570 $ 3,509 $ 2,398 $ 1,471
Fixed charges .................................... $ 4,630 $ 3,033 $ 1,539 $ 1,039 $ 1,406
Ratio of Earnings to Fixed Charges ............... 1.64 1.84 2.28 2.31 1.05
Including Interest on Deposits
Income before taxes .............................. $ 2,991 $ 2,555 $ 1,991 $ 1,396 $ 109
Equity in undistributed earnings
of unconsolidated subsidiaries ................. (7) (3) (5) (1) (1)
Fixed charges:
Interest expense (including
capitalized interest) .......................... 7,761 5,310 3,570 3,688 5,611
Amortization of debt discount and
appropriate issuance costs ..................... 12 8 6 3 2
1/3 of net rent expense .......................... 125 114 96 91 82
Total fixed charges ...................... 7,898 5,432 3,672 3,782 5,695
Preferred dividend requirements .................. 13 15 16 29 31
Earnings (excluding capitalized interest) ........ $ 10,882 $ 7,984 $ 5,658 $ 5,170 $ 5,791
Fixed charges .................................... $ 7,911 $ 5,447 $ 3,688 $ 3,811 $ 5,726
Ratio of Earnings to Fixed Charges ............... 1.38 1.47 1.53 1.36 1.01
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
1995 COMPARED TO 1994
OVERVIEW
NationsBank Corporation (NationsBank or the Corporation), a multi-bank
holding company headquartered in Charlotte, North Carolina, provides financial
products and services both domestically and internationally. On December 31,
1995, NationsBank had $187 billion in assets, making it the third-largest
banking company in the United States.
The Corporation provides a diversified range of banking and certain
nonbanking financial services. Business activities are managed through three
major Business Units: the GENERAL BANK, GLOBAL FINANCE and FINANCIAL SERVICES.
The power and breadth of the Corporation's franchise, the diversity of its
fee-generating activities and continued emphasis on expense control were
demonstrated through a 15-percent increase in net income in 1995 over 1994. The
Corporation earned $1.95 billion in 1995 compared to $1.69 billion in 1994.
Earnings per common share for 1995 increased 17 percent to $7.13 from $6.12 for
1994.
Key performance highlights for 1995 were:
[ ] Return on average common shareholders' equity rose to 17.01 percent from
16.10 percent in 1994.
[ ] Fifteen-percent growth in average loans led to an increase in taxable-
equivalent net interest income to $5.6 billion in 1995.
[ ] Provision for credit losses totaled $382 million in 1995 compared to $310
million in 1994. Net charge-offs remained at historical lows in 1995,
totaling $421 million, or .38 percent, versus .33 percent in 1994.
Nonperforming assets declined 25 percent to $853 million on December 31,
1995 from $1.1 billion on December 31, 1994.
[ ] Noninterest income increased 19 percent to $3.1 billion in 1995, reflecting
the diverse fee-generating activities of the Corporation. Capital markets
revenues, deposit and other service fees and acquisition-related mortgage
servicing fees were factors in the year-over-year increase.
[ ] Noninterest expense increased four per cent to $5.2 billion. Excluding the
impact of acquisitions, noninterest expense increased only three percent
reflecting additional investment in personnel in selected areas, expanded
marketing efforts to support revenue growth and increased expenditures
related to technology initiatives, partially offset by reduced deposit
insurance expense.
[ ] Revenue growth outpaced expense growth in 1995, bringing the efficiency
ratio to 59.77 percent, a 277 basis-point improvement over 1994.
Highlights from a Business Unit perspective were:
[ ] The GENERAL BANK'S 1995 earnings of $1.2 billion increased 26 percent.
Return on equity increased to 19 percent in 1995 from 17 percent in 1994.
Revenue growth and expense control led to a 365 basis-point improvement in
the efficiency ratio in 1995 to 63.8 percent.
[ ] GLOBAL FINANCE produced a return on equity of 16 percent in 1995,
consistent with the return in 1994. Earnings were $609 million compared to
$631 million in 1994. Increased investment in personnel resulted in a 27
basis-point rise in the efficiency ratio to 54.2 percent in 1995.
[ ] FINANCIAL SERVICES' earnings increased 25 percent to $129 million in 1995.
Return on equity increased to 14 percent in 1995 from 13 percent in the
prior year. The efficiency ratio improved 352 basis points in 1995 to 42.1
percent.
The remainder of management's discussion and analysis of the consolidated
results of operations and financial condition of NationsBank should be read
together with the consolidated financial statements and related notes presented
on pages 47 through 67.
BUSINESS UNIT OPERATIONS
The Business Units are managed with a focus on numerous performance
objectives including return on equity, operating efficiency and net income.
TABLE TWO summarizes key performance measures for each of the Business Units.
14 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
The net interest income of the Business Units reflects the results of a
funds transfer pricing process which derives net interest income by matching
assets and liabilities with similar interest rate sensitivity and maturity
characteristics. Equity capital is allocated to each Business Unit based on an
assessment of its inherent risk.
The GENERAL BANK provides comprehensive services in the commercial and
retail banking fields. Within the GENERAL BANK, the BANKING GROUP, which
contains the retail banking network, is the service provider for small and
medium-size companies and individuals. On December 31, 1995, the BANKING GROUP
had 1,833 banking centers located in the states of
TABLE ONE
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA
(DOLLARS IN MILLIONS EXCEPT PER-SHARE INFORMATION)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
INCOME STATEMENT
<S> <C> <C> <C> <C> <C>
Income from earning assets.............................$ 13,220 $ 10,529 $ 8,327 $ 7,780 $ 9,398
Interest expense..................................... 7,773 5,318 3,690 3,682 5,599
Net interest income (taxable-equivalent)............. 5,560 5,305 4,723 4,190 3,940
Net interest income.................................. 5,447 5,211 4,637 4,098 3,799
Provision for credit losses.......................... 382 310 430 715 1,582
Gains (losses) on sales of securities................ 29 (13) 84 249 454
Noninterest income................................... 3,078 2,597 2,101 1,913 1,742
Other real estate owned expense (income)............. 18 (12) 78 183 127
Restructuring expense................................ - - 30 - 330
Other noninterest expense............................ 5,163 4,942 4,293 3,966 3,847
Income before income taxes and effect of change
in method of accounting for income taxes........... 2,991 2,555 1,991 1,396 109
Income tax expense (benefit)......................... 1,041 865 690 251 (93)
Income before effect of change in method of
accounting for income taxes........................ 1,950 1,690 1,301 1,145 202
Effect of change in method of accounting for
income taxes....................................... - - 200 - -
Net income........................................... 1,950 1,690 1,501 1,145 202
Net income applicable to common shareholders......... 1,942 1,680 1,491 1,121 171
Average common shares issued (in thousands).......... 272,480 274,656 257,969 243,748 226,305
PER COMMON SHARE
Earnings before effect of change in method of
accounting for income taxes........................ $ 7.13 $ 6.12 $ 5.00 $ 4.60 $ .76
Earnings............................................. 7.13 6.12 5.78 4.60 .76
Cash dividends paid.................................. 2.08 1.88 1.64 1.51 1.48
Shareholders' equity (year-end)...................... 46.52 39.70 36.39 30.80 27.03
BALANCE SHEET (YEAR-END)
Total assets......................................... 187,298 169,604 157,686 118,059 110,319
Total loans, leases and factored accounts receivable,
net of unearned income............................. 117,033 103,371 92,007 72,714 69,108
Total deposits....................................... 100,691 100,470 91,113 82,727 88,075
Long-term debt....................................... 17,775 8,488 8,352 3,066 2,876
Common shareholders' equity.......................... 12,759 10,976 9,859 7,793 6,252
Total shareholders' equity........................... 12,801 11,011 9,979 7,814 6,518
PERFORMANCE RATIOS
Return on average assets............................. 1.03% 1.02% .97% 1.00% .17%
Return on average common shareholders' equity (1).... 17.01 16.10 15.00 15.83 2.70
Risk-based capital ratios
Tier 1............................................. 7.24 7.43 7.41 7.54 6.38
Total.............................................. 11.58 11.47 11.73 11.52 10.30
Leverage capital ratio............................... 6.27 6.18 6.00 6.16 5.07
Total equity to total assets......................... 6.83 6.49 6.33 6.62 5.91
MARKET PRICE PER SHARE OF COMMON STOCK
Close at the end of the year.......................... $ 69 5/8 $ 45 1/8 $ 49 $ 51 3/8 $ 40 5/8
High for the year..................................... 74 3/4 57 3/8 58 53 3/8 42 3/4
Low for the year...................................... 44 5/8 43 3/8 44 1/2 39 5/8 21 1/2
</TABLE>
(1) AVERAGE COMMON SHAREHOLDERS' EQUITY DOES NOT INCLUDE THE EFFECT OF
MARKET VALUE ADJUSTMENTS TO SECURITIES AVAILABLE FOR SALE AND MARKETABLE EQUITY
SECURITIES.
IN 1993, RETURN ON AVERAGE ASSETS AND RETURN ON AVERAGE COMMON SHAREHOLDERS'
EQUITY AFTER THE TAX BENEFIT FROM THE IMPACT OF ADOPTING A NEW INCOME TAX
ACCOUNTING STANDARD WERE 1.12% AND 17.33%, RESPECTIVELY.
MANAGEMENT'S DISCUSSION AND ANALYSIS 15
<PAGE>
Florida, Georgia, Kentucky, Maryland, North Carolina, South Carolina,
Tennessee, Texas and Virginia and the District of Columbia. In addition, fully
automated, 24-hour cash dispensing and depositing services are provided
throughout these states through 2,292 automated teller machines. Specialized
services, such as the origination and servicing of home mortgage loans, the
issuance and servicing of credit cards, indirect lending, dealer finance and
certain insurance services, are provided throughout the Corporation's franchise,
and on a nationwide basis for certain products, through the FINANCIAL PRODUCTS
group of the GENERAL BANK. The GENERAL BANK also contains the ASSET MANAGEMENT
GROUP which contains NATIONSBANK INVESTMENTS AND INVESTMENT MANAGEMENT, which
includes the full-service and discount brokerage companies and provides mutual
fund and investment management services, and the PRIVATE CLIENT GROUP, which
offers investment management, banking and fiduciary services.
The GENERAL BANK earned $1.2 billion in 1995, an increase of 26 percent over
1994. The BANKING GROUP, reflecting strong loan growth, improved asset quality
and growth in fee income, accounted for most of the increased earnings over last
year. The GENERAL BANK'S return on equity rose 200 basis points to 19 percent.
Taxable-equivalent net interest income in the GENERAL BANK increased $128
million led by broad-based loan growth. Loans in the GENERAL BANK increased
$10.1 billion, or 17 percent, on average. Most of the increase was in the
BANKING GROUP, with growth in residential mortgages, and in FINANCIAL PRODUCTS,
which experienced strong credit card loan growth.
Noninterest income rose 23 percent to $2.1 billion led by increases in
deposit service fee income, mortgage servicing income, brokerage income as a
result of the acquisition of the third-party interest in the Corporation's full-
service brokerage company and the $80-million gain on the sale of the Corporate
Trust business. Noninterest expense increased four percent, which was
significantly below the total revenue growth
1995 EARNINGS
CONTRIBUTION BY
BUSINESS UNIT*
(percent)
(Bar graph appears here with the following plot points.)
General Bank 61%
Global Finance 32%
Financial services 7%
* excludes other
TABLE TWO
BUSINESS UNIT SUMMARY
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
GENERAL BANK GLOBAL FINANCE FINANCIAL SERVICES
1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Net interest income (taxable-equivalent)........... $ 3,817 $ 3,689 1,186 $ 1,180 527 $ 413
Noninterest income................................. 2,100 1,712 910 834 68 51
Total revenue.................................... 5,917 5,401 2,096 2,014 595 464
Provision for credit losses........................ 267 283 - (46) 115 73
Other real estate owned expense (income)........... 11 8 (7) (27) 14 7
Noninterest expense................................ 3,776 3,644 1,136 1,087 250 212
Income before income taxes......................... 1,863 1,466 967 1,000 216 172
Income tax expense................................. 688 534 358 369 87 69
Net income (1)..................................... 1,175 $ 932 609 $ 631 129 $ 103
Net interest yield................................. 4.58% 4.52% 2.85% (2) 2.81% (2) 7.30% 7.45%
Return on equity................................... 19% 17% 16% 16% 14% 13%
Efficiency ratio................................... 63.8% 67.5% 54.2% 54.0% 42.1% 45.6%
Average (3)
Total loans and leases, net of unearned income... $68,675 $58,582 $ 34,191 $ 31,109 $7,204 $5,537
Total deposits................................... 77,330 77,665 14,645 11,273 - -
Total assets..................................... 88,957 86,860 80,842 66,496 7,699 6,064
Year-end (3)
Total loans and leases, net of unearned income... 74,108 63,578 35,566 33,193 7,798 6,380
Total deposits................................... 79,596 79,905 11,205 13,614 - -
</TABLE>
(1) BUSINESS UNIT RESULTS ARE PRESENTED ON A FULLY ALLOCATED BASIS BUT DO NOT
INCLUDE $37 MILLION AND $24 MILLION OF NET INCOME FOR 1995 AND 1994,
RESPECTIVELY, WHICH REPRESENTS EARNINGS ASSOCIATED WITH UNASSIGNED CAPITAL,
GAINS ON SALES OF SECURITIES AND OTHER CORPORATE ACTIVITIES.
(2) GLOBAL FINANCE'S NET INTEREST YIELD EXCLUDES THE IMPACT OF TRADING-RELATED
ACTIVITIES. INCLUDING TRADING-RELATED ACTIVITIES, THE NET INTEREST YIELD WAS
1.70 PERCENT FOR 1995 AND 1.98 PERCENT FOR 1994.
(3) THE SUMS OF BALANCE SHEET AMOUNTS D.IFFER FROM CONSOLIDATED AMOUNTS DUE TO
ACTIVITIES BETWEEN THE BUSINESS UNITS.
16 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
BUSINESS UNIT
DISTRIBUTION OF
LOANS AND REVENUES
(percent)
LOANS
(year-end)
(Bar graph appears with the following plot points.)
General Bank 63%
Global Finance 30%
Financial Services 7%
REVENUES*
(Bar graph appears with the following plot points.)
General Bank 69%
Global Finance 24%
Financial Services 7%
* excludes other
of 10 percent. The expense growth included several mortgage and banking
acquisitions, the purchase of the third-party interest in the full-service
brokerage company and increased marketing costs associated with credit card
solicitations. These increases were partly offset by reduced deposit insurance
expense and efforts to reduce banking center delivery costs. With 10-percent
growth in revenues and four-percent expense growth, the efficiency ratio
improved 365 basis points.
GLOBAL FINANCE provides comprehensive corporate banking and investment
banking services to domestic and international customers. This unit includes the
CORPORATE FINANCE, SPECIALIZED FINANCE and CAPITAL MARKETS groups. Treasury
management, loan syndication, asset-backed lending, leasing, factoring and
arrangement of asset-backed and project financing for clients are representative
of the services provided by GLOBAL FINANCE. The CAPITAL MARKETS group
underwrites, trades and distributes a wide range of securities (including bank-
eligible securities and, to a limited extent, bank-ineligible securities as
authorized by the Board of Governors of the Federal Reserve System under Section
20 of the Glass-Steagall Act) and trades and distributes financial futures,
forward settlement contracts, option contracts, swap agreements and other
derivative products in certain interest rate, foreign exchange, commodity and
equity markets and spot and forward foreign exchange contracts through two
principal units, NATIONSBANC - CRT (CRT) and NATIONSBANC CAPITAL MARKETS, INC.
(NCMI). GLOBAL FINANCE services are provided through various offices located in
major U.S. cities as well as in London, Frankfurt, Singapore, Bogota, Mexico
City, Grand Cayman, Nassau, Seoul, Tokyo, Osaka, Taipei and Hong Kong.
GLOBAL FINANCE generated a consistent return on equity of 16 percent and
earned $609 million in 1995 compared to $631 million in 1994. Taxable-equivalent
net interest income in GLOBAL FINANCE increased $6 million over 1994. The
benefit to net interest income of the $3.1-billion, or 10-percent increase in
loans over 1994 was partially offset by the increased use of market-based funds
to support earning asset growth. Loan growth, primarily commercial, was
concentrated in the CORPORATE FINANCE and SPECIALIZED FINANCE groups. Continued
progress was made in reducing average real estate outstandings by $586 million
in 1995. Asset quality continued to improve, though at a slower pace than in
1994, leading to no provision for credit losses in 1995.
Noninterest income increased nine percent over last year, with most of the
growth concentrated in investment banking fees, while noninterest expense rose
five percent. The CAPITAL MARKETS group generated $30 million in noninterest,
trading-related revenue growth. An increased level of investment, mostly
personnel related, to expand CAPITAL MARKETS activities was a primary
contributor to the $49-million increase in noninterest expense in GLOBAL
FINANCE.
FINANCIAL SERVICES is composed of the holding company, NATIONSCREDIT
CORPORATION, which includes NATIONSCREDIT CONSUMER CORPORATION, a consumer
finance operation, and NATIONSCREDIT COMMERCIAL CORPORATION, a commercial
finance operation. NATIONSCREDIT CONSUMER CORPORATION, which has 371 branches
in 34 states, provides personal, mortgage and automobile loans to consumers and
retail finance programs to dealers. NATIONSCREDIT COMMERCIAL CORPORATION
consists of six divisions that specialize in the following commercial financing
areas: equipment loans and leasing; loans for debt restructuring, mergers and
acquisitions and working capital; real estate, golf/recreational and health
care financing; and inventory financing to manufacturers, distributors and
dealers.
FINANCIAL SERVICES' earnings of $129 million increased 25 percent over 1994
and represented seven percent of consolidated earnings compared to six percent
in 1994. This improvement was the result of $1.7-billion, or 30-percent growth
in average loans and leases. Market demand in the consumer lending, commercial
real estate and distribution finance businesses coupled with new office
expansion in consumer lending contributed to loan growth. The increase in
provision for credit losses was driven mainly by loan growth, but also because
of somewhat higher consumer loss rates. The net interest yield of 7.30 percent
was down 15 basis points from 1994, due to higher funding costs. Noninterest
expense increased $38 million, or 18 percent, driven by the expansion of
consumer finance operations. The efficiency ratio of 42.1 percent for 1995
improved from 45.6 percent last year as the rate of revenue growth exceeded the
growth rate in expenses. The return on equity rose to 14 percent in
MANAGEMENT'S DISCUSSION AND ANALYSIS 17
<PAGE>
TABLE THREE
12-MONTH TAXABLE-EQUIVALENT DATA
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1995 1994 1993
AVERAGE AVERAGE AVERAGE
BALANCE INCOME BALANCE INCOME BALANCE INCOME
SHEET OR YIELDS/ SHEET OR YIELDS/ SHEET OR YIELDS/
AMOUNTS EXPENSE RATES AMOUNTS EXPENSE RATES AMOUNTS EXPENSE RATES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earning assets
Loans and leases, net of unearned income (1)
Commercial (2).................................$ 46,358 $ 3,797 8.19% $ 41,606 $ 3,147 7.56% $ 35,050 $2,438 6.96%
Real estate commercial......................... 7,195 669 9.30 7,780 636 8.18 6,667 506 7.59
Real estate construction....................... 3,106 302 9.73 3,155 268 8.49 2,894 217 7.50
Total commercial............................. 56,659 4,768 8.42 52,541 4,051 7.71 44,611 3,161 7.09
Residential mortgage........................... 20,562 1,600 7.78 14,980 1,141 7.62 10,904 902 8.27
Credit card.................................... 5,013 641 12.78 3,956 508 12.84 4,376 596 13.62
Other consumer................................. 21,940 2,209 10.07 19,768 1,831 9.26 16,462 1,521 9.24
Total consumer............................... 47,515 4,450 9.37 38,704 3,480 8.99 31,742 3,019 9.51
Foreign........................................ 2,036 157 7.71 1,417 86 6.10 961 52 5.49
Lease financing................................ 3,277 249 7.59 2,344 176 7.50 1,670 133 7.96
Total loans and leases, net.................. 109,487 9,624 8.79 95,006 7,793 8.20 78,984 6,365 8.06
Securities
Held for investment............................ 15,521 864 5.57 15,048 761 5.06 24,823 1,375 5.54
Available for sale (3)......................... 10,272 642 6.25 12,386 644 5.20 1,017 49 4.80
Total securities............................. 25,793 1,506 5.84 27,434 1,405 5.12 25,840 1,424 5.51
Loans held for sale.............................. 322 24 7.47 339 23 6.63 790 53 6.73
Federal funds sold............................... 774 47 6.10 983 45 4.59 441 14 3.16
Securities purchased under agreements to resell.. 14,385 890 6.19 12,406 502 4.05 5,608 180 3.21
Time deposits placed and other
short-term investments......................... 2,066 142 6.87 1,762 90 5.12 2,037 79 3.91
Trading account securities (4)................... 14,177 1,100 7.76 10,451 765 7.32 5,482 298 5.43
Total earning assets (5)..................... 167,004 13,333 7.98 148,381 10,623 7.16 119,182 8,413 7.06
Cash and cash equivalents.......................... 7,820 8,271 7,275
Factored accounts receivable....................... 1,163 1,252 1,074
Other assets, less allowance for credit losses..... 12,560 8,415 6,869
Total assets.................................$188,547 $166,319 $134,400
Interest-bearing liabilities
Savings........................................... 8,575 204 2.37 $ 9,116 212 2.33 $ 6,774 161 2.38
NOW and money market deposit accounts............. 27,640 740 2.68 29,724 696 2.34 28,641 641 2.24
Consumer CDs and IRAs............................. 24,840 1,290 5.19 23,937 999 4.17 23,387 1,057 4.52
Negotiated CDs, public funds
and other time deposits......................... 2,992 166 5.56 3,319 133 4.02 4,211 167 3.97
Foreign time deposits............................. 14,103 881 6.25 7,544 375 4.98 3,033 123 4.05
Federal funds purchased........................... 5,455 322 5.91 5,397 219 4.07 6,479 196 3.03
Securities sold under agreements to repurchase (6) 30,336 1,863 6.14 24,903 1,075 4.32 17,283 540 3.13
Commercial paper.................................. 2,804 171 6.10 2,482 111 4.46 1,379 45 3.26
Other short-term borrowings....................... 5,690 354 6.20 5,015 213 4.25 4,006 138 3.45
Trading account liabilities (4)................... 12,025 896 7.45 10,526 735 6.98 4,146 230 5.54
Long-term debt (7)................................ 12,652 886 7.00 8,033 550 6.85 5,268 392 7.44
Total interest-bearing liabilities............147,112 7,773 5.28 129,996 5,318 4.09 104,607 3,690 3.53
Noninterest-bearing sources
Noninterest-bearing deposits...................... 21,128 20,097 17,425
Other liabilities................................. 8,856 5,742 3,717
Shareholders' equity.............................. 11,451 10,484 8,651
Total liabilities and shareholders' equity....$188,547 $166,319 $134,400
Net interest spread................................. 2.70 3.07 3.53
Impact of noninterest-bearing sources............... .63 .51 .43
Net interest income/yield on earning assets......... $5,560 3.33% $ 5,305 3.58% $4,723 3.96%
</TABLE>
(1) NONPERFORMING LOANS ARE INCLUDED IN THE RESPECTIVE AVERAGE LOAN BALANCES.
INCOME ON SUCH NONPERFORMING LOANS IS RECOGNIZED ON A CASH BASIS.
(2) COMMERCIAL LOAN INTEREST INCOME INCLUDES NET INTEREST RATE SWAP REVENUES
RELATED TO SWAPS CONVERTING VARIABLE-RATE COMMERCIAL LOANS TO FIXED RATE. SUCH
INCREASES (DECREASES) IN INTEREST INCOME WERE ($209), $62 AND $120 IN 1995,
1994 AND 1993, RESPECTIVELY.
(3) THE AVERAGE BALANCE SHEET AMOUNTS AND YIELDS ON SECURITIES AVAILABLE FOR
SALE ARE BASED ON THE AVERAGE OF HISTORICAL AMORTIZED COST BALANCES.
(4) THE FAIR VALUES OF DERIVATIVES-DEALER POSITIONS ARE REPORTED IN OTHER
ASSETS AND LIABILITIES, RESPECTIVELY.
(5) INTEREST INCOME INCLUDES TAXABLE-EQUIVALENT ADJUSTMENTS OF $113, $94 AND
$86 FOR 1995, 1994 AND 1993, RESPECTIVELY.
(6) SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE INTEREST EXPENSE INCLUDES
NET INTEREST RATE SWAP EXPENSE RELATED TO SWAPS FIXING THE COST OF CERTAIN OF
THESE LIABILITIES. SUCH INCREASES IN INTEREST EXPENSE WERE $28, $35 AND $3 IN
1995, 1994 AND 1993, RESPECTIVELY.
(7) LONG-TERM DEBT INTEREST EXPENSE INCLUDES NET INTEREST RATE SWAP EXPENSE
RELATED TO SWAPS PRIMARILY CONVERTING THE COST OF CERTAIN FIXED-RATE DEBT TO
VARIABLE RATE. THE INCREASE IN INTEREST EXPENSE WAS $2 IN 1995.
18 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
NET INTEREST INCOME
(billions)
(Bar graph appears here with the following plot points.)
91 92 93 94 95
3.94 4.19 4.72 5.31 5.56
1995 compared to 13 percent in 1994. These returns reflect a 13-percent
equity-to-asset ratio.
RESULTS OF OPERATIONS NET INTEREST INCOME
An analysis of the Corporation's taxable-equivalent net interest income and
average balance sheet levels for the last three years is presented in TABLE
THREE. TABLE FOUR presents an analysis of the changes in net interest income
from year to year.
Taxable-equivalent net interest income increased $255 million to $5.6
billion in 1995, driven by growth in average earning assets, principally loans
and leases, which increased $14.5 billion to $109.5 billion. The increase in net
interest income resulting primarily from loan growth was partially offset by the
use of higher cost market-based funds and term debt. As the growth in earning
assets outpaced customer deposit growth, the Corporation shifted to alternative
funding sources such as term debt.
Loan growth is expected to continue, but is dependent on economic conditions
as well as various discretionary factors, such as decisions to securitize
certain loan portfolios, the retention of residential mortgage loans generated
by the Corporation's mortgage subsidiary and the management of borrower,
industry, product or geographic concentrations.
The net interest yield of 3.33 percent in 1995 reflected the funding of
earning asset growth principally with market-based funds and term debt and the
addition of $6.5 billion in low-spread trading-related assets when compared to
1994. Had the relative mix of low-spread trading-related assets to total average
earning assets remained constant in 1995 compared to 1994, the net interest
yield in 1995 would have been 3.41 percent.
PROVISION FOR CREDIT LOSSES
The provision for credit losses was $382 million in 1995 compared to $310
million in the prior year, reflecting increased loans, the continuing shift in
the mix of the loan portfolio towards consumer lending and the maturing credit
cycle. The level of provision expense in 1995 was consistent with credit quality
indicators. Net charge-offs in 1995 increased by $105 million compared to 1994
due to higher levels of credit card and other consumer loan charge-offs coupled
with a lower level of recoveries in 1995. Management expects the higher level of
charge-offs experienced in 1995 to continue in 1996 as the Corporation continues
its efforts to shift the mix of the loan portfolio to a higher consumer
concentration, and credit losses continue to be at more normalized levels.
Nonperforming commercial assets continued to decline during 1995 compared to
1994.
The allowance for credit losses was $2.2 billion, or 1.85 percent of net
loans, leases and factored accounts receivable, on December 31, 1995 compared to
$2.2 billion, or 2.11 percent, at the end of 1994. The allowance for credit
losses was 306 percent of nonperforming loans on December 31, 1995 compared to
273 percent on December 31, 1994. Future economic conditions will impact credit
quality.
TABLE THIRTEEN provides an analysis of the activity in the Corporation's
allowance for credit losses for each of the last five years. Allowance levels,
net charge-offs and nonperforming assets are discussed in the Credit Risk
Management and Credit Portfolio Review section beginning on page 31.
SECURITIES GAINS AND LOSSES
Gains from the sales of securities were $29 million in 1995, primarily
reflecting the Corporation's fourth quarter repositioning of the portfolios in
an effort to maintain its neutral interest sensitivity position in light of
completed and pending acquisitions. Losses from sales of securities were $13
million in 1994.
NONINTEREST INCOME
As presented in TABLE FIVE, noninterest income increased $481 million to
$3.1 billion in 1995, reflecting strong growth in most categories as described
below:
[ ] Trading account profits and fees, including foreign exchange income,
totaled $306million in 1995, an increase of $33 million from $273 million in
1994.
The Corporation engages in corporate and government bond trading and
sales and maintains trading positions in a variety of cash instruments and
derivative contracts. The Corporation offers a number of products primarily to
institutional customers and enters into transactions for its own account. In
set tingtrading strategies, the Corporation manages these activities to
maximize trading revenues, while, at the same time, taking controlled risks.
MANAGEMENT'S DISCUSSION AND ANALYSIS 19
<PAGE>
Capital markets activities are managed in the CAPITAL MARKETS group and are
conducted in two principal divisions, NCMI and CRT. Major trading sites include
Charlotte, Chicago, New York, London and Singapore. NCMI underwrites,
distributes and trades fixed-income securities and has the power to underwrite
equity securities. Its business activities include both customer and
proprietary trading activities. Additionally, NCMI is a primary dealer of U.S.
Government securities. CRT manages the Corporation's derivatives and foreign
exchange business activities. Interest rate derivatives are the primary
component of CRT'S customer-
TABLE FOUR
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.
<TABLE>
<CAPTION>
FROM 1994 TO 1995 FROM 1993 TO 1994
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............................ $ 377 $ 273 $ 650 20.7% $ 483 $ 226 $ 709 29.1%
Real estate commercial................ (50) 83 33 5.2 89 41 130 25.7
Real estate construction.............. (4) 38 34 12.7 21 30 51 23.5
Total commercial.................... 331 386 717 17.7 595 295 890 28.2
Residential mortgage.................. 434 25 459 40.2 315 (76) 239 26.5
Credit card........................... 135 (2) 133 26.2 (55) (33) (88) (14.8)
Other consumer........................ 211 167 378 20.6 306 4 310 20.4
Total consumer...................... 820 150 970 27.9 633 (172) 461 15.3
Foreign............................... 44 27 71 82.6 27 7 34 65.4
Lease financing....................... 71 2 73 41.5 51 (8) 43 32.3
Total loans and leases, net......... 1,246 585 1,831 23.5 1,312 116 1,428 22.4
Securities
Held for investment................... 24 79 103 13.5 (503) (111) (614) (44.7)
Available for sale.................... (120) 118 (2) (.3) 591 4 595 n/m
Total securities.................... (88) 189 101 7.2 85 (104) (19) (1.3)
Loans held for sale..................... (1) 2 1 4.3 (31) 1 (30) (56.6)
Federal funds sold...................... (11) 13 2 4.4 23 8 31 221.4
Securities purchased under agreements
to resell............................. 90 298 388 77.3 264 58 322 178.9
Time deposits placed and other
short-term investments................ 17 35 52 57.8 (12) 23 11 13.9
Trading account securities.............. 287 48 335 43.8 339 128 467 156.7
Total income from earning assets.... 1,413 1,297 2,710 25.5 2,089 121 2,210 26.3
Interest expense
Savings................................. (13) 5 (8) (3.8) 55 (4) 51 31.7
NOW and money market deposit accounts... (51) 95 44 6.3 26 29 55 8.6
Consumer CDs and IRAs................... 39 252 291 29.1 24 (82) (58) (5.5)
Negotiated CDs, public funds
and other time deposits............... (14) 47 33 24.8 (36) 2 (34) (20.4)
Foreign time deposits................... 391 115 506 134.9 219 33 252 204.9
Federal funds purchased................. 2 101 103 47.0 (36) 59 23 11.7
Securities sold under agreements
to repurchase......................... 268 520 788 73.3 287 248 535 99.1
Commercial paper........................ 16 44 60 54.1 45 21 66 146.7
Other short-term borrowings............. 32 109 141 66.2 39 36 75 54.3
Trading account liabilities............. 109 52 161 21.9 432 73 505 219.6
Long-term debt.......................... 323 13 336 61.1 191 (33) 158 40.3
Total interest expense.............. 764 1,691 2,455 46.2 982 646 1,628 44.1
Net interest income....................... 636 (381) $ 255 4.8 1,076 (494) $ 582 12.3
N/M - NOT MEANINGFUL.
</TABLE>
20 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
based and proprietary derivative products. Other derivative products consist
of equity- and commodity-related transactions.
An analysis of trading account profits and fees by major business activity
follows (in millions):
1995 1994 1993
Securities trading........... $103 $ 82 $ 73
Interest rate contracts...... 151 119 21
Foreign exchange contracts... 26 27 27
Other........................ 26 45 31
Total trading account
profits and fees......... $306 $273 $152
In addition to trading account profits and fees, the CAPITAL MARKETS group
also generates investment banking income and brokerage income.
[ ] GENERAL BANK asset management and fiduciary service fees were $444
million in 1995, compared to $435 million in 1994, reflecting growth in PRIVATE
CLIENT GROUP revenues and mutual fund advisory fees, partially offset by a
decline in retirement service fees. An analysis of asset management and
fiduciary service fees by major business activity for 1995 and 1994 as well as
the market values of assets under management and administration on December 31
are presented below (in millions):
1995 1994
ASSET MANAGEMENT AND
FIDUCIARY SERVICE FEES
Private Client Group...... 259 $ 246
Retirement services and
corporate trust......... 128 138
Mutual funds.............. 27 22
Investment management
subsidiaries and other.. 30 29
Total asset
management and
fiduciary service
fees................ 444 $ 435
MARKET VALUE OF ASSETS
Assets under
management.............. 66,200 $ 57,400
Assets under
administration.......... 183,200 163,600
PRIVATE CLIENT GROUP fees include fees for investment management, fiduciary
and tax services provided primarily to individuals and investors. These fees
increased $13 million in 1995 over 1994, principally due to increased sales and
market appreciation associated with assets under management. Retirement services
and corporate trust encompass a wide range of services including investment
advisory, administrative and record-keeping services for customers' employee
benefit plans, securities lending and investment management services offered to
corporations, municipalities and others. The decline in retirement services and
corporate trust fees in 1995 reflects the impact of management's repositioning
of this business in an effort to concentrate on the most profitable product
lines. Mutual fund revenues reflect fees received as advisor to the Nations
Fund family. Fee growth of $5 million in 1995 was primarily driven by increased
assets under management, reflecting both market conditions and increased sales.
Fees from investment management subsidiaries include revenues of SOVRAN CAPITAL
MANAGEMENT and ASB CAPITAL MANAGEMENT which serve institutional investors.
During the fourth quarter of 1995, the Corporation completed the
previously announced sale of the portion of its trust business that deals
with bond servicing and administration, known as Corporate Trust,
resulting in a gain of approximately $80 million, which is included in
miscellaneous income. The decision to sell this unit was based upon
management's desire to focus on investment management, retirement and
fiduciary services. Historically, the Corporate Trust business has
generated only 10 percent of the Corporation's asset management and
Corporation's asset management and fiduciary service fees.
[ ] Service charges on deposit accounts increased $87 million, or 11
percent, over 1994, attributable to higher fees, growth in number of households
served, in part due to smaller banking organization acquisitions in late 1994,
and emphasis on fee collection.
[ ] Mortgage servicing and related fees grew $52 million, or 61 percent,
to $138 million in 1995, primarily due to acquisitions of several mortgage
banking operations and servicing portfolios. In the latter part of 1994, the
Corporation's mortgage banking subsidiary acquired $7.6 billion in servicing.
In addition, $35.0 billion in servicing was acquired by the mortgage banking
subsidiary on March 31, 1995. Including acquisitions, the average portfolio of
loans serviced increased 95 percent from $35.5 billion in 1994 to $69.3 billion
in 1995. On December 31, 1995, the servicing portfolio, including loans
serviced on behalf of the Corporation's banking subsidiaries, totaled $81.4
billion compared
MANAGEMENT'S DISCUSSION AND ANALYSIS 21
<PAGE>
to $39.0 billion on December 31, 1994. Mortgage loan originations through
the Corporation's mortgage banking subsidiary increased $4.2 billion to $11.1
billion in 1995 compared to $6.9 billion in 1994, primarily reflecting changes
in the interest rate environment. Origination volume in 1995 consisted of
approximately $4.3 billion of retail loan volume and $6.8 billion of
correspondent loan volume.
In conducting its mortgage banking activities, the Corporation is exposed to
fluctuations in interest rates. Loans originated for sale to third parties
expose the Corporation to interest rate risk for the period between loan
commitment date and subsequent delivery. Additionally, the value of the
Corporation's mortgage servicing rights is affected by changes in prepayment
rates. To manage risks associated with mortgage banking activities, the
Corporation enters into various instruments including option contracts, forward
delivery contracts and certain rate swaps. The contract/notional amount of these
instruments approximated $5.2 billion on December 31, 1995. Net unrealized gains
associated with these contracts were $48 million on December 31, 1995.
[ ] Investment banking income totaled $192 million in 1995, an increase of
39 percent over 1994, primarily reflecting higher syndication fees. The GLOBAL
FINANCE syndication group was agent or co-agent on 420 deals totaling $281.6
billion in 1995, compared to 362 deals totaling $195.5 billion in 1994.
Additionally, fee income associated with the CAPITAL MARKETS group's asset-
backed financing arrangements on behalf of customers increased as this group
arranged 40 asset-backed financings totaling $2.0 billion in 1995.
[ ] The higher level of brokerage income in 1995 was primarily attributable to
the full-year impact of the acquisition of the third-party interest in the
Corporation's full-service brokerage company. This company was a joint venture
arrangement prior to November 15, 1994, accounted for under the equity method.
[ ] During the second quarter of 1995, the Corporation and a third party
formed a joint venture to market merchant credit card authorization, processing
and settlement services to regional and local
TABLE FIVE
NONINTEREST INCOME
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1995 1994
PERCENT PERCENT
OF TAXABLE- OF TAXABLE-
EQUIVALENT EQUIVALENT
NET INTEREST NET INTEREST CHANGE
AMOUNT INCOME AMOUNT INCOME AMOUNT PERCENT
<S> <C> <C> <C> <C> <C> <C>
Service charges on deposit accounts................. $ 884 15.9% $ 797 15.0% $ 87 10.9%
Nondeposit-related service fees
Safe deposit rent................................. 27 .5 27 .5 - -
Mortgage servicing and related fees............... 138 2.5 86 1.6 52 60.5
Fees on factored accounts receivable.............. 68 1.2 74 1.4 (6) (8.1)
Investment banking income......................... 192 3.5 138 2.6 54 39.1
Other service fees................................ 129 2.3 111 2.1 18 16.2
Total nondeposit-related service fees........... 554 10.0 436 8.2 118 27.1
Asset management and fiduciary service fees......... 444 8.0 435 8.2 9 2.1
Credit card income
Merchant discount fees............................ 7 .1 27 .5 (20) (74.1)
Annual credit card fees........................... 24 .4 21 .4 3 14.3
Other credit card fees............................ 246 4.5 232 4.4 14 6.0
Total credit card income........................ 277 5.0 280 5.3 (3) (1.1)
Other income
Brokerage income.................................. 114 2.1 44 .8 70 159.1
Trading account profits and fees.................. 306 5.5 273 5.1 33 12.1
Bankers' acceptances and letters of credit fees... 74 1.3 67 1.3 7 10.4
Insurance commissions and earnings................ 65 1.2 49 .9 16 32.7
Miscellaneous..................................... 360 6.4 216 4.2 144 66.7
Total other income.............................. 919 16.5 649 12.3 270 41.6
$3,078 55.4% $2,597 49.0% $481 18.5
</TABLE>
22 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
merchants throughout the Corporation's service area of the Southeast and
Texas. The Corporation contributed its merchant discount unit in exchange for
consideration including an equity investment position in the newly formed joint
venture. Accordingly, merchant discount fee income and the related noninterest
expense of the contributed unit decreased in the last three quarters of 1995 as
the equity earnings from the operation of the joint venture were reported as a
component of other credit card fees. Credit card income was $277 million in 1995
compared to $280 million in 1994, primarily reflecting the impact of the
formation of the joint venture, partially offset by increased interchange income
attributable to higher cardholder purchase volume which is included in other
credit card fees.
[ ] Miscellaneous income totaled $360 million in 1995, an increase of $144
million, or 67 percent, over 1994. As previously mentioned, in 1995,
miscellaneous income included an $80-million gain associated with the sale of
a portion of the Corporate Trust business. Miscellaneous income includes
certain prepayment fees and other fees such as net gains on sales of
miscellaneous investments, business activities, premises, venture capital
investments, mortgage servicing and other similar items.
NONINTEREST EXPENSE
As presented in TABLE SIX, the Corporation's noninterest expense increased
four percent to $5.2 billion in 1995 from $4.9 billion in 1994.
Approximately 40 percent of the increase resulted from acquisitions of
several smaller banking organizations, acquisitions of several mortgage banking
operations and servicing portfolios and the full-year impact of the acquisition
of the third-party interest in the Corporation's full-service brokerage company.
Additionally, increased expenditures in selected areas to enhance revenue growth
contributed to the year-over-year increase. These increases were partially
offset by lower deposit insurance, reduced expenses associated with the sale of
the merchant discount credit card unit in the second quarter of 1995 and expense
savings associated with revising the infrastructure of several GENERAL BANK
business activities.
Included in the various components of noninterest expense are the costs of
ongoing initiatives related to enhancing customer sales and optimizing product
delivery channels. For example, the Model Banking project is being implemented
across the Corporation's franchise to facilitate and enhance the GENERAL BANK'S
retail customer sales and product delivery. Projects are under way to define and
achieve an optimal composition of customer delivery channels and develop
alternative delivery channels, such as PC-based banking.
TABLE SIX
NONINTEREST EXPENSE
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1995 1994
PERCENT PERCENT
OF TAXABLE- OF TAXABLE-
EQUIVALENT EQUIVALENT
NET INTEREST NET INTEREST
AND AND
NONINTEREST NONINTEREST CHANGE
AMOUNT INCOME AMOUNT INCOME AMOUNT PERCENT
<S> <C> <C> <C> <C> <C> <C>
Personnel.................................. $2,491 28.8% $2,311 29.1% $180 7.8%
Occupancy, net............................. 495 5.7 487 6.2 8 1.6
Equipment.................................. 397 4.6 364 4.6 33 9.1
Marketing.................................. 217 2.5 161 2.0 56 34.8
Professional fees.......................... 182 2.1 171 2.2 11 6.4
Amortization of intangibles................ 119 1.4 141 1.8 (22) (15.6)
Credit card................................ 55 .6 71 .9 (16) (22.5)
Deposit insurance.......................... 118 1.4 211 2.7 (93) (44.1)
Data processing............................ 229 2.7 235 3.0 (6) (2.6)
Telecommunications......................... 150 1.7 137 1.7 13 9.5
Postage and courier........................ 135 1.6 126 1.6 9 7.1
Other general operating.................... 411 4.8 388 4.9 23 5.9
General administrative and miscellaneous... 164 1.9 139 1.8 25 18.0
$5,163 59.8% $4,942 62.5% $221 4.5
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS 23
<PAGE>
A discussion of the significant components of noninterest expense in 1995
compared to 1994 is as follows:
[ ] Personnel expense increased $180 million over 1994, primarily due to the
impact of acquisitions discussed above, partially offset by decreases from
dispositions. Continued investment in personnel in the CAPITAL MARKETS group to
strategically expand trading and other capital markets activities and
investments to enhance the consumer lending businesses in FINANCIAL SERVICES
and the FINANCIAL PRODUCTS group also contributed to the increase in personnel
expense. These increases were partially offset by further optimization of the
GENERAL BANK retail banking center delivery network as well as increased
efficiencies in commercial banking and the ASSET MANAGEMENT GROUP.
[ ] Equipment expense increased nine percent in 1995 over 1994, reflecting
enhancements to computer resources primarily in the CAPITAL MARKETS group and
increased costs related to enhancement of product delivery systems.
[ ] Marketing expense increased $56 million to $217 million in 1995,
attributable to expanded credit card solicitations in the FINANCIAL PRODUCTS
group and other promotional efforts to enhance revenues. Marketing expense in
1995 also included certain costs associated with the Corporation's Olympic
sponsorship.
[ ] The Corporation's deposit insurance expense decreased 44 percent to
$118 million in 1995 from $211 million in 1994, primarily reflecting reductions
in insurance rates charged by the FDIC beginning June 1, 1995.
[ ] The Corporation's combined other general operating and general
administrative and miscellaneous expenses increased $48 million to $575
million in 1995. Included in 1995 expense was a $30-million charge reflecting a
proposed settlement associated with the resolution of litigation involving the
sale of Nations Government Income Term Trusts 2003 and 2004 and acquisition-
related expenses, partially offset by lower loan and collection expenses and
the results of focused expense management efforts.
INCOME TAXES
The Corporation's income tax expense for 1995 was $1.0 billion, for an
effective tax rate of 34.8 percent of pretax income. Tax expense for 1994 was
$865 million, reflecting an effective tax rate of 33.9 percent.
Note Twelve to the consolidated financial statements includes a
reconciliation of federal income tax expense computed using the federal
statutory rate of 35 percent to the actual income tax expense reported for 1995
and 1994.
See Notes One and Twelve to the consolidated financial statements for
additional information on income taxes.
BALANCE SHEET REVIEW AND
LIQUIDITY RISK MANAGEMENT
The Corporation utilizes an integrated approach in managing its balance
sheet which includes management of interest rate sensitivity, credit risk,
liquidity risk and capital position.
TABLE SEVEN provides an analysis of the sources and uses of funds for 1995
and 1994 based on average levels. In response to earning asset growth coupled
with customers seeking higher-yielding investment alternatives to deposits,
during 1995 the Corporation shifted its funding mix toward the use of term debt,
an alternative stable source of funds, and market-based funds. Market-based
funds increased $14.0 billion over 1994 levels and comprised a larger portion of
total sources of funds, at 38 percent for 1995 compared to 35 percent in 1994.
Average long-term debt increased $4.6 billion in 1995 and represented seven
percent of total sources of funds in 1995 compared to five percent in 1994.
Customer-based funds, though relatively flat between 1995 and 1994,
decreased as a percentage of total sources to 44 percent in 1995 compared to 51
percent in 1994.
Loans and leases, the Corporation's primary use of funds, increased 15
percent and represented 58 percent of total uses in 1995. The ratio of average
loans and leases to customer-based funds increased to 131 percent in 1995
compared to 113 percent in 1994 due to strong loan growth and the use of market-
based funds and term debt to support earning asset growth.
24 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
Cash and cash equivalents were $8.4 billion on December 31, 1995, a decrease
of $1.1 billion from December 31, 1994. During 1995, net cash used in operating
activities was $4.9 billion, net cash used in investing activities was $6.2
billion and net cash provided from financing activities was $10.0 billion. For
further information on cash flows, see the Consolidated Statement of Cash Flows
in the consolidated financial statements.
Liquidity is a measure of the Corporation's ability to fulfill its cash
requirements and is managed by the Corporation through its asset and liability
management process. The Corporation assesses the level of liquidity necessary to
meet its cash requirements by monitoring its assets and liabilities and
modifying these positions as liquidity requirements change. This process,
coupled with the Corporation's ability to raise capital and debt financing, is
designed to cover the liquidity needs of the Corporation. The following
discussion provides an overview of significant on-and off-balance sheet
components.
SECURITIES
The securities portfolio on December 31, 1995 consisted of securities held
for investment totaling $4.4 billion and securities available for sale totaling
$19.4 billion compared to $17.8 billion and $8.0 billion, respectively, on
December 31, 1994. As discussed in Note Three to the consolidated financial
statements, in December 1995, the Corporation transferred $8.6 billion of
securities from the held for investment category to the available for sale
category providing added flexibility in future interest rate and liquidity
management.
On December 31, 1995, the market value of the Corporation's portfolio of
securities held for investment equaled the book value of the portfolio. This
compared to unrealized net depreciation of $699 million on December 31, 1994.
The valuation reserve for securities available for sale and marketable
equity securities increased shareholders' equity by $323 million on December 31,
1995, reflecting pretax appreciation of $418 million and $97 million on
securities available for sale and marketable equity securities, respectively.
The valuation amount reduced shareholders' equity by $136 million on December
31, 1994. The changes in the valuation amounts for both the securities held for
investment and the securities available for sale portfolios were primarily due
to the decrease in interest rates during 1995.
The estimated average maturities of the securities held for investment and
securities available for sale portfolios were 1.65 and
TABLE SEVEN
<TABLE>
<CAPTION>
SOURCES AND USES OF FUNDS
(AVERAGE DOLLARS IN MILLIONS)
1995 1994
AMOUNT PERCENT AMOUNT PERCENT
<S> <C> <C> <C> <C>
Composition of sources
Savings, NOW , money market deposit accounts
and consumer CDs and IRAs............................... $ 61,055 32.4% $ 62,777 37.7%
Noninterest-bearing deposits.............................. 21,128 11.2 20,097 12.1
Customer-based portion of negotiated CDs.................. 1,534 .8 1,328 .8
Customer-based funds.................................. 83,717 44.4 84,202 50.6
Market-based funds........................................ 71,871 38.1 57,858 34.8
Long-term debt............................................ 12,652 6.7 8,033 4.8
Other liabilities......................................... 8,856 4.7 5,742 3.5
Shareholders' equity...................................... 11,451 6.1 10,484 6.3
Total sources......................................... $188,547 100.0% $166,319 100.0%
Composition of uses
Loans and leases, net of unearned income.................. $109,487 58.1% $ 95,006 57.1%
Securities held for investment............................ 15,521 8.2 15,048 9.1
Securities available for sale............................. 10,272 5.4 12,386 7.4
Federal funds sold and securities purchased under
agreements to resell.................................... 15,159 8.0 13,389 8.1
Trading account securities................................ 14,177 7.5 10,451 6.3
Other..................................................... 2,388 1.4 2,101 1.2
Total earning assets.................................. 167,004 88.6 148,381 89.2
Factored accounts receivable.............................. 1,163 .6 1,252 .8
Other assets.............................................. 20,380 10.8 16,686 10.0
Total uses............................................ $188,547 100.0% $166,319 100.0%
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS 25
<PAGE>
2.96 years, respectively, on December 31, 1995 compared to 2.48 and 2.73
years, respectively, on December 31, 1994. The estimated average maturity of the
combined securities portfolio was 2.72 years on December 31, 1995 compared to
2.56 years on December 31, 1994, a reflection of the investment activity and
maturities which occurred primarily in the first half of 1995.
The securities portfolio serves a primary role in the overall context of
balance sheet management by the Corporation. The decision to purchase or sell
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. The portfolio's scheduled maturities and the liquid
nature of securities, in general, represent a significant source of liquidity
for the Corporation. Approximately $4.1 billion, or 17 percent, of the
securities portfolio, matures in 1996.
LOANS AND LEASES
Total loans and leases increased 13 percent to $116.0 billion on December
31, 1995 compared to $102.4 billion on December 31, 1994. Average loans and
leases for 1995 were $109.5 billion, an increase of 15 percent compared to
1994's average balance. The increase was due primarily to growth in residential
mortgages and other consumer loans.
Average commercial loans increased 11 percent to $46.4 billion in 1995
compared to 1994. Real estate commercial and construction loans decreased in
1995, with average loans outstanding of $10.3 billion and $10.9 billion in 1995
and 1994, respectively.
Average residential mortgage loans increased $5.6 billion to $20.6 billion
in 1995 compared to $15.0 billion in 1994, the result of increased originations
made through the Corporation's mortgage subsidiary and banking centers, as well
as the retention by the Corporation's banking subsidiaries of a substantial
portion of the originations generated by the mortgage subsidiary.
Average credit card loans increased 27 percent to $5.0 billion in 1995
compared to 1994. Other consumer loans increased 11 percent to $21.9 billion.
The GENERAL BANK contributed approximately two-thirds of the increase in
combined credit card and other consumer loans with the remaining growth
occurring in FINANCIAL SERVICES.
<TABLE>
<CAPTION>
TABLE EIGHT
DISTRIBUTION OF LOANS, LEASES AND FACTORED ACCOUNTS RECEIVABLE
DECEMBER 31
(DOLLARS IN MILLIONS)
1995 1994 1993 1992 1991
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Domestic
Commercial..................... $ 47,989 41.0% $ 44,665 43.1% $40,808 44.3% $32,260 44.4% $28,701 41.5%
Real estate commercial......... 6,183 5.3 7,349 7.1 8,239 9.0 6,324 8.7 6,756 9.8
Real estate construction....... 2,976 2.5 2,981 2.9 3,256 3.5 3,065 4.2 4,212 6.1
Total commercial........... 57,148 48.8 54,995 53.1 52,303 56.8 41,649 57.3 39,669 57.4
Residential mortgage........... 24,026 20.6 17,244 16.7 12,689 13.8 9,262 12.7 7,571 11.0
Credit card.................... 6,532 5.6 4,753 4.6 3,728 4.1 4,297 5.9 4,178 6.0
Other consumer................. 22,287 19.0 20,511 19.9 19,326 21.0 14,152 19.4 14,645 21.2
Total consumer............. 52,845 45.2 42,508 41.2 35,743 38.9 27,711 38.0 26,394 38.2
Lease financing................ 3,264 2.8 2,440 2.4 1,729 1.9 1,301 1.8 1,229 1.8
Factored accounts receivable... 991 .8 1,004 1.0 1,001 1.1 917 1.3 817 1.2
114,248 97.6 100,947 97.7 90,776 98.7 71,578 98.4 68,109 98.6
Foreign
Commercial and industrial
companies.................... 1,635 1.4 1,183 1.1 510 .5 634 .9 634 .9
Banks and other financial
institutions................. 609 .5 795 .8 446 .5 304 .4 177 .2
Governments and
official institutions........ 7 - 6 - 22 - 2 - 42 .1
Lease financing................ 534 .5 440 .4 253 .3 196 .3 146 .2
2,785 2.4 2,424 2.3 1,231 1.3 1,136 1.6 999 1.4
Total loans, leases and factored
accounts receivable, net
of unearned income............. $117,033 100.0% $103,371 100.0% $92,007 100.0% $72,714 100.0% $69,108 100.0%
</TABLE>
26 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
AVERAGE LOANS
AND LEASES
(billions)
(Bar graph appears here with the following plot points.)
91 92 93 94 95
69.4 68.2 79.0 95.0 109.5
A significant source of liquidity for the Corporation is the repayment and
maturities of loans. TABLE NINE shows selected loan maturity data on December
31, 1995 and indicates that approximately 45 percent of the selected loans had
maturities of one year or less. The securitization and sale of certain loans and
the use of loans as collateral in asset-backed financing arrangements are also
sources of liquidity. In December 1995, the Corporation securitized
approximately $1.1 billion of indirect auto loans. Additionally, during 1995 the
Corporation issued approximately $3.0 billion of mortgage-backed bonds and $1.1
billion of credit card-backed financing.
OTHER EARNING ASSETS
As presented in TABLE SEVEN, aggregate federal funds sold, securities
purchased under agreements to resell and trading account securities increased
$5.5 billion to $29.3 billion in 1995 compared to 1994 and represented 16
percent of total uses of funds in 1995 compared to 14 percent in 1994. Increased
trading activities were the primary reason for these increases.
DEPOSITS
TABLE THREE provides information on the average amounts of deposits and the
rates paid by deposit category. Through the Corporation's diverse retail banking
network, deposits remain a primary, highly stable source of funds for the
Corporation. As the Corporation has diversified its sources of funds, customer-
based funds have remained relatively flat although declining as a percentage of
total sources from 51 percent in 1994 to 44 percent in 1995. Declines of $1.5
billion were experienced in certain customer-based deposits, reflecting
industry-wide trends of customers seeking higher-yielding investment
alternatives. Average noninterest-bearing deposits increased $1.0 billion during
1995 compared to 1994.
On December 31, 1995, the Corporation had domestic certificates of deposit
greater than $100 thousand totaling $6.5 billion, with $3.1 billion maturing
within three months or less, $1.2 billion maturing within three to six months,
$1.1 billion maturing within six to twelve months and $1.1 billion maturing
after twelve months. Additionally, on December 31, 1995, the Corporation had
other domestic time deposits greater than $100 thousand totaling $304 million,
with $30 million maturing within three months or less, $29 million maturing
within three to six months, $38 million maturing within six to twelve months and
$207 million maturing after twelve months. Foreign office certificates of
deposit and other time deposits of $100 thousand or more amounted to $12.9
billion and $12.6 billion on December 31, 1995 and 1994, respectively.
TABLE NINE
SELECTED LOAN MATURITY DATA
DECEMBER 31, 1995
(DOLLARS IN MILLIONS)
THIS TABLE PRESENTS THE MATURITY DISTRIBUTION AND INTEREST SENSITIVITY OF
SELECTED LOAN CATEGORIES (EXCLUDING RESIDENTIAL MORTGAGE, CREDIT CARD, OTHER
CONSUMER LOANS, LEASE FINANCING AND FACTORED ACCOUNTS RECEIVABLE). MATURITIES
ARE PRESENTED ON A CONTRACTUAL BASIS.
<TABLE>
<CAPTION>
DUE AFTER
DUE IN 1 1 YEAR
YEAR THROUGH DUE AFTER
OR LESS 5 YEARS 5 YEARS TOTAL
<S> <C> <C> <C> <C>
Commercial.................................................. $ 21,141 $ 19,153 $ 7,695 $47,989
Real estate commercial...................................... 2,008 3,446 729 6,183
Real estate construction.................................... 1,781 1,139 56 2,976
Foreign..................................................... 1,668 325 258 2,251
Total selected loans, net of unearned income.............. $ 26,598 $ 24,063 $ 8,738 $59,399
Percent of total............................................ 44.8% 40.5% 14.7% 100.0%
Cumulative percent of total................................. 44.8 85.3 100.0
Sensitivity of loans to changes in interest rates-loans
due after one year
Predetermined interest rate............................... $ 6,363 $ 3,508 $ 9,871
Floating or adjustable interest rate...................... 17,700 5,230 22,930
$ 24,063 $ 8,738 $32,801
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS 27
<PAGE>
SHORT-TERM BORROWINGS AND
TRADING ACCOUNT LIABILITIES
The Corporation uses short-term borrowings as a funding source and in its
management of interest rate risk. TABLE TEN presents the categories of short-
term borrowings.
In 1995, the banking subsidiaries increased the maximum available issuance
under the bank note program by $3.0 billion to $9.0 billion. As of December 31,
1995, short-term bank notes outstanding under this program were $3.1 billion
compared to $4.5 billion on December 31, 1994.
Average securities sold under agreements to repurchase increased $5.4
billion in 1995 and short sales increased $1.5 billion on average over 1994
levels, primarily reflecting the expanded trading activities of the CAPITAL
MARKETS group.
LONG-TERM DEBT
On December 31, 1995 and 1994, long-term debt was $17.8 billion and $8.5
billion, respectively. The Corporation issued approximately $11.4 billion in
long-term senior and subordinated debt. The Corporation continued to diversify
its funding sources through the issuances of $3.0 billion of mortgage-backed
bonds, a $1.1-billion credit card-backed financing, a $500-million Eurobond
offering and the issuance of $2.2 billion in long-term debt by the banking
subsidiaries under the previously mentioned bank note program. In addition, the
Corporation issued approximately $4.6 billion of senior and subordinated debt
including medium-term notes.
Proceeds from the issuance of long-term debt were used primarily to fund
average earning asset growth of 13 percent, fund the common stock repurchase
programs, replace debt which matured and fund certain mortgage and banking
acquisitions. See Note Six to the consolidated financial statements for further
details on long-term debt.
TABLE TEN
SHORT-TERM BORROWINGS
(DOLLARS IN MILLIONS)
FEDERAL FUNDS PURCHASED GENERALLY REPRESENT OVERNIGHT BORROWINGS, AND
REPURCHASE AGREEMENTS REPRESENT BORROWINGS WHICH GENERALLY RANGE FROM ONE DAY TO
THREE MONTHS IN MATURITY. COMMERCIAL PAPER IS ISSUED IN MATURITIES NOT TO EXCEED
NINE MONTHS. OTHER SHORT-TERM BORROWINGS PRINCIPALLY CONSIST OF BANK NOTES AND
U.S. TREASURY NOTE BALANCES.
<TABLE>
<CAPTION>
1995 1994 1993
AMOUNT RATE AMOUNT RATE AMOUNT RATE
<S> <C> <C> <C> <C> <C> <C>
Federal funds purchased
On December 31..............................$ 5,940 5.26% $ 3,993 5.19% $ 7,135 2.92%
Average during year......................... 5,455 5.91 5,397 4.07 6,479 3.03
Maximum month-end balance during year....... 7,317 - 7,264 - 7,899 -
Securities sold under agreements to repurchase
On December 31.............................. 23,034 5.66 21,977 5.36 21,236 3.11
Average during year......................... 30,336 6.14 24,903 4.32 17,283 3.13
Maximum month-end balance during year....... 38,926 - 27,532 - 22,733 -
Commercial paper
On December 31.............................. 2,773 5.65 2,519 5.22 2,056 3.26
Average during year......................... 2,804 6.10 2,482 4.46 1,379 3.26
Maximum month-end balance during year....... 2,930 - 2,871 - 2,056 -
Other short-term borrowings
On December 31.............................. 4,143 5.94 5,640 7.21 5,522 3.08
Average during year......................... 5,690 6.20 5,015 4.25 4,006 3.45
Maximum month-end balance during year....... 7,378 - 6,634 - 8,187 -
</TABLE>
28 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
OTHER
The Corporation has commercial paper back-up lines totaling $1.5 billion
which mature in 1997. No borrowings have been made under these lines.
The strength of the Corporation's overall financial position is reflected in
the following December 31, 1995 debt ratings:
COMMERCIAL SENIOR
PAPER DEBT
Moody's Investors
Service.............. P-1 A2
Standard & Poor's
Corporation.......... A-1 A
Duff and Phelps, Inc... D-1+ A+
Fitch Investors
Service, Inc......... F-1 A+
Thomson BankWatch...... TBW-1 A+
IBCA................... A1 A
In managing liquidity, the Corporation takes into consideration the ability
of the subsidiary banks to pay dividends to the parent company. See Note Nine to
the consolidated financial statements for further details on dividend
capabilities of the subsidiary banks.
OFF-BALANCE SHEET
As discussed in the Market Risk Management section beginning on page 38, the
Corporation utilizes interest rate swaps in its asset and liability management
process. Interest rate swaps allow the Corporation to adjust its interest rate
risk position without exposure to risk of loss of principal and funding
requirements, as swaps do not involve the exchange of notional amounts, only net
interest payments. The interest payments can be based on a fixed rate or a
variable index.
The Corporation uses non-leveraged generic, index amortizing, collateralized
mortgage obligation (CMO) and basis swaps. Generic swaps involve the exchange of
fixed and variable interest rates based on the contractual underlying notional
amounts. Index amortizing and CMO swaps also involve the exchange of fixed and
variable interest rates; however, their notional amounts decline and their
maturities vary based on certain interest rate indices in the case of index
amortizing swaps, or mortgage prepayment rates in the case of CMO swaps. Basis
swaps involve the exchange of payments based on the contractual underlying
notional amounts where both the pay rate and the receive rate are floating
rates based on different indices.
As presented in the footnotes to TABLE THREE, net interest receipts and
payments on these swaps have been included in interest income and expense on the
underlying instruments. On December 31, 1995, there were no realized deferred
gains or losses associated with terminated contracts.
TABLE ELEVEN summarizes the notional contracts and the activity for the year
ended December 31, 1995 of asset and liability management interest rate swaps
(ALM swap or swaps). As reflected in the table, the gross notional amount of the
Corporation's ALM swap program on December 31, 1995 was $24.3 billion, with the
Corporation receiving fixed on $13.8 billion, converting variable-rate
commercial loans to fixed rate and converting the cost of certain fixed-rate
long-term debt to variable rate, and receiving variable on $10.0 billion, fixing
the cost of certain variable-rate liabilities, primarily market-based funds. On
December 31, 1995, the net receive fixed position was $3.9 billion, representing
a reduction from the net receive fixed position of $8.9 billion on December 31,
1994.
TABLE TWELVE summarizes the maturities, average pay and receive rates and
the market value on December 31, 1995 of the Corporation's ALM swaps. The
weighted
TABLE ELEVEN
ASSET AND LIABILITY MANAGEMENT INTEREST RATE SWAPS NOTIONAL CONTRACTS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
INDEX
GENERIC AMORTIZING CMO TOTAL
RECEIVE PAY RECEIVE RECEIVE PAY RECEIVE PAY
FIXED FIXED FIXED FIXED FIXED FIXED FIXED BASIS TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance on December 31, 1994... $ 6,528 $8,446 $ 8,450 $2,504 $ 97 $ 17,482 $8,543 $ - $ 26,025
Additions................... 2,923 1,561 - - - 2,923 1,561 486 4,970
Maturities.................. (3,488) (99) (2,539) (540) (22) (6,567) (121) - (6,688)
Balance on December 31, 1995... $ 5,963 $9,908 $ 5,911 $1,964 $ 75 $ 13,838 $9,983 $486 $ 24,307
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS 29
<PAGE>
TABLE TWELVE
ASSET AND LIABILITY MANAGEMENT INTEREST RATE SWAPS
DECEMBER 31, 1995
(DOLLARS IN MILLIONS, AVERAGE MATURITY IN YEARS)
<TABLE>
<CAPTION>
MATURITIES
MARKET AFTER AVERAGE
VALUE TOTAL 1996 1997 1998 1999 2000 2000 MATURITY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSET CONVERSION SWAPS
Receive fixed generic.............. $ (6) .96
Notional value................... $ 4,275 $ 2,700 $ 575 $1,000 - - -
Weighted average receive rate.... 4.85% 4.62% 4.45% 5.67% - - -
Weighted average pay rate........ 5.84
Receive fixed amortizing........... (42) .70
Notional value................... $ 5,911 $ 4,497 $1,220 $ 194 - - -
Weighted average receive rate.... 4.88% 4.88% 4.87% 5.08% - - -
Weighted average pay rate........ 5.85
Receive fixed CMO.................. (11) 1.72
Notional value................... $ 1,964 $ 656 $ 418 $ 469 $ 421 - -
Weighted average receive rate.... 5.12% 5.10% 5.11% 5.08% 5.21% - -
Weighted average pay rate........ 5.92
Total asset conversion swaps....... $ (59)
Notional value................... $12,150 $ 7,853 $2,213 $1,663 $ 421 - -
LIABILITY CONVERSION SWAPS
Receive fixed generic.............. $ 65 5.70
Notional value................... $ 1,688 $ 4 - $ 3 - $1,308 $ 373
Weighted average receive rate.... 6.73% 8.76% - 6.58% - 6.56% 7.32%
Weighted average pay rate........ 5.96
Pay fixed generic.................. (82) .74
Notional value................... $ 9,908 $ 8,798 $ 925 $ 100 - $ 74 $ 11
Weighted average pay rate........ 6.62% 6.53% 7.52% 6.10% - 7.42% 9.78%
Weighted average receive rate.... 5.92
Pay fixed CMO...................... 1 1.55
Notional value................... $ 75 $ 22 $ 16 $ 37 - - -
Weighted average pay rate........ 4.44% 4.44% 4.44% 4.44% - - -
Weighted average receive rate.... 5.94
Total liability conversion swaps... $ (16)
Notional value................... $11,671 $ 8,824 $ 941 $ 140 - $1,382 $ 384
Basis swaps........................ $ - 1.59
Notional value................... $ 486 $ 100 $ 371 - - - $ 15
Weighted average receive rate.... 5.75%
Weighted average pay rate........ 5.82
Total swaps........................ $ (75)
Notional value................... $24,307 $16,777 $3,525 $1,803 $ 421 $1,382 $ 399
Total receive fixed rate swaps..... $ 6 1.54
Notional value................... $13,838 $ 7,857 $2,213 $1,666 $ 421 $1,308 $ 373
Weighted average receive rate.... 5.13% 4.81% 4.81% 5.44% 5.21% 6.56% 7.32%
Weighted average pay rate........ 5.87
Total pay fixed rate swaps......... $ (81) .74
Notional value................... $ 9,983 $ 8,820 $ 941 $ 137 - $ 74 $ 11
Weighted average pay rate........ 6.61% 6.52% 7.47% 5.65% - 7.42% 9.78%
Weighted average receive rate.... 5.92
</TABLE>
FLOATING RATES REPRESENT THE LAST REPRICING AND WILL CHANGE IN THE FUTURE
BASED ON MOVEMENTS IN ONE-, THREE- AND SIX-MONTH LIBOR RATES.
MATURITIES FOR CMO AND AMORTIZING SWAPS ARE BASED ON INTEREST RATES IMPLIED
BY THE FORWARD CURVE ON DECEMBER 31, 1995 AND MAY DIFFER FROM ACTUAL MATURITIES,
DEPENDING ON FUTURE INTEREST RATE MOVEMENTS AND RESULTANT PREPAYMENT PATTERNS.
ON DECEMBER 31, 1995, IN ADDITION TO THE ABOVE INTEREST RATE SWAPS, THE
CORPORATION HAD APPROXIMATELY $1.2 BILLION NOTIONAL OF RECEIVE FIXED GENERIC
INTEREST RATE SWAPS ASSOCIATED PRIMARILY WITH A CREDIT CARD SECURITIZATION. ON
DECEMBER 31, 1995, THESE POSITIONS HAD AN UNREALIZED MARKET VALUE OF NEGATIVE $1
MILLION, A WEIGHTED AVERAGE RECEIVE RATE OF 5.19 PERCENT, A PAY RATE OF 5.66
PERCENT AND AN AVERAGE MATURITY OF 3.76 YEARS. ADDITIONALLY, THE CORPORATION HAD
$80 MILLION NOTIONAL OF ASSET AND LIABILITY MANAGEMENT INTEREST RATE CAPS AND
FLOORS WITH AN INSIGNIFICANT MARKET VALUE.
30 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
average interest receive rates and pay rates were 5.13 percent and 5.87
percent, respectively, for receive fixed ALM swaps and 5.92 percent and 6.61
percent, respectively, for receive floating ALM swaps as of December 31, 1995.
The net unrealized depreciation of the ALM swap portfolio on December 31,
1995 was $75 million compared to $726 million on December 31, 1994, reflecting
the reduction in interest rates and maturities. The unrealized depreciation in
the estimated value of the ALM swap portfolio should be viewed in the context of
the overall balance sheet. The value of any single component of the balance
sheet or off-balance sheet position should not be viewed in isolation.
CREDIT RISK MANAGEMENT AND
CREDIT PORTFOLIO REVIEW
In conducting business activities, the Corporation is exposed to the
possibility that borrowers or counterparties may default on their obligations to
the Corporation. Credit risk arises through the extension of loans, leases,
factored accounts receivable, certain securities, letters of credit, financial
guarantees and through counterparty risk on trading and capital markets
transactions. To manage this risk, the Credit Policy group establishes policies
and procedures to manage both on- and off-balance sheet credit risk and
communicates and monitors the application of these policies and procedures
throughout the Corporation.
The Corporation's overall objective in managing credit risk is to minimize
the adverse impact of any single event or set of occurrences. To achieve this
objective, the Corporation strives to maintain a credit risk profile that is
diverse in terms of product type, industry concentration, geographic
distribution and borrower or counterparty concentration.
The Credit Policy group works with lending officers, trading personnel and
various other line personnel in areas that conduct activities involving credit
risk and is involved in the implementation, refinement and monitoring of credit
policies and procedures.
The Corporation manages credit exposure to individual borrowers and
counterparties on an aggregate basis. Included in the aggregate measure of
exposure to an individual borrower or counterparty are loans, leases, factored
accounts receivable, securities, letters of credit, bankers' acceptances,
derivatives in a gain position and unfunded commitments. The creditworthiness of
a borrower or counterparty is determined by experienced personnel, and limits
are established for the total credit exposure to any one borrower or
counterparty. Credit limits are subject to varying levels of approval by senior
line and credit policy management. Total exposure to a borrower or counterparty
is aggregated and measured against established limits.
Borrowers or counterparties receive an initial risk rating by the
originating credit officer. This rating is based on the amount of inherent
credit risk and is reviewed for appropriateness by senior line and credit policy
personnel. Credits are monitored by line and credit policy personnel for
deterioration in a borrower's or counterparty's financial condition which would
impact the ability of the borrower or counterparty to perform under the
contract. Risk ratings are adjusted as necessary.
For consumer lending, credit scoring systems are utilized to provide
standards for extension of credit. Consumer portfolio credit risk is monitored
primarily using statistical models to predict portfolio behavior.
In certain circumstances, the Corporation obtains collateral to support
credit extensions and commitments. Generally, such collateral is in the form of
real and personal property, cash on deposit or other highly liquid instruments.
Whenever possible, the Corporation obtains real property as security for some
loans that are made on the general creditworthiness of the borrower and whose
proceeds were not used for real estate-related purposes.
The Corporation also manages exposure to a single borrower, industry,
product-type or other concentration through syndications of credits,
participations, loan sales and securitizations. Through the Corporation's
GLOBAL FINANCE group, the Corporation is a major participant in the
syndications market. In a syndicated facility, each participating lender funds
only its portion of the syndicated facility, therefore limiting its exposure to
the borrower. The Corporation also identifies and reduces its exposure to funded
borrower, product or industry concentrations through loan sales. Generally,
these sales are without recourse to the Corporation. For instance, in December
1995, to further reduce real estate exposures, the Corporation sold two pools of
loans with book values of $125 million, consisting primarily of selected lower
quality real estate loans.
In conducting derivatives activities, in certain jurisdictions, the
Corporation reduces
MANAGEMENT'S DISCUSSION AND ANALYSIS 31
<PAGE>
risk to any one counterparty through the use of legally enforceable master
netting agreements which allow the Corporation to settle positive and negative
positions with the same counterparty on a net basis.
An independent credit review group conducts ongoing reviews of credit
activities and portfolios, re-examining on a regular basis risk assessments for
credit exposures and overall compliance with policy.
LOAN AND LEASE PORTFOLIO- The Corporation's credit exposure is centered in
its loan and lease portfolio which on December 31, 1995 totaled $116.0 billion,
or 69 percent of total earning assets. TABLE EIGHT on page 26 presents a
distribution of loans by product type.
ALLOWANCE FOR CREDIT LOSSES - The
TABLE THIRTEEN
ALLOWANCE FOR CREDIT LOSSES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Balance on January 1........................................ $ 2,186 $ 2,169 $ 1,454 $ 1,605 $ 1,322
Loans, leases and factored accounts receivable charged off
Commercial................................................ (98) (113) (107) (245) (436)
Real estate commercial.................................... (25) (32) (84) (279) (316)
Real estate construction.................................. (17) (27) (17) (114) (276)
Total commercial........................................ (140) (172) (208) (638) (1,028)
Residential mortgage...................................... (8) (7) (10) (18) (33)
Credit card............................................... (189) (126) (184) (172) (138)
Other consumer............................................ (263) (192) (172) (166) (185)
Total consumer.......................................... (460) (325) (366) (356) (356)
Foreign................................................... - - - (7) (3)
Lease financing........................................... (2) (4) (5) (8) (7)
Factored accounts receivable.............................. (34) (32) (30) (17) (23)
Total loans, leases and factored accounts
receivable charged off.................................. (636) (533) (609) (1,026) (1,417)
Recoveries of loans, leases and factored accounts
receivable previously charged off
Commercial................................................ 78 69 67 62 36
Real estate commercial.................................... 15 17 21 13 5
Real estate construction.................................. 9 26 12 8 3
Total commercial........................................ 102 112 100 83 44
Residential mortgage...................................... 2 2 3 4 3
Credit card............................................... 26 22 19 13 19
Other consumer............................................ 72 67 65 48 37
Total consumer.......................................... 100 91 87 65 59
Foreign................................................... - - 1 1 1
Lease financing........................................... 1 3 2 2 2
Factored accounts receivable.............................. 12 11 7 9 3
Total recoveries of loans, leases and
factored accounts receivable previously charged
off................................................... 215 217 197 160 109
Net charge-offs........................................... (421) (316) (412) (866) (1,308)
Provision for credit losses................................. 382 310 430 715 1,582
Allowance applicable to loans of purchased companies and
other..................................................... 16 23 697 - 9
Balance on December 31...................................... 2,163 $ 2,186 $ 2,169 $ 1,454 $ 1,605
Loans, leases and factored accounts receivable,
net of unearned income, outstanding on December 31........ $117,033 $103,371 $92,007 $72,714 $69,108
Allowance for credit losses as a percentage of
loans, leases and factored accounts receivable,
net of unearned income, outstanding on December 31........ 1.85% 2.11% 2.36% 2.00% 2.32%
Average loans, leases and factored accounts receivable,
net of unearned income, outstanding during the year....... $110,650 $ 96,258 $80,058 $69,136 $70,196
Net charge-offs as a percentage of average loans,
leases and factored accounts receivable,
net of unearned income, outstanding during the year....... .38% .33% .51% 1.25% 1.86%
Ratio of the allowance for credit losses
on December 31 to net charge-offs......................... 5.14 6.93 5.27 1.68 1.23
Allowance for credit losses as a percentage of
nonperforming loans....................................... 306.49% 273.07% 193.38% 103.11% 81.82%
</TABLE>
32 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
NET CHARGE-OFFS
AS A PERCENTAGE OF
AVERAGE NET LOANS
(percent)
(Bar graph appears here with the following plot points.)
91 92 93 94 95
1.86 1.25 .51 .33 .38
Corporation's allowance for credit losses was $2.2 billion on both December
31, 1995 and 1994. TABLE THIRTEEN provides an analysis of the changes in the
allowance for credit losses. The provision for credit losses was $72 million
higher in 1995 than in 1994, because of both higher charge-offs and higher loan
growth, principally in the consumer loan portfolios. Total net charge-offs
increased $105 million in 1995 to $421 million, or .38 percent of average loans,
leases and factored accounts receivable, versus $316 million, or .33 percent, in
1994. The increases were experienced in credit card and other consumer net
charge-offs which increased $59 million and $66 million, respectively. The 27-
percent growth in 1995 in average credit card loan levels and 11-percent growth
in average other consumer loan levels over 1994 average levels led to increased
charge-offs which generally occur as the portfolios season. Additionally, an
increased rate of personal bankruptcies in 1995 contributed to higher charge-
offs. Management anticipates that the credit losses experienced in 1995 reflect
more typical loss levels for this type of lending than the lower charges
experienced in the prior two years and that losses at these or higher levels
will continue for the near future. Furthermore, future economic conditions also
will impact credit quality and may result in increased net charge-offs and
higher provisions for credit losses.
Based on the risk rating process described above, an amount is allocated
within the allowance for credit losses to cover the amount of loss estimated to
be inherent in particular risk categories of loans. The allocation of the
allowance for credit losses, as presented in TABLE FOURTEEN, 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 industries.
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 the
allowance for credit losses is appropriate given inherent credit losses on
December 31, 1995.
NONPERFORMING ASSETS - On December 31, 1995, nonperforming assets were $853
million, or .73 percent of net loans, leases, factored accounts receivable and
other real estate owned, compared to $1.1 billion, or 1.10 percent, on December
31, 1994. As presented in TABLE FIFTEEN, nonperforming loans were $706 million
at the end of 1995 compared to $801 million at the end of 1994. At the beginning
of 1995, upon adoption of the loan impairment accounting policies discussed more
fully in Notes One and Five to the consolidated financial statements,
approximately $80 million of in-substance foreclosed loans previously reported
as other real estate owned was reclassified to nonperforming loans. After
reflecting this reclassification in the December 31, 1994 amounts,
TABLE FOURTEEN
ALLOCATION OF THE ALLOWANCE FOR CREDIT LOSSES
DECEMBER 31
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial..................... $ 450 20.8% $ 444 20.3% $ 403 18.6% $ 303 20.9% $ 524 32.6%
Real estate commercial......... 176 8.1 214 9.8 230 10.6 220 15.1 282 17.6
Real estate construction....... 69 3.2 83 3.8 123 5.7 141 9.7 252 15.7
Total commercial............. 695 32.1 741 33.9 756 34.9 664 45.7 1,058 65.9
Residential mortgage........... 48 2.2 34 1.6 24 1.1 21 1.4 50 3.1
Credit card.................... 164 7.6 117 5.4 92 4.2 125 8.6 104 6.5
Other consumer................. 251 11.7 228 10.4 224 10.4 135 9.3 161 10.0
Total consumer............... 463 21.5 379 17.4 340 15.7 281 19.3 315 19.6
Foreign........................ 11 .5 11 .5 13 .6 17 1.2 6 .4
Lease financing................ 25 1.2 17 .8 13 .6 12 .8 12 .7
Factored accounts receivable... 20 .9 23 1.0 19 .9 18 1.2 17 1.1
Unallocated.................... 949 43.8 1,015 46.4 1,028 47.3 462 31.8 197 12.3
$2,163 100.0% $2,186 100.0% $2,169 100.0% $1,454 100.0% $1,605 100.0%
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS 33
<PAGE>
nonperforming loans decreased $175 million, or 20 percent, primarily
reflecting declines of $119 million in nonperforming commercial loans and $107
million in nonperforming real estate commercial and construction loans.
Approximately $30 million of the $107-million decline in real estate commercial
and construction nonperforming loans was related to the previously mentioned
December 1995 pool sales. Declines in nonperforming loans primarily reflect
payments resulting from the improved financial condition of borrowers and the
results of the Corporation's continuing loan workout activities. Declines were
partially offset by an increase of $57 million in total nonperforming consumer
loans at December 31, 1995 compared to year-end 1994 amounts. The allowance
coverage of nonperforming loans increased to 306 percent on December 31, 1995,
up from 273 percent at the end of 1994.
Other real estate owned declined $190 million. After adjusting for the
previously dis-cussed $80-million reclassification from other real estate owned
to nonperforming loans, it declined $110 million, or 43 percent.
Internal loan workout units are devoted to the management and/or collection
of certain nonperforming assets, as well as certain performing loans. Aggressive
collection strategies and a proactive approach to managing overall credit risk
has expedited the Corporation's disposition, collection and renegotiation of
nonperforming and other lower-quality assets and allowed loan officers to
concentrate on generating new business.
The Corporation continues its efforts to expedite disposition, collection
and renegotiation of nonperforming and other lower-quality assets. As part of
this process, the Corporation routinely evaluates all reasonable alternatives,
including the sale of assets individually or in groups. The final decision to
proceed with any alternative is evaluated in the context of the overall credit-
risk profile of the Corporation.
NONPERFORMING ASSETS
(BILLIONS)
(Bar braph appears here with the following plot points.)
91 92 93 94 95
OREO .843 .587 .661 .337 .147
Nonperforming Loans 1.961 1.410 1.122 .801 .706
TABLE FIFTEEN
NONPERFORMING ASSETS
DECEMBER 31
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Nonperforming loans
Commercial.............................................. $271 $ 362 $ 474 $ 650 $ 831
Real estate commercial.................................. 196 201 318 404 535
Real estate construction................................ 16 66 142 210 480
Total commercial...................................... 483 629 934 1,264 1,846
Residential mortgage.................................... 87 66 77 88 114
Other consumer (1)...................................... 130 94 93 34 -
Total consumer........................................ 217 160 170 122 114
Foreign................................................. - 3 8 9 1
Lease financing (1)..................................... 6 9 10 15 -
Total nonperforming loans........................... 706 801 1,122 1,410 1,961
Other real estate owned................................... 147 337 661 587 843
Total nonperforming assets.......................... $853 $1,138 $1,783 $1,997 $2,804
Nonperforming assets as a percentage of
Total assets............................................ .46% .67% 1.13% 1.69% 2.54%
Loans, leases and factored accounts receivable,
net of unearned income, and other real estate
owned............................................... .73 1.10 1.92 2.72 4.01
Total loans past due 90 days or more and
not classified as nonperforming......................... $174 $ 146 $ 167 $ 215 $ 223
The loss of income associated with nonperforming loans on December 31 and the
cost of carrying other real estate owned were:
1995 1994 1993 1992 1991
Income that would have been recorded in accordance with
original terms.......................................... $102 $ 96 $ 80 $ 105 $ 205
Less income actually recorded............................. (27) (31) (34) (31) (82)
Loss of income............................................ $ 75 $ 65 $ 46 $ 74 $ 123
Cost of carrying other real estate owned.................. $ 13 $ 24 $ 18 $ 25 $ 36
</TABLE>
ON DECEMBER 31, 1995, THERE WERE NO MATERIAL COMMITMENTS TO LEND ADDITIONAL
FUNDS WITH RESPECT TO NONPERFORMING LOANS.
(1) INCLUDED IN COMMERCIAL NONPERFORMING LOANS IN 1991.
34 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
DERIVATIVES ACTIVITIES - Credit risk associated with derivatives positions
is measured as the net replacement cost the Corporation could incur should
counterparties with contracts in a gain position completely fail to perform
under the terms of those contracts and any collateral underlying the contracts
proves to be of no value to the Corporation. In managing derivatives credit
risk, the Corporation considers both the current exposure, which is the
replacement cost of contracts on the measurement date, as well as an estimate of
the potential change in value of contracts over their remaining lives.
TABLE SIXTEEN presents both the notional/contract amounts on December 31,
1995 and 1994 and the current credit risk amounts (the net replacement cost of
contracts in a gain position on December 31, 1995) of the Corporation's
derivatives-dealer positions. The notional or contract amounts indicate the
total volume of transactions and significantly exceed the amount of the
Corporation's credit or market risk associated with these instruments. The
credit risk amounts presented in TABLE SIXTEEN do not consider the value of any
collateral, but generally take into consideration the effects of legally
enforceable master netting agreements. TABLES ELEVEN and TWELVE present the
notional/contract amounts of the Corporation's asset and liability management
swaps. On December 31, 1995, the credit risk associated with these swaps was not
significant.
In managing credit risk associated with its derivatives activities, the
Corporation deals with creditworthy counterparties, primarily U.S. and foreign
commercial banks and broker-dealers.
A portion of the Corporation's derivatives-dealer activity is exchange-
traded. Because exchange-traded instruments conform to standard terms and are
subject to policies set by the exchange involved, including counter-party
approval, margin requirements and security deposit requirements, the credit risk
to the Corporation is minimal. Of the $3.8-billion credit risk amount reported
in TABLE SIXTEEN, $791 million related to exchange-traded instruments. This
compares to a total credit risk amount of $1.8 billion on December 31, 1994,
which included $354 million related to exchange-traded instruments.
During 1995 there were no credit losses associated with derivatives
transactions. In addition, on December 31, 1995, there were
TABLE SIXTEEN
DERIVATIVES-DEALER POSITIONS
DECEMBER 31
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1995 1994
CONTRACT/ CREDIT RISK CONTRACT/
NOTIONAL AMOUNT (1) NOTIONAL
<S> <C> <C> <C>
Interest Rate Contracts
Swaps.................................. $123,946 989 $ 45,179
Futures and forwards................... 193,774 37 124,620
Written options........................ 233,976 - 114,928
Purchased options...................... 236,317 1,310 118,839
Foreign Exchange Contracts
Swaps.................................. 1,196 21 470
Spot, futures and forwards............. 70,199 532 26,987
Written options........................ 42,227 - 13,398
Purchased options...................... 44,273 350 13,507
Commodity and Other Contracts
Swaps.................................. 757 141 570
Futures and forwards................... 3,231 3 1,984
Written options........................ 15,476 - 12,608
Purchased options...................... 16,344 600 11,591
Total before cross product netting... 3,983
Cross product netting................ 183
Net replacement cost................. $3,800
</TABLE>
(1) REPRESENTS THE NET 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. AMOUNTS INCLUDE ACCRUED
INTEREST.
MANAGEMENT'S DISCUSSION AND ANALYSIS 35
<PAGE>
no nonperforming derivatives positions.
CONCENTRATIONS OF CREDIT RISK - As previously discussed, in an effort to
minimize the adverse impact of any single event or set of occurrences, the
Corporation strives to maintain a diverse credit portfolio. Summarized below are
areas of credit risk with exposures in excess of 25 percent of period-end
shareholders' equity and a discussion of foreign outstandings.
REAL ESTATE - Total nonresidential real estate commercial and construction
loans, the portion of such loans which are nonperforming, OREO and other credit
exposures are presented in TABLES SEVENTEEN and EIGHTEEN. Other credit
exposures, as presented in the tables, include letters of credit and loans held
for sale. The exposures presented represent credit extensions for real estate-
related purposes to borrowers or counterparties who are primarily in the real
estate development or investment business and for which the ultimate repayment
of the credit is dependent on the sale, lease, rental or refinancing of the
real estate.
Total nonresidential real estate commercial and construction loans continued
to decline in 1995 and totaled $9.2 billion, or eight percent of net loans,
leases and factored accounts receivable, on December 31, 1995 compared to $10.3
billion, or 10 percent, at the end of 1994. During 1995, the Corporation
recorded real estate net charge-offs of $18 million, or .17 percent of average
real estate loans, compared to net charge-offs of $16 million, or .15 percent,
in 1994. The December 1995 real estate pool sales accounted for $11 million of
the $18-million total net charge-offs. Nonperforming real estate commercial and
construction loans totaled $212 million and $267 million on December 31, 1995
and 1994, respectively.
TABLE SEVENTEEN
REAL ESTATE COMMERCIAL AND CONSTRUCTION LOANS, OTHER REAL ESTATE OWNED
AND OTHER REAL ESTATE CREDIT EXPOSURES BY GEOGRAPHIC REGION
DECEMBER 31, 1995
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
LOANS (1) OTHER CREDIT
OUTSTANDING NONPERFORMING OREO EXPOSURES (2)
<S> <C> <C> <C> <C>
Maryland, District of Columbia and Virginia... $2,269 $ 99 $ 59 $ 434
Florida....................................... 2,061 45 22 114
North Carolina and South Carolina............. 1,585 31 12 79
Other states.................................. 3,244 37 16 793
$9,159 $212 $109 $1,420
</TABLE>
DISTRIBUTION BASED ON GEOGRAPHIC LOCATION OF COLLATERAL.
(1) ON DECEMBER 31, 1995, THE CORPORATION HAD UNFUNDED BINDING REAL ESTATE
COMMERCIAL AND CONSTRUCTION LOAN COMMITMENTS.
(2) OTHER CREDIT EXPOSURES INCLUDE LETTERS OF CREDIT AND LOANS HELD FOR
SALE.
TABLE EIGHTEEN
REAL ESTATE COMMERCIAL AND CONSTRUCTION LOANS, OTHER REAL ESTATE OWNED
AND OTHER REAL ESTATE CREDIT EXPOSURES BY PROPERTY TYPE
DECEMBER 31, 1995
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
LOANS (1) OTHER CREDIT
OUTSTANDING NONPERFORMING OREO EXPOSURES (2)
<S> <C> <C> <C> <C>
Shopping centers/retail..... $1,671 $ 20 $ 11 $ 72
Apartments.................. 1,539 9 1 611
Office buildings............ 1,492 30 14 22
Residential................. 926 10 4 22
Hotels...................... 841 9 - 62
Land and land development... 759 46 61 84
Industrial/warehouse........ 570 25 3 48
Commercial-other............ 386 35 7 341
Resorts/golf courses........ 196 1 - -
Multiple use................ 78 3 - 6
Other....................... 701 24 8 152
$9,159 $212 $109 $1,420
</TABLE>
(1) ON DECEMBER 31, 1995, THE CORPORATION HAD UNFUNDED BINDING REAL ESTATE
COMMERCIAL AND CONSTRUCTION LOAN COMMITMENTS.
(2) OTHER CREDIT EXPOSURES INCLUDE LETTERS OF CREDIT AND LOANS HELD FOR
SALE.
36 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
The exposures included in TABLES SEVENTEEN and EIGHTEEN do not include
credit extensions which were made on the general creditworthiness of the
borrower for which real estate was obtained as security or as an abundance of
caution and for which the ultimate repayment of the credit is not dependent on
the sale, lease, rental or refinancing of the real estate. Accordingly, the
exposures presented do not include commercial loans secured by owner-occupied
real estate, except where the borrower is a real estate developer. In addition
to the amounts presented in the tables, on December 31, 1995, the Corporation
had approximately $8.6 billion of commercial loans which were not real estate
dependent but for which the Corporation had obtained real estate as secondary
repayment security.
OTHER INDUSTRIES - TABLE NINETEEN presents selected industry credit
exposures. Commercial loans, factored accounts receivable and lease financings
are included in the table. Other credit exposures as presented include loans
held for sale, letters of credit, bankers' acceptances and derivatives exposures
in a gain position. Commercial loan outstandings totaled $48.0 billion, or 41
percent of net loans, leases and factored accounts receivable, on December 31,
1995 compared to $44.7 billion, or 43 percent, at the end of 1994. Net charge-
offs of commercial loans totaled $20 million, or .04 percent of average
commercial loans in 1995, versus $44 million, or .11 percent, in 1994.
Nonperforming commercial loans were $271 million and $362 million on December
31, 1995 and 1994, respectively.
As presented in TABLE NINETEEN and indirectly through other industry
exposures, the Corporation has credit exposure to the retail industry. Given the
current softness in this industry, management anticipates that credit quality in
the retail sector may experience deterioration in 1996.
CONSUMER - On December 31, 1995, consumer loan outstandings totaled $52.8
billion, representing 45 percent of net loans, leases and factored accounts
receivable. This compares to outstandings of $42.5 billion, or 41 percent, on
December 31, 1994. TABLE EIGHT details the components of the Corporation's
consumer loan portfolio. Net charge-offs in the consumer portfolio were $360
million in 1995 compared to $234 million in 1994, reflecting significant loan
growth. In addition to credit card loans reported in the financial statements,
the Corporation manages certain credit card receivables which have been
securitized ($1.3 billion). Total average managed credit card receivables
totaled $6.3 billion in 1995 compared to $5.2 billion in 1994. In December 1995,
the Corporation securitized approximately $1.1 billion of indirect auto loans.
On a managed portfolio basis, that is, taking into account the credit card and
indirect auto loan securitizations, net charge-offs as a percentage of average
managed
TABLE NINETEEN
SELECTED INDUSTRY CREDIT EXPOSURES
DECEMBER 31, 1995
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
LOANS, LEASES AND FACTORED ACCOUNTS
RECEIVABLE, NET OF UNEARNED INCOME OTHER
UNFUNDED CREDIT
OUTSTANDING NONPERFORMING COMMITMENTS EXPOSURES (1)
<S> <C> <C> <C> <C>
Communications............... $3,953 $ 2 $4,252 $ 335
Health care.................. 3,400 16 2,495 688
Leisure and sports........... 2,989 18 1,782 417
Oil and gas.................. 2,837 34 3,538 740
Food......................... 2,715 16 2,698 416
Textiles and apparel......... 2,556 38 1,113 370
Automotive................... 2,493 12 1,404 80
Machinery and equipment...... 2,475 7 2,370 275
Retail....................... 2,282 34 2,756 655
Electronics.................. 1,681 11 2,150 150
Construction................. 1,577 23 1,174 167
F orest products and paper... 1,374 7 1,602 245
Utilities.................... 818 - 2,533 223
Finance companies............ 775 - 4,531 69
Banks........................ 668 - 1,438 2,053
Brokers and dealers.......... 278 - 1,164 773
</TABLE>
(1) OTHER CREDIT EXPOSURES INCLUDE LOANS HELD FOR SALE, LETTERS OF CREDIT,
BANKERS' ACCEPTANCES AND DERIVATIVES EXPOSURES IN A GAIN POSITION.
MANAGEMENT'S DISCUSSION AND ANALYSIS 37
<PAGE>
consumer loans in 1995 were 3.81 percent for credit card, .03 percent for
residential mortgage and .87 percent for other consumer loans. This compares to
net charge-off ratios of 3.46 percent, .03 percent and .63 percent,
respectively, in 1994.
FOREIGN - Foreign outstandings, which exclude contingencies and the local
currency 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 $3.8
billion on December 31, 1995 compared to $4.6 billion on December 31, 1994.
MARKET RISK MANAGEMENT
In the normal course of conducting business activities, the Corporation is
exposed to market risk which includes both price and liquidity risk. Price risk
arises from fluctuations in interest rates, foreign exchange rates and commodity
and equity prices that may result in changes in the values of financial
instruments. Liquidity risk arises from the possibility that the Corporation may
not be able to satisfy current and future financial commitments or that the
Corporation may not be able to liquidate financial instruments at market prices.
Risk management procedures and policies have been established and are utilized
to manage the Corporation's exposure to market risk. The strategy of the
Corporation with respect to market risk is to maximize net income while
maintaining an acceptable level of risk to changes in market rates. While
achievement of this goal requires a balance between profitability, liquidity and
market price risk, there are opportunities to enhance revenues through
controlled risks.
Market risk is managed by the Corporation's Finance Committee which
formulates policy based on desirable levels of market risk. In setting desirable
levels of market risk, the Finance Committee considers the impact on earnings
and capital of the current outlook in market rates, potential changes in the
outlook in market rates, world and regional economies, liquidity, business
strategies and other factors.
The Corporation's asset and liability management process is utilized to
manage interest rate risk through the structuring of balance sheet and off-
balance sheet portfolios. To effectively measure and manage interest rate risk,
the Corporation uses computer simulations which determine the impact on net
interest income of numerous interest rate scenarios, balance sheet trends and
strategies. These simulations incorporate assumptions about balance sheet
dynamics, such as loan and deposit growth, loan and deposit pricing, changes in
funding mix and asset and liability repricing and maturity characteristics.
Simulations are run under various interest rate scenarios to determine the
impact on net income and capital. From these scenarios, interest rate risk is
quantified and appropriate strategies are developed and implemented. The overall
interest rate risk position and strategies are reviewed on an ongoing basis by
executive management.
Additionally, duration and market value sensitivity measures are selectively
utilized where they provide added value to the overall interest rate risk
management process.
In implementing strategies to manage interest rate risk, the primary tools
used by the Corporation are the securities portfolio and interest rate swaps,
and management of the mix, yields or rates and maturities of assets and of the
wholesale and retail funding sources of the Corporation.
TABLE TWENTY represents the Corporation's interest rate gap position on
December 31, 1995. Based on contractual maturities or repricing dates (or
anticipated dates where no contractual maturity or repricing date exists),
interest-sensitive assets and liabilities are placed in maturity categories. The
Corporation's near-term cumulative interest rate gap position is a reflection of
the strength of the customer-deposit gathering franchise which provides the
Corporation with a relatively stable core deposit base. These funds have been
deployed in longer-term interest earning assets, primarily loans and securities.
A gap analysis is limited in its usefulness as it represents a one-day position,
which is continually changing and not necessarily indicative of the
Corporation's position at any other time. Additionally, the gap analysis does
not consider the many factors accompanying interest rate movements.
On December 31, 1995, the interest rate risk position of the Corporation was
relatively neutral as the impact of a gradual parallel 100 basis-point rise or
fall in interest rates over the next 12 months was estimated to be less than one
percent of net income when compared to stable rates. Additionally, on December
31, 1995, a 100 basis-point parallel increase in interest rates from December
31,
38 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
1995 levels was estimated to result in a change of less than one percent in
the market value of the Corporation's total shareholders' equity.
The Corporation manages its exposure to market risk resulting from trading
activities through a risk management function which is independent of the
business units. Each major trading site in Charlotte, Chicago, New York and
London is monitored by these risk management units. Risk limits and stress
scenario guidelines have been approved by the Corporation's Finance Committee,
and daily earnings at risk limits are generally allocated to the business units.
In addition to limits placed on these individual business units, limits also are
imposed on the risks individual traders can take and on the amount of risk that
can be concentrated in a particular product or market. Risk positions are
monitored by business unit, risk management personnel and senior management on a
daily basis. Business unit and risk management personnel are responsible for
continual monitoring of the changing aggregate position of the portfolios under
their responsibility, including projection of the profit or loss levels that
could result from market moves. If any market risk limits are exceeded, the risk
management units ensure that senior management is aware and that appropriate
actions are taken.
To estimate potential losses that could result from adverse market
movements, the Corporation uses a daily earnings at risk methodology. Earnings
at risk estimates are measured on a daily basis at the individual trading unit
level, by type of trading activity and for all trading activities in the
aggregate. Daily reports of estimates compared to respective limits are reviewed
by senior management, and trading strategies are adjusted accordingly. In
addition to these simulations, portfolios which have significant option
positions are stress tested continually to simulate the potential loss that
might occur
TABLE TWENTY
INTEREST RATE GAP ANALYSIS
DECEMBER 31, 1995
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
OVER 12
MONTHS AND
INTEREST-SENSITIVE 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... $ 49,437 $ 11,097 $ 4,662 $ 7,959 $ 73,155 $42,887 $116,042
Securities held for investment............. 80 221 286 940 1,527 2,905 4,432
Securities available for sale.............. 5 2,117 278 459 2,859 16,556 19,415
Loans held for sale........................ 1,663 - - - 1,663 - 1,663
Time deposits placed and other
short-term investments................... 894 179 107 116 1,296 - 1,296
Trading account securities................. 14,848 - - - 14,848 - 14,848
Federal funds sold and securities
purchased under agreements to resell..... 6,230 - - - 6,230 - 6,230
Total.................................... 73,157 13,614 5,333 9,474 101,578 62,348 163,926
Interest-bearing liabilities
Savings.................................... 8,257 - - - 8,257 - 8,257
NOW and money market deposit accounts...... 28,160 - - - 28,160 - 28,160
Consumer CDs and IRAs...................... 3,105 3,674 4,374 6,503 17,656 7,254 24,910
Negotiated CDs, public funds and
other time deposits...................... 906 933 486 269 2,594 467 3,061
Foreign time deposits...................... 6,606 3,205 1,398 1,676 12,885 4 12,889
Borrowed funds............................. 30,790 1,733 2,579 788 35,890 - 35,890
Short sales................................ 11,782 - - - 11,782 - 11,782
Long-term debt............................. 4,444 4,403 139 630 9,616 8,159 17,775
Total.................................... 94,050 13,948 8,976 9,866 126,840 15,884 142,724
Noninterest-bearing, net..................... - - - - - 21,202 21,202
Total.................................... 94,050 13,948 8,976 9,866 126,840 37,086 $163,926
Interest rate gap............................ (20,893) (334) (3,643) (392) (25,262) 25,262
Effect of asset and liability management
interest rate swaps, futures and
other off-balance sheet items.............. (3,766) 3,431 167 (5,999) (6,167) 6,167
Adjusted interest rate gap................... $ (24,659) $ 3,097 $ (3,476) $ (6,391) $ (31,429) $31,429
Cumulative adjusted interest rate gap........ $ (24,659) $ (21,562) $ (25,038) $ (31,429)
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS 39
<PAGE>
due to unexpected market movements.
Earnings at risk represents a one-day measurement of pre-tax earnings at
risk from movements in market prices using the assumption that positions cannot
be rehedged during the period of any prescribed price and volatility change. A
99-percent confidence level is utilized, which indicates that actual trading
profits and losses may deviate from expected levels and exceed estimates
approximately one day out of every 100 days of trading activity. Earnings at
risk is measured on both a gross and uncorrelated basis. The gross measure
assumes that adverse market movements occur simultaneously across all segments
of the trading portfolio, an unlikely assumption. On December 31, 1995, the
gross estimates for aggregate interest rate, foreign exchange and equity and
commodity trading activities were $36.6 million, $1.3 million and $2.7 million,
respectively. Alternatively, using a statistical measure which is more likely to
capture the effects of market movements, the estimate on December 31, 1995 for
aggregate trading activities was $14.5 million.
Average daily CAPITAL MARKETS-related revenues in 1995 approximated $1.4
million. During 1995, the Corporation's CAPITAL MARKETS-related activities
resulted in positive daily revenues for approximately 73 percent of total
trading days.
The CAPITAL MARKETS-related revenue stream is quite stable. In 1995 the
standard deviation of CAPITAL MARKETS-related revenues was $2.8 million. Using
this data, one can conclude that the aggregate CAPITAL MARKETS activities should
not result in exposure of more than $5.1 million for any one day, assuming 99-
percent confidence. Daily earnings at risk will average considerably more than
this due to the assumption of no evasive actions as well as the assumption that
adverse market movements occur simultaneously across all segments of the trading
portfolio.
CAPITAL RESOURCES AND
CAPITAL MANAGEMENT
Shareholders' equity on December 31, 1995 was $12.8 billion compared to
$11.0 billion on December 31, 1994. Net earnings retention of $1.4 billion
coupled with net appreciation of $460 million, on an after tax basis, in the
market value of securities available for sale were the primary reasons for the
increase. Issuances of common stock in acquisitions and under various employee
benefit plans were offset by common stock repurchases in the open market as
discussed more fully in Note Seven to the consolidated financial statements.
The Federal Reserve Board, the Office of the Comptroller of the Currency and
the Federal Deposit Insurance Corporation have issued risk-based capital
guidelines for U.S. banking organizations. These guidelines provide a capital
framework that is sensitive to differences in credit risk profiles among banking
companies.
Under the risk-based capital guidelines, there are two tiers of capital.
Tier 1 Capital includes common shareholders' equity and qualifying preferred
stock, less goodwill and other adjustments. Tier 2 Capital consists of preferred
stock not qualifying as Tier 1, mandatory convertible debt, limited amounts of
subordinated debt, other qualifying term debt and the allowance for credit
losses up to 1.25 percent of risk-weighted assets. Total Capital consists of
Tier 1 Capital and Tier 2 Capital.
The risk-based capital guidelines are designed to measure Tier 1 and Total
Capital in relation to the credit risk of both on- and off-balance sheet items.
Under the guidelines, one of four risk weights is applied to the different on-
balance sheet assets. Off-balance sheet items, such as loan commitments and
derivatives contracts, are also applied a risk weight after conversion to
balance sheet-equivalent amounts.
The leverage ratio guidelines establish a minimum ratio of Tier 1 Capital to
quarterly average assets, excluding goodwill and certain other items, 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.
Presented below are the Corporation's regulatory capital ratios on December
31:
1995 1994
Risk-Based Capital Ratios
Tier 1 Capital......... 7.24% 7.43%
Total Capital.......... 11.58 11.47
Leverage Capital Ratio... 6.27 6.18
The Corporation's regulatory capital ratios on December 31, 1995 compare
favorably with the regulatory minimums of four percent for Tier 1, eight percent
for total risk-based capital and the leverage guidelines of 100 to 200 basis
points above the minimum ratio of three percent.
40 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
FOURTH QUARTER REVIEW
During the fourth quarter of 1995, the Corporation recorded net income of
$510 million compared to $405 million in the fourth quarter of 1994. TABLE
TWENTY-ONE presents selected quarterly operating results for each quarter of
1995 and 1994.
TABLE TWENTY-TWO presents an analysis of the Corporation's taxable-
equivalent net interest income for each of the last five quarters in the period
ended December 31, 1995. Taxable-equivalent net interest income was $1.4 billion
in the fourth quarter of 1995 compared to $1.3 billion in the comparable 1994
period. The net interest yield was 3.38 percent in the fourth quarter of 1995
compared to 3.40 percent in the fourth quarter of 1994. The slight decline in
the net interest yield resulted from the funding of earning asset growth
principally with market-based funds and term debt, partially offset by improved
spreads on the securities and ALM swaps portfolios.
The provision for credit losses was $142 million in the fourth quarter of
1995 compared to $70 million in the same quarter of 1994. Net charge-offs for
the fourth quarter of 1995 were $156 million compared to $98 million in the
fourth quarter of 1994. The increases in the provision for credit losses and net
charge-offs resulted from strong consumer loan growth and credit quality trends.
Securities gains in the fourth quarter of 1995 were $21 million compared to
losses of $28 million in the same 1994 period. The gains resulted from the
Corporation's repositioning of the portfolios in an effort to maintain neutral
interest sensitivity in light of recent and pending acquisitions.
Noninterest income was $846 million and $639 million in the fourth quarters
of 1995 and 1994, respectively. The $207-million increase was due primarily to
higher service charge fees on deposit accounts, higher trading account profits
and fees, acquisition-related mortgage servicing income and the previously
mentioned $80-million gain on the sale of a portion of the Corporate Trust
business.
Noninterest expense increased $81 million in the fourth quarter of 1995
compared to the fourth quarter of 1994, primarily due to acquisitions and the
previously mentioned $30-million proposed litigation settlement, partially
offset by reduced deposit insurance and the Corporation's continued emphasis on
management of expense levels.
Income tax expense was $278 million in the fourth quarter of 1995,
reflecting an effective tax rate of 35 percent of pretax income. This compared
to income tax expense of $183 million or an effective tax rate of 31 percent in
the fourth quarter of 1994.
1994 COMPARED TO 1993
The following discussion and analysis provides a comparison of the
Corporation's results of operations for the years ended December 31, 1994 and
1993. This discussion should be read in conjunction with the consolidated
financial statements and related notes on pages 47 through 67.
OVERVIEW
The Corporation's net income of $1.7 billion represented an increase of $389
million over 1993 earnings of $1.3 billion, excluding the 1993 impact of
adopting a new income tax accounting standard. Earnings per common share were
$6.12 and $5.00 for 1994 and 1993, respectively. Return on average common
shareholders' equity increased to 16.10 percent in 1994 from 15.00 percent in
1993. Including the impact of adopting a new income tax accounting standard,
1993 net income, earnings per share and return on average common shareholders'
equity were $1.5 billion, $5.78 and 17.33 percent, respectively. The
Corporation's results for 1994 reflected strong earnings in most operating units
and improved credit quality.
BUSINESS UNIT OPERATIONS
The GENERAL BANK earned $932 million in 1994 compared to $740 million in
1993. Return on equity for the GENERAL BANK was 17 percent in 1994 compared to
16 percent in 1993. The efficiency ratio improved from 68.1 percent in 1993 to
67.5 percent in 1994.
GLOBAL FINANCE earned $631 million in 1994 compared to $492 million in 1993.
The return on equity for GLOBAL FINANCE was 16 percent for both 1994 and 1993.
The efficiency ratio increased to 54.0 percent for 1994 from 47.9 percent in
1993 reflecting investments committed to expand capital markets activities and
the full-year impact of CRT.
MANAGEMENT'S DISCUSSION AND ANALYSIS 41
<PAGE>
FINANCIAL SERVICES, which was formed in 1993, earned $103 million in 1994
compared to $35 million in 1993, primarily reflecting a full year of earnings in
1994. The return on equity for FINANCIAL SERVICES was 13 percent for both 1994
and 1993. The efficiency ratio improved to 45.6 percent for 1994 compared to
61.6 percent for 1993.
NETINTEREST INCOME
Taxable-equivalent net interest income was $5.3 billion in 1994, an increase
of $582 million over $4.7 billion in 1993. This increase was due to higher
earning asset levels, principally loans and leases.
The net interest yield declined 38 basis points to 3.58 percent in 1994 from
3.96 percent in 1993, reflecting the decreased spread between fixed-rate
investment securities and market-based funds, partially offset by increased net
interest yields resulting from loan growth and deposit cost containment efforts.
PROVISION FOR CREDIT LOSSES
The provision for credit losses was $310 million in 1994 compared to $430
million in the prior year. Net charge-offs declined $96 million to $316 million
in 1994. On December 31, 1994, the allowance for credit losses was $2.2 billion,
or 2.11 percent of net loans, leases and factored accounts receivable, compared
to $2.2 billion, or 2.36 percent, at the end of 1993. The allowance for credit
losses was 273 percent of nonperforming loans on December 31, 1994 compared to
193 percent on December 31, 1993.
TABLE TWENTY-ONE
SELECTED QUARTERLY OPERATING RESULTS
(DOLLARS IN MILLIONS EXCEPT PER-SHARE INFORMATION)
<TABLE>
<CAPTION>
1995 QUARTERS 1994 QUARTERS
FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND FIRST
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income from earning assets................. $ 3,361 $ 3,398 $ 3,391 $ 3,070 $ 2,918 $ 2,701 $ 2,512 $ 2,398
Interest expense........................... 1,948 2,007 2,055 1,763 1,618 1,395 1,195 1,110
Net interest income (taxable-equivalent)... 1,438 1,420 1,367 1,335 1,326 1,330 1,339 1,310
Net interest income........................ 1,413 1,391 1,336 1,307 1,300 1,306 1,317 1,288
Provision for credit losses................ 142 100 70 70 70 70 70 100
Gains (losses) on sales of securities...... 21 3 4 1 (28) (4) 5 14
Noninterest income......................... 846 776 730 726 639 649 629 680
Other real estate owned expense (income). 8 7 1 2 (8) (6) (3) 5
Noninterest expense........................ 1,342 1,245 1,288 1,288 1,261 1,234 1,228 1,219
Income before income taxes................. 788 818 711 674 588 653 656 658
Income tax expense......................... 278 288 244 231 183 222 219 241
Net income................................. 510 530 467 443 405 431 437 417
Earnings per common share.................. 1.87 1.95 1.71 1.60 1.46 1.55 1.58 1.52
Dividends per common share................. .58 .50 .50 .50 .50 .46 .46 .46
Yield on average earning assets............ 7.95% 8.08% 7.98% 7.93% 7.54% 7.24% 7.00% 6.81%
Rate on average interest-
bearing liabilities...................... 5.22 5.38 5.39 5.13 4.71 4.22 3.80 3.57
Net interest spread........................ 2.73 2.70 2.59 2.80 2.83 3.02 3.20 3.24
Net interest yield......................... 3.38 3.35 3.19 3.41 3.40 3.54 3.70 3.69
Average total assets....................... $191,693 $ 190,501 $ 194,302 $ 177,515 $ 174,554 $167,283 $ 161,989 $ 161,294
Average total deposits..................... 98,602 98,671 100,569 99,285 98,574 94,656 91,358 90,260
Average total shareholders' equity......... 11,903 11,487 11,213 11,192 10,906 10,665 10,272 10,080
Return on average assets................... 1.06% 1.10% .96% 1.01% .92% 1.02% 1.08% 1.05%
Return on average common
shareholders' equity..................... 16.98 18.29 16.69 16.03 14.68 16.00 17.04 16.82
Market price per share of common stock
High for the quarter..................... 74 3/4 $ 68 7/8 $ 57 3/4 $ 51 3/4 $ 50 3/4 $ 56 $ 57 3/8 $ 50 7/8
Low for the quarter...................... 64 53 3/4 49 5/8 44 5/8 43 3/8 47 1/8 44 1/2 44 3/8
Close at the end of the quarter.......... 69 5/8 67 1/4 53 5/8 50 3/4 45 1/8 49 51 3/8 45 3/4
Risk-based capital ratios
Tier 1................................... 7.24% 7.16% 7.03% 7.25% 7.43% 7.48% 7.63% 7.50%
Total.................................... 11.58 11.23 10.90 11.06 11.47 11.57 11.57 11.66
</TABLE>
42 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
SECURITIES GAINS AND LOSSES
Losses from the sales of securities were $13 million in 1994 compared to
gains of $84 million in 1993. The losses in 1994 were attributable to securities
sold in the fourth quarter of 1994 as a part of interest rate risk repositioning
efforts.
NONINTEREST INCOME
Noninterest income increased 24 percent to $2.6 billion in 1994 from $2.1
billion in 1993. Adjusted for acquisitions, growth in noninterest income was 11
percent in 1994. Growth occurred in most major categories of noninterest income
during 1994.
OTHER REAL ESTATE OWNED EXPENSE
OREO expense declined $90 million to a net recovery of $12 million in 1994
compared to expense of $78 million in 1993, consistent with the improvement in
asset quality. Improved real estate markets resulted in lower OREO writedowns
and increased gains on sales of these properties.
NONINTEREST EXPENSE
Noninterest expense increased 15 percent in 1994 compared to 1993. Most
categories of noninterest expense were significantly influenced by acquisitions.
Adjusting for the impact of acquisitions, noninterest expense in 1994 increased
approximately two and one-half percent.
INCOME TAXES
The Corporation's income tax expense for 1994 was $865 million, for an
effective tax rate of 33.9 percent of pretax income. Tax expense for 1993 was
$690 million, for an effective tax rate of 34.7 percent.
MANAGEMENT'S DISCUSSION AND ANALYSIS 43
<PAGE>
TABLE TWENTY-TWO
QUARTERLY TAXABLE-EQUIVALENT DATA
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
FOURTH QUARTER 1995 THIRD QUARTER 1995
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 (2)....................................... $ 47,077 971 8.18% $ 46,574 $ 953 8.12%
Real estate commercial............................... 6,649 157 9.39 7,116 168 9.38
Real estate construction............................. 3,016 72 9.44 3,091 75 9.63
Total commercial................................... 56,742 1,200 8.39 56,781 1,196 8.36
Residential mortgage................................. 23,573 459 7.78 21,581 420 7.78
Credit card.......................................... 5,709 182 12.69 5,014 164 12.94
Other consumer....................................... 22,852 581 10.09 22,638 583 10.19
Total consumer..................................... 52,134 1,222 9.33 49,233 1,167 9.41
Foreign.............................................. 2,100 40 7.65 2,034 40 7.73
Lease financing...................................... 3,628 68 7.48 3,407 65 7.65
Total loans and leases, net........................ 114,604 2,530 8.77 111,455 2,468 8.79
Securities
Held for investment.................................. 12,945 186 5.72 14,101 205 5.77
Available for sale (3)............................... 10,689 174 6.45 11,891 188 6.28
Total securities................................... 23,634 360 6.05 25,992 393 6.01
Loans held for sale.................................... 644 12 7.34 424 8 7.36
Time deposits placed and other
short-term investments............................... 1,634 28 6.77 2,031 32 6.32
Federal funds sold..................................... 534 8 6.02 747 11 6.14
Securities purchased under agreements to resell........ 12,088 163 5.36 14,740 240 6.45
Trading account securities (4)......................... 16,196 285 6.99 13,063 275 8.37
Total earning assets (5)........................... 169,334 3,386 7.95 168,452 3,427 8.08
Cash and cash equivalents................................ 7,500 7,449
Factored accounts receivable............................. 1,221 1,201
Other assets, less allowance for credit losses........... 13,638 13,399
Total assets....................................... $191,693 $190,501
Interest-bearing liabilities
Savings................................................ 8,287 49 2.34 $ 8,455 51 2.37
NOW and money market deposit accounts.................. 27,233 185 2.71 27,160 183 2.67
Consumer CDs and IRAs.................................. 24,682 339 5.44 24,786 335 5.36
Negotiated CDs, public funds and other time
deposits............................................. 2,946 42 5.74 2,830 41 5.72
Foreign time deposits.................................. 13,546 211 6.18 13,921 220 6.27
Federal funds purchased................................ 5,599 81 5.78 6,109 90 5.84
Securities sold under agreements to repurchase (6)..... 30,136 440 5.79 30,179 465 6.11
Commercial paper....................................... 2,871 43 5.89 2,803 43 6.10
Other short-term borrowings............................ 4,550 78 6.72 5,833 93 6.30
Trading account liabilities (4)........................ 11,125 185 6.60 11,891 240 8.03
Long-term debt (7)..................................... 17,276 295 6.83 14,127 246 6.98
Total interest-bearing liabilities................. 148,251 1,948 5.22 148,094 2,007 5.38
Noninterest-bearing sources
Noninterest-bearing deposits........................... 21,908 21,519
Other liabilities...................................... 9,631 9,401
Shareholders' equity................................... 11,903 11,487
Total liabilities and shareholders' equity......... $191,693 $190,501
Net interest spread...................................... 2.73 2.70
Impact of noninterest-bearing sources.................... .65 .65
Net interest income/yield on earning assets.............. $1,438 3.38% $1,420 3.35%
</TABLE>
(1) NONPERFORMING LOANS ARE INCLUDED IN THE RESPECTIVE AVERAGE LOAN BALANCES.
INCOME ON SUCH NONPERFORMING LOANS IS RECOGNIZED ON A CASH BASIS.
(2) COMMERCIAL LOAN INTEREST INCOME INCLUDES NET INTEREST RATE SWAP REVENUES
RELATED TO SWAPS CONVERTING VARIABLE-RATE COMMERCIAL LOANS TO FIXED RATE.
INTEREST RATE SWAPS DECREASED INTEREST INCOME $34, $49, $65 AND $61 IN THE
FOURTH, THIRD, SECOND AND FIRST QUARTERS OF 1995, RESPECTIVELY, AND $32 IN THE
FOURTH QUARTER OF 1994.
(3) THE AVERAGE BALANCE SHEET AMOUNTS AND YIELDS ON SECURITIES AVAILABLE FOR
SALE ARE BASED ON THE AVERAGE OF HISTORICAL AMORTIZED COST BALANCES.
(4) THE FAIR VALUES OF DERIVATIVES-DEALER POSITIONS ARE REPORTED IN OTHER
ASSETS AND LIABILITIES, RESPECTIVELY.
(5) INTEREST INCOME INCLUDES TAXABLE-EQUIVALENT ADJUSTMENTS OF $25, $29, $31
AND $28 IN THE FOURTH, THIRD, SECOND AND FIRST QUARTERS OF 1995, RESPECTIVELY,
AND $26 IN THE FOURTH QUARTER OF 1994.
(6) SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE INTEREST EXPENSE INCLUDES
NET INTEREST RATE SWAP EXPENSE RELATED TO SWAPS FIXING THE COST OF CERTAIN OF
THESE LIABILITIES. SUCH INCREASES (DECREASES) IN INTEREST EXPENSE WERE $12,
$4, ($1) AND $13 IN THE FOURTH, THIRD, SECOND AND FIRST QUARTERS OF 1995,
RESPECTIVELY, AND $21 IN THE FOURTH QUARTER OF 1994.
(7) LONG-TERM DEBT INTEREST EXPENSE INCLUDES NET INTEREST RATE SWAP EXPENSE
RELATED TO SWAPS PRIMARILY CONVERTING THE COST OF CERTAIN FIXED-RATE DEBT TO
VARIABLE RATE. SUCH INCREASES IN INTEREST EXPENSE WERE $1 IN BOTH THE SECOND
AND FIRST QUARTERS OF 1995, RESPECTIVELY.
44 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
<TABLE>
<CAPTION>
SECOND QUARTER 1995 FIRST QUARTER 1995 FOURTH QUARTER 1994
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>
$ 46,525 $ 954 8.22% $ 45,238 $ 919 8.24% $ 43,587 $ 855 7.78%
7,395 171 9.29 7,630 173 9.16 7,289 162 8.86
3,216 78 9.76 3,100 77 10.07 3,038 72 9.33
57,136 1,203 8.45 55,968 1,169 8.47 53,914 1,089 8.01
19,242 378 7.84 17,780 343 7.76 16,680 321 7.68
4,775 156 13.13 4,543 139 12.36 4,357 141 12.80
21,609 544 10.11 20,624 501 9.85 20,294 486 9.50
45,626 1,078 9.47 42,947 983 9.25 41,331 948 9.11
2,048 41 7.96 1,961 36 7.50 1,764 30 6.79
3,114 58 7.43 2,951 58 7.86 2,755 53 7.71
107,924 2,380 8.84 103,827 2,246 8.76 99,764 2,120 8.44
17,457 235 5.40 17,648 238 5.45 17,966 245 5.40
10,730 170 6.33 7,728 110 5.80 8,560 117 5.44
28,187 405 5.76 25,376 348 5.56 26,526 362 5.42
153 3 8.06 61 1 9.10 109 3 7.65
2,310 42 7.29 2,297 40 7.01 2,231 32 5.75
714 12 6.24 1,105 16 6.02 1,360 18 5.39
16,820 273 6.53 13,909 214 6.23 14,799 185 4.97
15,834 307 7.77 11,574 233 8.16 10,318 224 8.64
171,942 3,422 7.98 158,149 3,098 7.93 155,107 2,944 7.54
8,024 8,321 8,674
1,181 1,048 1,235
13,155 9,997 9,538
$194,302 $177,515 $174,554
$ 8,656 51 2.40 $ 8,911 53 2.39 $ 9,143 54 2.37
27,608 185 2.68 28,577 187 2.66 29,442 190 2.53
25,075 325 5.20 24,818 291 4.76 25,136 277 4.40
3,046 42 5.51 3,151 41 5.30 2,825 35 4.80
15,107 239 6.36 13,844 211 6.18 11,576 162 5.57
5,654 87 6.17 4,438 64 5.83 4,267 56 5.17
34,445 547 6.37 26,547 411 6.28 26,591 367 5.48
2,806 44 6.30 2,734 41 6.13 2,730 37 5.42
6,546 101 6.16 5,847 82 5.74 5,354 69 5.08
13,660 249 7.31 11,427 222 7.87 11,168 227 8.08
10,209 185 7.22 8,888 160 7.22 8,147 144 7.08
152,812 2,055 5.39 139,182 1,763 5.13 136,379 1,618 4.71
21,077 19,984 20,452
9,200 7,157 6,817
11,213 11,192 10,906
$194,302 $177,515 $174,554
2.59 2.80 2.83
.60 .61 .57
$1,367 3.19% $1,335 3.41% $1,326 3.40%
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS 45
<PAGE>
REPORT OF MANAGEMENT
The management of NationsBank Corporation is responsible for the
preparation, 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. Management recognizes that even a highly
effective internal control system has inherent risks, including the possibility
of human error and the circumvention or overriding of controls, and that the
effectiveness of an internal control system can change with circumstances.
However, management believes that the internal control system provides
reasonable assurance that errors or irregularities that could be material to the
financial statements are prevented or would be detected on a timely basis and
corrected through the normal course of business. As of December 31, 1995,
management believes that the internal controls are in place and operating
effectively.
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 independent accountants were engaged to perform an independent audit of
the consolidated financial statements. In determining the nature and extent of
their auditing procedures, they have evaluated the Corporation's accounting
policies and procedures and the effectiveness of the related internal control
system. An independent audit provides an objective review of management's
responsibility to report operating results and financial condition. Their report
appears below.
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.
(Signature of Hugh L. McColl Jr.) (Signature of James H. Hance Jr.)
Hugh L. McColl Jr. James H. Hance Jr.
Chairman Vice Chairman And
Chief Financial Officer
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, 1995 and 1994, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1995, 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 Twelve to the consolidated financial statements, the
Corporation changed its method of accounting for income taxes in 1993.
(Signature of Price Waterhouse LLP)
Charlotte, North Carolina
January 12, 1996
46 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
NationsBank Corporation And Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN MILLIONS EXCEPT PER-SHARE INFORMATION)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
<S> <C> <C> <C>
INCOME FROM EARNING ASSETS
Interest and fees on loans................................ $ 9,331 $ 7,577 $ 6,198
Lease financing income.................................... 221 150 110
Interest and dividends on securities
Held for investment..................................... 851 755 1,347
Available for sale...................................... 617 623 49
Interest and fees on loans held for sale.................. 24 23 53
Interest on time deposits placed and
other short-term investments............................ 142 90 79
Federal funds sold........................................ 47 45 14
Securities purchased under agreements to resell........... 890 502 180
Trading account securities................................ 1,097 764 297
Total income from earning assets........................ 13,220 10,529 8,327
INTEREST EXPENSE
Deposits.................................................. 3,281 2,415 2,149
Borrowed funds............................................ 2,710 1,618 919
Trading account liabilities............................... 896 735 230
Long-term debt............................................ 886 550 392
Total interest expense.................................. 7,773 5,318 3,690
NET INTEREST INCOME......................................... 5,447 5,211 4,637
PROVISION FOR CREDIT LOSSES................................. 382 310 430
NET CREDIT INCOME........................................... 5,065 4,901 4,207
GAINS (LOSSES) ON SALES OF SECURITIES....................... 29 (13) 84
NONINTEREST INCOME.......................................... 3,078 2,597 2,101
OTHER REAL ESTATE OWNED EXPENSE (INCOME).................... 18 (12) 78
RESTRUCTURING EXPENSE....................................... - - 30
OTHER NONINTEREST EXPENSE................................... 5,163 4,942 4,293
INCOME BEFORE INCOME TAXES AND EFFECT OF CHANGE IN METHOD
OF ACCOUNTING FOR INCOME TAXES............................ 2,991 2,555 1,991
INCOME TAX EXPENSE.......................................... 1,041 865 690
INCOME BEFORE EFFECT OF CHANGE IN METHOD
OF ACCOUNTING FOR INCOME TAXES............................ 1,950 1,690 1,301
EFFECT OF CHANGE IN METHOD OF ACCOUNTING FOR INCOME
TAXES..................................................... - - 200
NET INCOME.................................................. 1,950 $ 1,690 $ 1,501
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS................. 1,942 $ 1,680 $ 1,491
PER-SHARE INFORMATION
Earnings per common share before effect of change in
method of
accounting for income taxes............................. 7.13 $ 6.12 $ 5.00
Effect of change in method of accounting for income
taxes................................................... - - .78
Earnings per common share................................. 7.13 $ 6.12 $ 5.78
Fully diluted earnings per common share before effect
of change
in method of accounting for income taxes................ 7.04 $ 6.06 $ 4.95
Effect of change in method of accounting for income
taxes................................................... - - .77
Fully diluted earnings per common share................... 7.04 $ 6.06 $ 5.72
Dividends per common share................................ 2.08 $ 1.88 $ 1.64
AVERAGE COMMON SHARES ISSUED (in thousands)................. 272,480 274,656 257,969
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
CONSOLIDATED FINANCIAL STATEMENTS 47
<PAGE>
NationsBank Corporation And Subsidiaries
CONSOLIDATED BALANCE SHEET
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31
1995 1994
<S> <C> <C>
ASSETS
Cash and cash equivalents................................. $ 8,448 $ 9,582
Time deposits placed and other short-term
investments............................................. 1,296 2,159
Securities
Held for investment, at cost (market value -
$4,432 and $17,101)................................... 4,432 17,800
Available for sale...................................... 19,415 8,025
Total securities...................................... 23,847 25,825
Loans held for sale....................................... 1,663 318
Federal funds sold........................................ 111 960
Securities purchased under agreements to resell........... 6,119 10,152
Trading account assets.................................... 18,867 9,941
Loans and leases, net of unearned income.................. 116,042 102,367
Factored accounts receivable.............................. 991 1,004
Loans, leases and factored accounts
receivable, net of unearned income.................. 117,033 103,371
Allowance for credit losses............................... (2,163) (2,186)
Premises, equipment and lease rights, net................. 2,508 2,439
Customers' acceptance liability........................... 918 684
Interest receivable....................................... 1,597 1,408
Mortgage servicing rights................................. 707 195
Goodwill.................................................. 1,139 1,047
Core deposit and other intangibles........................ 375 470
Other assets.............................................. 4,833 3,239
$187,298 $169,604
LIABILITIES
Deposits
Noninterest-bearing..................................... 23,414 $ 21,380
Savings................................................. 8,257 9,037
NOW and money market deposit accounts................... 28,160 29,752
Time.................................................... 27,971 27,698
Foreign time............................................ 12,889 12,603
Total deposits........................................ 100,691 100,470
Federal funds purchased................................... 5,940 3,993
Securities sold under agreements to repurchase............ 23,034 21,977
Trading account liabilities............................... 15,177 11,426
Commercial paper.......................................... 2,773 2,519
Other short-term borrowings............................... 4,143 5,640
Liability to factoring clients............................ 580 586
Acceptances outstanding................................... 918 684
Accrued expenses and other liabilities.................... 3,466 2,810
Long-term debt............................................ 17,775 8,488
Total liabilities..................................... 174,497 158,593
Contingent liabilities and other financial
commitments (Notes Eight and Ten)
SHAREHOLDERS' EQUITY
Preferred stock: authorized - 45,000,000 shares
ESOP Convertible, Series C: issued - 2,473,081 and
2,606,657 shares...................................... 105 111
Common stock: authorized - 800,000,000 shares; issued
- 274,268,773 and 276,451,552 shares.................... 4,655 4,740
Retained earnings......................................... 7,826 6,451
Other , including loan to ESOP trust...................... 215 (291)
Total shareholders' equity............................ 12,801 11,011
$187,298 $169,604
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
48 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
NationsBank Corporation And Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................................ $ 1,950 $ 1,690 $ 1,501
Reconciliation of net income to net cash (used)
provided by operating activities
Provision for credit losses............................. 382 310 430
(Gains) losses on sales of securities................... (29) 13 (84)
Depreciation and premises improvements
amortization.......................................... 280 265 242
Amortization of intangibles............................. 119 141 110
Deferred income tax expense............................. 192 372 210
Effect of change in method of accounting for
income taxes.......................................... - - (200)
Net change in trading instruments....................... (5,175) 3,796 707
Net increase in interest receivable..................... (182) (282) (93)
Net increase in interest payable........................ 208 299 93
Net (increase) decrease in loans held for sale.......... (1,345) 1,379 (406)
Net increase (decrease) in liability to factoring
clients............................................... (6) 52 52
Other operating activities.............................. (1,327) 1,083 (425)
Net cash (used) provided by operating
activities.......................................... (4,933) 9,118 2,137
INVESTING ACTIVITIES
Proceeds from maturities of securities held for
investment.............................................. 5,547 5,864 9,182
Purchases of securities held for investment............... (545) (10,293) (10,493)
Proceeds from sales and maturities of securities
available for sale...................................... 25,556 23,762 18,295
Purchases of securities available for sale................ (27,594) (16,055) (15,805)
Net (increase) decrease in federal funds sold and
securities
purchased under agreements to resell.................... 4,931 (3,805) (410)
Net (increase) decrease in time deposits placed and
other short-term investments............................ 863 (670) 816
Net originations of loans and leases...................... (11,977) (12,656) (12,473)
Purchases of loans and leases............................. (6,354) (2,936) (3,830)
Proceeds from sales and securitizations of loans.......... 4,681 4,126 8,682
Purchases and originations of mortgage servicing
rights.................................................. (598) (124) (40)
Purchases of factored accounts receivable................. (7,856) (7,612) (7,343)
Collections of factored accounts receivable............... 7,834 7,577 7,229
Net purchases of premises and equipment................... (307) (327) (65)
Proceeds from sales of other real estate owned............ 204 369 261
Sales (acquisitions) of business activities, net of
cash.................................................... (567) 3,778 (4,606)
Net cash used in investing activities................. (6,182) (9,002) (10,600)
FINANCING ACTIVITIES
Net increase (decrease) in deposits....................... (158) 4,261 (1,581)
Net increase (decrease) in federal funds purchased and
securities
sold under agreements to repurchase..................... 2,909 (2,562) 4,503
Net increase (decrease) in other short-term borrowings
and commercial paper.................................... (1,244) 491 1,958
Proceeds from issuance of long-term debt.................. 11,393 1,198 4,125
Retirement of long-term debt.............................. (2,061) (1,017) (405)
Preferred stock repurchased and redeemed.................. - (94) -
Proceeds from issuance of common stock.................... 239 267 197
Cash dividends paid....................................... (575) (527) (433)
Common stock repurchased.................................. (522) (180) -
Other financing activities................................ - (20) (23)
Net cash provided by financing activities............. 9,981 1,817 8,341
Net increase (decrease) in cash and cash equivalents........ (1,134) 1,933 (122)
Cash and cash equivalents on January 1...................... 9,582 7,649 7,771
Cash and cash equivalents on December 31.................... 8,448 $ 9,582 $ 7,649
Supplemental cash flow disclosure
Cash paid for interest.................................... 7,565 $ 5,020 $ 3,477
Cash paid for income taxes................................ 675 718 360
</TABLE>
LOANS TRANSFERRED TO OTHER REAL ESTATE OWNED AMOUNTED TO $98, $207 AND $251
IN 1995, 1994 AND 1993, RESPECTIVELY.
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
CONSOLIDATED FINANCIAL STATEMENTS 49
<PAGE>
NationsBank Corporation And Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(DOLLARS IN MILLIONS, SHARES IN THOUSANDS)
<TABLE>
<CAPTION>
TOTAL
LOAN TO SHARE-
PREFERRED COMMON STOCK RETAINED ESOP HOLDERS'
STOCK SHARES AMOUNT EARNINGS TRUST OTHER EQUITY
<S> <C> <C> <C> <C> <C> <C> <C>
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
Valuation reserve for securities available
for sale and marketable equity securities... 104 104
Other......................................... (4) 94 4 10 (8) 2
BALANCE ON DECEMBER 31, 1993.................... 208 270,905 4,594 5,247 (88) 18 9,979
Net income.................................... 1,690 1,690
Cash dividends
Common...................................... (517) (517)
Preferred................................... (10) (10)
Preferred stock repurchased and redeemed...... (93) (1) (94)
Common stock issued under dividend
reinvestment and employee plans............. 5,351 254 13 267
Common stock issued in acquisitions........... 3,510 64 41 105
Common stock repurchased...................... (3,524) (180) (180)
Net change in unrealized gains (losses)
on securities available for sale and
marketable equity securities................ (240) (240)
Other......................................... (4) 210 9 12 (6) 11
BALANCE ON DECEMBER 31, 1994.................... 111 276,452 4,740 6,451 (76) (215) 11,011
Net income.................................... 1,950 1,950
Cash dividends
Common...................................... (567) (567)
Preferred................................... (8) (8)
Common stock issued under dividend
reinvestment and employee plans............. 4,439 214 25 239
Common stock issued in acquisitions........... 2,998 217 217
Common stock repurchased...................... (9,733) (522) (522)
Net change in unrealized gains (losses)
on securities available for sale and
marketable equity securities................ 460 460
Other......................................... (6) 113 6 13 8 21
BALANCE ON DECEMBER 31, 1995.................... $105 274,269 $4,655 $7,826 $ (63) $ 278 $12,801
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
50 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<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. As discussed more fully in the second
paragraph beginning on page 15 and the first and fourth full paragraphs on page
17, through its banking subsidiaries and its various nonbanking subsidiaries,
the Corporation provides banking and banking-related services, primarily
throughout the Southeast and Mid-Atlantic states and Texas.
NOTE ONE
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of NationsBank Corporation and its
subsidiaries conform with generally accepted accounting principles and
prevailing industry practices. Certain prior year amounts have been reclassified
to conform to current year classifications. A description of the significant
accounting policies is presented below.
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. Results of operations of
companies purchased are included from the dates of acquisition.
Net assets of companies acquired in purchase transactions are recorded at
fair value at the date of acquisition. 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.
Prior year financial statements are restated to include accounts of
significant 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.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts and disclosures. Significant estimates
made by management are discussed in these footnotes as applicable.
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
Securities are classified based on management's intention on the date of
purchase. Securities which management has the intent and ability to hold to
maturity are classified as held for investment and reported at amortized cost.
All other securities are classified as available for sale and carried at fair
value with net unrealized gains and losses included in shareholders' equity on
an after-tax basis. In addition, marketable equity securities are carried at
fair value with net unrealized gains and losses included in shareholders'
equity, net of tax.
Interest and dividends on securities, including amortization of premiums and
accretion of discounts, are included in interest income. Realized gains and
losses from the sales of securities are determined using the specific
identification method.
LOANS HELD FOR SALE
Loans held for sale include residential mortgage, commercial real estate and
other loans and are carried at the lower of aggregate cost or market value.
Generally, such loans are originated with the intent of sale.
TRADING INSTRUMENTS
Instruments utilized in trading activities include both securities and
derivatives and are stated at fair value. Fair value is generally based on
quoted market prices. If quoted market prices are not available, fair values are
estimated on the basis of dealer quotes, pricing models or quoted prices for
instruments with similar characteristics. Gross unrealized gains and losses on
trading derivatives positions with the same counter-party are generally
presented on a net basis for balance sheet reporting purposes where legally
enforceable master netting agreements have been executed. Realized and
unrealized gains and losses are recognized as noninterest income.
SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL AND
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities purchased under agreements to resell and securities sold under
agreements to repurchase are treated as collateralized financing transactions
and are recorded at the amounts at which the securities were acquired or sold
plus accrued interest. It is the Corporation's policy to obtain control or take
possession of securities purchased under agreements to resell. The Corporation
monitors the market value of the underlying securities which collateralize the
related receivable on resale agreements, including accrued interest, and
requests additional collateral when deemed appropriate.
LOANS
Loans are reported at their outstanding principal balances net of any
charge-offs, unamortized deferred fees and costs on originated loans and
premiums or discounts on purchased loans.
Loan origination fees and certain direct origination costs are deferred and
recognized as adjustments to income over the lives of the related loans.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 51
<PAGE>
Discounts and premiums are amortized to income using methods that
approximate the interest method.
ALLOWANCE FOR CREDIT LOSSES
The allowance for credit losses is available to absorb losses inherent in
the credit extension process including the loan and lease portfolio and other
extensions of credit, such as off-balance sheet credit exposures. Credit
exposures deemed to be uncollectible are charged against the allowance for
credit losses. Recoveries of previously charged-off amounts are credited to the
allowance for credit losses.
Individually identified impaired loans are measured based on the present
value of payments expected to be received, using the historical effective loan
rate as the discount rate. Alternatively, measurement also may be based on
observable market prices or, for loans that are solely dependent on the
collateral for repayment, measurement may be based on the fair value of the
collateral. Loans that are to be foreclosed are measured based on the fair value
of the collateral. If the recorded investment in the impaired loan exceeds the
measure of fair value, a valuation allowance is established as a component of
the allowance for credit losses. Changes to the valuation allowance are recorded
as a component of the provision for credit losses.
The Corporation's process for determining an appropriate allowance for
credit losses includes management judgment and use of estimates. 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,
including loans that are individually identified as being impaired, are
generally classified as nonperforming loans unless well secured and in the
process of collection. Loans whose contractual terms have been restructured in a
manner which grants a concession to a borrower experiencing financial
difficulties, and loans similarly restructured prior to 1995 that are impaired,
are classified as non-performing until such time as the loan is not impaired
based on the terms of the restructured agreement and the interest rate is a
market rate as measured at the restructuring date. Generally, loans which are
past due 180 days or more as to principal or interest are classified as
nonperforming regardless of collateral or collection status. Generally, 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 credit 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 credit card loans. Income is generally recognized on past-due
consumer and credit card loans until the loan is charged off.
OTHER REAL ESTATE OWNED
Loans are classified as other real estate owned when the Corporation
forecloses on a property or when physical possession of the collateral is taken
regardless of whether foreclosure proceedings have taken place. Prior to 1995,
other real estate owned included in-substance foreclosed loans including certain
loans for which the Corporation had not taken physical possession of the
collateral. In addition, other real estate owned includes 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 property previously served as collateral, or
(2) the fair value of the property minus estimated costs to sell. Prior to
foreclosure, the recorded amount of the loan or lease is reduced, 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 AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are recognized principally using the
straight-line method over the estimated useful lives of the assets.
MORTGAGE SERVICING RIGHTS
Beginning April 1, 1995, the Corporation revised its accounting for mortgage
servicing rights (MSRs).
The total cost of mortgage loans originated or purchased after this date is
allocated between the cost of the loans and the MSRs based on the relative fair
values of the loans and the MSRs. MSRs acquired separately are capitalized at
their cost. During 1995, the Corporation capitalized $676 million of MSRs
principally due to separately acquired servicing rights, including those
acquired in connection with the acquisitions discussed in Note Two. Previously,
only MSRs purchased separately were recorded as assets. The cost of MSRs is
amortized in proportion to and over the estimated period of net servicing
revenues. During 1995, amortization was $86 million.
The fair value on December 31, 1995 of servicing for which the Corporation
has capitalized an acquisition cost was $792 million compared to a carrying
value of $707 million. Additionally, there is value associated with servicing
originated prior to April 1995 for which the carrying value is zero. Total loans
serviced approximated $81.4 billion on December 31, 1995, including loans
serviced on behalf of the Corporation's banking subsidiaries. The Corporation
evaluates MSRs strata for impairment by estimating the fair value based on
anticipated future net cash flows, taking into consideration prepayment
predictions. The predominant
52 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
characteristics used as the basis for stratifying MSRs are loan type and
period of origination. MSRs acquired prior to April 1995 are evaluated for
impairment separately. If the carrying value of the MSRs exceeds the estimated
fair value, a valuation allowance is established. Changes to the valuation
allowance are charged against or credited to mortgage servicing income and fees.
The valuation allowance on December 31, 1995 and changes in the valuation
allowance during 1995 were not significant.
INCOME TAXES
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, tax 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.
RETIREMENT BENEFITS
The Corporation has established qualified retirement plans covering 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 and its subsidiaries have established unfunded
supplemental benefit plans providing any benefits that 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
and its subsidiaries. These plans are nonqualified and, therefore, in general, a
participant's or beneficiary's claim to benefits is as a general creditor.
The Corporation and its subsidiaries have established several postretirement
medical benefit plans which are not funded.
RISK MANAGEMENT INSTRUMENTS
Risk management instruments are utilized to modify the interest rate
characteristics of related assets or liabilities or hedge against changes in
interest rates, currency fluctuations or other such exposures as part of the
Corporation's asset and liability management process.
Instruments must be designated as hedges and must be effective throughout
the hedge period.
Swaps, principally interest rate, used in the asset and liability management
process are accounted for on the accrual basis with revenues or expenses
recognized as adjustments to income or expense on the underlying linked assets
or liabilities. Risk management swaps generally are not terminated. When
terminations do occur, gains or losses are recorded as adjustments to the
carrying value of the underlying assets or liabilities and recognized as income
or expense over the remaining expected lives of such underlying assets or
liabilities. In circumstances where the underlying assets or liabilities are
sold, any remaining carrying value adjustments and the cumulative change in
value of any open positions are recognized immediately as a component of the
gain or loss on disposition of such underlying assets or liabilities.
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 related asset or
liability and recognized in income over the remaining term of the related asset
or liability.
Risk management instruments used to hedge or modify the interest rate
characteristics of debt securities classified as available for sale are carried
at fair value with unrealized gains or losses deferred as a component of
shareholders' equity.
The Corporation also purchases options in the interest rate market to
protect the value of certain assets, principally mortgage servicing rights,
against changes in prepayment rates. Option premiums are amortized over the
option life on a straight-line basis. Such contracts are designated as hedges,
and gains and losses are recorded as adjustments to the carrying value of the
underlying assets. As such, they are included in the basis of mortgage servicing
rights which are subjected to impairment valuations as described in the Mortgage
Servicing Rights accounting policy on page 52.
The Corporation also utilizes forward delivery contracts and options for the
sale of mortgage-backed securities to reduce the interest rate risk inherent in
mortgage loans held for sale and the commitments made to borrowers for mortgage
loans which have not been funded. These financial instruments are considered in
the Corporation's valuation of its mortgage loans held for sale which are
carried at the lower of cost or market.
EARNINGS PER COMMON SHARE
Earnings per common share are computed by dividing net income, reduced by
dividends on preferred stock, by the weighted average number of common shares
outstanding for each period presented.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" which is effective for awards granted in fiscal years beginning
after December 15, 1995. This standard defines a fair value-based method of
measuring employee stock options or similar equity instruments. In lieu of
recording the value of such options as compensation expense, companies may
provide pro forma disclosures quantifying the difference between compensation
cost included in net income as prescribed by current accounting standards and
the related cost measured by such fair value-based method.
The Corporation will provide such disclosure in its annual financial
statements after the effective date of the standard.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 53
<PAGE>
NOTE TWO
ACQUISITION ACTIVITY
On January 9, 1996, the Corporation completed the acquisition of Bank South
Corporation (Bank South), headquartered in Atlanta, Georgia. Each outstanding
share of Bank South common stock was converted into .44 shares of Corporation
common stock, resulting in the issuance of 26,304,617 shares of common stock by
the Corporation. Bank South's total assets, total deposits and total
shareholders' equity were $7.4 billion, $5.1 billion and $685 million,
respectively, on the date of acquisition. This acquisition was accounted for as
a pooling of interests and will not have a material impact on the results of
operations or financial condition of the Corporation. In the first quarter of
1996, the Corporation will record a one-time restructuring charge for merger
costs, consisting mainly of severance packages and facilities consolidations and
closures.
During January and February 1996, the Corporation acquired a banking
organization in Florida and one in Texas. Combined total loans and deposits of
these entities acquired were $3.1 billion and $3.9 billion, respectively. During
December 1995, the Corporation completed the acquisitions of two small banking
organizations in Florida. Combined total loans and deposits of these entities
acquired were $697 million and $954 million, respectively. These acquisitions
were accounted for as purchases and will not have a material impact on the
results of operations or financial condition of the Corporation.
On March 31, 1995, the Corporation's mortgage banking subsidiary completed
the acquisition of KeyCorp Mortgage Inc. from KeyCorp and Key Bank of New York.
The acquisition included a $25-billion residential mortgage servicing portfolio,
for which the Corporation's subsidiary paid approximately $339 million, a
mortgage servicing operation employing approximately 430 associates and other
servicing-related assets.
On March 31, 1995, the Corporation's mortgage banking subsidiary acquired
from Source One Mortgage Services Corporation a $10-billion residential mortgage
servicing portfolio.
NOTE THREE
SECURITIES
The book and market values of securities held for investment and
securities available for sale on December 31 were (dollars in millions):
<TABLE>
<CAPTION>
U.S. TREASURY
SECURITIES FOREIGN OTHER
AND AGENCY SOVEREIGN TAXABLE TOTAL TAX-EXEMPT
SECURITIES HELD FOR INVESTMENT DEBENTURES SECURITIES SECURITIES TAXABLE SECURITIES TOTAL
<S> <C> <C> <C> <C> <C> <C>
1995
Book value.................... $ 4,184 $ 22 $ 26 $ 4,232 $ 200 $ 4,432
Gross unrealized gains........ 12 - - 12 7 19
Gross unrealized losses....... (18) - - (18) (1) (19)
Market value.................. 4,178 $ 22 $ 26 $ 4,226 $ 206 $ 4,432
1994
Book value.................... $ 17,580 $ 19 $ 60 $17,659 $ 141 $17,800
Gross unrealized gains........ 1 - - 1 1 2
Gross unrealized losses....... (697) - (1) (698) (3) (701)
Market value.................. $ 16,884 $ 19 $ 59 $16,962 $ 139 $17,101
1993
Book value.................... $ 13,110 $ 18 $ 428 $13,556 $ 28 $13,584
Gross unrealized gains........ 35 - 15 50 2 52
Gross unrealized losses....... (30) - (2) (32) - (32)
Market value.................. $ 13,115 $ 18 $ 441 $13,574 $ 30 $13,604
</TABLE>
54 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
<TABLE>
<CAPTION>
U.S. TREASURY
SECURITIES FOREIGN OTHER
AND AGENCY SOVEREIGN TAXABLE TOTAL TAX-EXEMPT
SECURITIES AVAILABLE FOR SALE DEBENTURES SECURITIES SECURITIES TAXABLE SECURITIES TOTAL
<S> <C> <C> <C> <C> <C> <C>
1995
Cost......................... $ 16,938 $ 1,591 $ 426 $ 18,955 $ 42 $ 18,997
Gross unrealized gains....... 408 22 3 433 1 434
Gross unrealized losses...... (16) - - (16) - (16)
Market value................. $ 17,330 $ 1,613 $ 429 $ 19,372 $ 43 $ 19,415
1994
Cost......................... $ 7,729 $ - $ 250 $ 7,979 $ 310 $ 8,289
Gross unrealized gains....... - - - - 11 11
Gross unrealized losses...... (274) - - (274) (1) (275)
Market value................. $ 7,455 $ - $ 250 $ 7,705 $ 320 $ 8,025
1993
Cost......................... $ 14,960 $ - $ 7 $ 14,967 $ 378 $ 15,345
Gross unrealized gains....... 100 - - 100 30 130
Gross unrealized losses...... (5) - - (5) - (5)
Market value................. $ 15,055 $ - $ 7 $ 15,062 $ 408 $ 15,470
</TABLE>
The components, expected maturity distribution and yields (computed on a
taxable-equivalent basis) of the Corporation's securities portfolio on December
31, 1995 are summarized below (dollars in millions). Actual maturities may
differ from contractual maturities or maturities shown below since borrowers may
have the right to prepay obligations with or without prepayment penalties.
<TABLE>
<CAPTION>
DUE AFTER 1 DUE AFTER 5
DUE IN 1 YEAR THROUGH 5 THROUGH 10 DUE AFTER
OR LESS YEARS YEARS 10 YEARS TOTAL
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Book value of securities held
for investment
U.S. Treasury securities
and agency debentures............. $1,258 5.18% $ 2,921 5.52% $ - -% $ 5 5.70% $ 4,184 5.42%
Foreign sovereign securities........ 7 7.19 8 8.24 7 7.75 - - 22 7.75
Other taxable securities............ 14 8.00 8 8.92 1 5.71 3 6.34 26 8.08
Total taxable..................... 1,279 5.22 2,937 5.54 8 7.63 8 5.95 4,232 5.45
Tax-exempt securities............... 49 11.47 90 10.41 38 10.48 23 9.34 200 10.53
Total............................. $1,328 5.44 $ 3,027 5.66 $ 46 9.69 $ 31 9.65 $ 4,432 5.68
Market value of securities
held for investment................... $1,322 $ 3,031 $ 46 $ 33 $ 4,432
Market value of securities available
for sale
U.S. Treasury securities
and agency debentures............. $2,656 4.59% $14,523 6.31% $112 5.77% $ 39 7.43% $17,330 6.04%
Foreign sovereign securities........ - - 1,613 5.81 - - - - 1,613 5.81
Other taxable securities............ 105 5.83 59 6.80 47 6.60 218 6.02 429 6.14
Total taxable..................... 2,761 4.64 16,195 6.24 159 6.02 257 6.24 19,372 6.00
Tax-exempt securities............... 3 11.31 7 9.91 6 9.47 27 13.63 43 12.20
Total............................. $2,764 4.64 $16,202 6.24 $165 6.14 $284 6.93 $19,415 6.02
Cost of securities available for sale... $2,770 $15,781 $163 $283 $18,997
</TABLE>
The components of gains and losses on sales of available for sale securities
for the years ended December 31 were (dollars in millions):
1995 1994 1993
Gross gains on sales of securities...... 74 $ 36 $166
Gross losses on sales of securities..... (45) (49) (82)
Gains (losses) on sales of securities... 29 $ (13) $ 84
There were no sales of securities held for investment in 1995, 1994 or 1993.
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, 1995 or 1994.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 55
<PAGE>
The income tax expense attributable to securities transactions was $10
million for 1995 compared to an income tax benefit of $5 million and expense of
$29 million for 1994 and 1993, respectively.
Securities are pledged or assigned to secure borrowed funds, government and
trust deposits and for other purposes. The carrying value of pledged securities
was $22.5 billion on December 31, 1995 compared to $23.1 billion on December 31,
1994.
In December 1995, the Corporation reclassified $8.6 billion from the held
for investment category to the available for sale category. The securities were
adjusted to market value resulting in net unrealized gains of approximately $220
million which were included in shareholders' equity at $143 million net of tax.
On December 31, 1995, the valuation reserve for securities available for
sale and marketable equity securities, including the impact of the December 1995
reclassification, increased shareholders' equity by $323 million, reflecting
$418 million of pretax appreciation on securities available for sale and $97
million of pretax appreciation on marketable equity securities.
NOTE FOUR
TRADING ACCOUNT ASSETS AND LIABILITIES
The fair values on December 31 and the average fair values for the years
ended December 31 of the components of trading account assets and liabilities
were (dollars in millions):
<TABLE>
<CAPTION>
AVERAGE BALANCES
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Securities owned
U.S. Treasury securities.................................. $10,364 $ 5,958 $10,254 $ 7,713
Securities of other U .S. Government agencies and
corporations............................................ 1,508 1,185 1,541 1,322
Certificates of deposit, bankers' acceptances and
commercial paper........................................ 555 371 524 409
Corporate debentures...................................... 1,443 581 1,031 722
Foreign sovereign instruments............................. 576 10 200 -
Other securities.......................................... 402 259 627 285
Total securities owned.................................. 14,848 8,364 14,177 10,451
Derivatives-dealer positions................................ 4,019 1,577 3,230 1,158
Total trading account assets............................ $18,867 $ 9,941 $17,407 $11,609
Short sales
U.S. Treasury securities.................................. $11,066 $ 9,352 $11,416 $ 9,840
Securities of other U .S. Government agencies and
corporations............................................ 16 182 12 550
Corporate debentures...................................... 683 278 591 134
Other securities.......................................... 17 - 6 2
Total short sales....................................... 11,782 9,812 12,025 10,526
Derivatives-dealer positions................................ 3,395 1,614 2,970 1,063
Total trading account liabilities....................... $15,177 $11,426 $14,995 $11,589
</TABLE>
A discussion of the Corporation's trading activities and an analysis of the
revenues associated with the Corporation's trading activities is presented in
the noninterest income section beginning on page 19. The Corporation's
derivatives-dealer positions are presented in the discussion beginning on page
35 and TABLE SIXTEEN.
The net change in the unrealized gain or loss on trading securities held on
December 31, 1995 and 1994, included in noninterest income for those years, was
a gain of $44 million for 1995 and a loss of $3 million for 1994.
Derivatives-dealer positions presented in the table above represent the fair
values of interest rate, foreign exchange, equity and commodity-related products
including financial futures, forward settlement and option contracts and swap
agreements associated with the Corporation's derivatives trading activities.
A swap agreement is a contract between two parties to exchange cash flows
based on specified underlying notional amounts and indices. Financial futures or
forward settlement contracts are agreements 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, index or commodity at a predetermined rate or price at a time or
during a period in the future.
These agreements can be transacted on organized exchanges or directly
between parties.
56 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
NOTE FIVE
LOANS, LEASES AND FACTORED ACCOUNTS RECEIVABLE
Loans, leases and factored accounts receivable on December 31 were (dollars
in millions):
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
LOANS
Commercial................................................ 48,186 $ 44,804
Real estate commercial.................................... 6,183 7,350
Real estate construction.................................. 2,976 2,981
Total commercial........................................ 57,345 55,135
Residential mortgage...................................... 24,043 17,311
Credit card............................................... 6,532 4,756
Other consumer............................................ 22,751 20,853
Total consumer.......................................... 53,326 42,920
Foreign................................................... 2,251 1,984
Factored accounts receivable.............................. 991 1,004
Total loans and factored accounts receivable............ 113,913 101,043
Less unearned income.................................... (678) (552)
Loans and factored accounts receivable, net of
unearned income....................................... 113,235 100,491
LEASES
Lease receivables......................................... 3,915 3,056
Estimated residual value.................................. 1,192 934
Less unearned income...................................... (1,309) (1,110)
Leases, net of unearned income.......................... 3,798 2,880
Loans, leases and factored accounts receivable,
net of unearned income................................ $117,033 $103,371
</TABLE>
Transactions in the allowance for credit losses were (dollars in millions):
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Balance on January 1........................................ $2,186 $2,169 $1,454
Loans, leases and factored accounts receivable charged
off....................................................... (636) (533) (609)
Recoveries of loans, leases and factored accounts
receivable previously charged off......................... 215 217 197
Net charge-offs........................................... (421) (316) (412)
Provision for credit losses................................. 382 310 430
Allowance applicable to loans of purchased companies and
other..................................................... 16 23 697
Balance on December 31...................................... $2,163 $2,186 $2,169
</TABLE>
Loans to directors and executive officers of the Corporation were $35
million and $100 million on January 1 and December 31, 1995, respectively. An
analysis of activity for 1995 with respect to such aggregate loans is as follows
(dollars in millions):
BALANCE NEW BALANCE
JANUARY 1 LOANS PAYMENTS DECEMBER 31
$35 $ 306 $ 241 $ 100
Loans to immediate family members of directors and executive officers of the
Corporation totaled $17 million and $7 million on January 1 and December 31,
1995, respectively.
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 $575 million on December 31, 1995.
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 January 1, 1995, the recorded investment in certain loans that were
considered to be impaired totaled $712 million (including $80 million of in-
substance foreclosed loans previously reported as other real estate owned). On
December 31, 1995, the recorded investment in certain loans that were
considered to be impaired was $483 million, all of which was classified as
nonperforming. Impaired loans on December 31, 1995 were comprised of commercial
loans of $271 million, real estate commercial loans of $196 million and real
estate construction loans of $16 million. Of these impaired loans, $316 million
had a related valuation allowance of $40 million and $167 million did not have
a valuation allowance primarily due to application of interest payments against
book balances or write-downs previously taken on these loans. The average
recorded investment in certain impaired loans for the year ended December 31,
1995 was approximately $598 million. For the year ended December 31, 1995,
interest income recognized on impaired loans totaled $26 million, all of which
was recognized on a cash basis.
On December 31, 1995, 1994 and 1993, nonperforming loans, including certain
loans which are considered impaired, totaled $706 million, $801 million and $1.1
billion, respectively.
The net amount of interest recorded during each year on loans that were
classified as nonperforming or restructured on December 31, 1995, 1994 and 1993
was $27 million, $31 million and $34 million, respectively. If these loans had
been accruing interest at their originally contracted rates, related income
would have been $102 million in 1995,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 57
<PAGE>
$96 million in 1994 and $80 million in 1993.
Other real estate owned amounted to $147 million, $337 million and $661
million on December 31, 1995, 1994 and 1993, respectively. On January 1, 1995,
$80 million of in-substance foreclosed loans previously reported as other real
estate owned was reclassified to nonperforming loans. The cost of carrying other
real estate owned amounted to $13 million, $24 million and $18 million in 1995,
1994 and 1993, respectively.
NOTE SIX
SHORT-TERM BORROWINGS AND LONG-TERM DEBT
The Corporation's banking subsidiaries, NationsBank, N.A., NationsBank, N.A.
(South) and NationsBank of Texas, N.A., jointly maintain a program to offer from
time to time up to $9.0 billion in bank notes with fixed or floating rates and
maturities from 30 days to 15 years from date of issue. On December 31, 1995,
short-term and long-term bank notes outstanding were $3.1 billion and $1.9
billion, respectively. On December 31, 1994, short-term bank notes outstanding
were $4.5 billion.
On December 31, 1995 and 1994, the Corporation had unused commercial paper
back-up lines of credit totaling $1.5 billion which expire in 1997. These lines
were supported by fees paid directly by the Corporation to unaffiliated banks.
The maturities of long-term debt on December 31 were (dollars in millions):
<TABLE>
<CAPTION>
1995
VARIOUS VARIOUS
FIXED-RATE FLOATING-RATE 1994
DEBT DEBT AMOUNT AMOUNT
OBLIGATIONS OBLIGATIONS OUTSTANDING OUTSTANDING
<S> <C> <C> <C> <C>
PARENT COMPANY
Senior debt
Due in 1995............................................. $ - $ - $ - $ 969
Due in 1996............................................. 721 473 1,194 1,194
Due in 1997............................................. 338 405 743 183
Due in 1998............................................. 889 525 1,414 889
Due in 1999............................................. 117 800 917 558
Due in 2000............................................. 949 564 1,513 448
Thereafter.............................................. 150 821 971 149
3,164 3,588 6,752 4,390
Subordinated debt
Due in 1995............................................. - - - 3
Due in 1996............................................. - - - 3
Due in 1997............................................. 75 - 75 76
Due in 1999............................................. 399 - 399 399
Thereafter.............................................. 3,708 265 3,973 2,727
4,182 265 4,447 3,208
Total parent company long-term debt..................... 7,346 3,853 11,199 7,598
BANKING AND NONBANKING SUBSIDIARIES
Senior debt
Due in 1995............................................. - - - 284
Due in 1996............................................. 144 100 244 198
Due in 1997............................................. 11 897 908 49
Due in 1998............................................. 3 1,806 1,809 3
Due in 1999............................................. 9 75 84 13
Due in 2000............................................. 54 2,947 3,001 3
Thereafter.............................................. 11 189 200 7
232 6,014 6,246 557
Subordinated debt
Due in 2004 and thereafter.............................. 300 8 308 309
300 8 308 309
Total banking and nonbanking subsidiaries long-
term debt............................................. 532 6,022 6,554 866
$ 7,878 $ 9,875 17,753 8,464
Obligations under capital leases........................ 22 24
Total long-term debt.................................... $ 17,775 $ 8,488
</TABLE>
As part of its interest rate risk management activities, the Corporation
enters into interest rate swap agreements for certain long-term debt issuances.
Through the use of interest rate swaps, $1.7 billion of fixed-rate debt with
rates ranging from 5.72 percent to 8.57 percent have been effectively converted
to floating rates primarily at spreads over LIBOR. In addition, $550 million of
notes with floating rates have been converted to fixed rates ranging from 7.32
percent to 8.12 percent.
On December 31, 1995, including the effects of interest rate swap agreements
entered into for certain long-term debt
58 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
issuances, the weighted average effective interest rates for total long-term
debt, total fixed-rate debt and total floating-rate debt (based on the rates in
effect on December 31, 1995) were 6.52 percent, 7.44 percent and 5.79 percent,
respectively.
Two series of mortgage-backed bonds were issued during 1995 through Main
Place Funding Corporation (MPFC), a wholly-owned, limited-purpose subsidiary of
the Corporation's Texas banking subsidiary. Outstandings under these issuances
were $3.0 billion on December 31, 1995. Both series are collateralized primarily
by pools of 1-to-4 family mortgage loans which had a book value of $4.5 billion
on December 31, 1995. As of February 22, 1996, $1.0 billion was available for
issuance under a shelf registration statement filed by MPFC.
During 1995, the Corporation's Delaware credit card bank subsidiary issued
asset-backed certificates through the NationsBank credit card master trust.
Asset-backed certificates outstanding totaled $1.1 billion on December 31, 1995.
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 $2.3 billion was available for payment of dividends on
December 31, 1995.
Certain debt obligations may be redeemed prior to maturity at the option of
the Corporation. On January 24, 1996, the Corporation announced its intention to
redeem $300 million of 10 1/2-percent subordinated notes originally due 1999
effective March 15, 1996. Of total long-term debt on December 31, 1995, $18
million of debt scheduled to mature in 2002 has been redeemable since 1982, $500
million scheduled to mature in 2000 is redeemable beginning in 1998, $25 million
scheduled to mature in 2010 is redeemable beginning in 1999 and an aggregate of
$130 million scheduled to mature in either 2005 or 2010 is redeemable beginning
in 2000.
As of February 22, 1996, $2.6 billion of corporate debt securities and
preferred and common stock was available for issuance under a shelf registration
statement.
Additionally, in late 1995, the Corporation announced plans to offer up to
$1.5 billion of senior or subordinated notes exclusively to non-United States
residents under a Euro medium-term note program. The notes may bear interest at
fixed or floating rates. As of February 22, 1996, the Corporation had issued
$229 million under this program.
NOTE SEVEN
SHAREHOLDERS' EQUITY
The Corporation has authorized 45 million shares of preferred stock. As of
December 31, 1995, the Corporation had issued 2.5 million shares of ESOP
Convertible Preferred Stock, Series C (ESOP Preferred Stock). The ESOP Preferred
Stock has a stated and liquidation value of $42.50 per share, provides for an
annual cumulative dividend of $3.30 per share and is convertible into .84 shares
of the Corporation's common stock at an initial conversion price of $42.50 per
.84 shares of the Corporation's common stock. ESOP Preferred Stock in the amount
of $6.0 million in 1995 and $4.0 million in both 1994 and 1993 was converted
into the Corporation's common stock.
On September 28, 1994, the Board authorized the Corporation to purchase up
to 20 million shares of its common stock from time to time in open market or
privately negotiated transactions. Additionally, in July 1994 and July
1995, the Board authorized annual repurchase amounts of up to 10 million and
5 million shares, respectively, of its common stock for its dividend
reinvestment and stock purchase plan and its various other employee benefit
plans. During 1995 and 1994, 9.7 million shares and 3.5 million shares,
respectively, were repurchased under these various stock repurchase programs.
Other shareholders' equity on December 31 was comprised of the following
(dollars in millions):
1995 1994
Restricted stock award plan
deferred compensation....................... $ (37) $ (62)
Net unrealized gains (losses) on available for
sale securities and marketable equity
securities, net of tax...................... 323 (136)
Foreign exchange adjustment and other......... (8) (17)
$ 278 $ (215)
NOTE EIGHT
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 31.
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. The commitments shown below have been reduced by amounts
collateralized by cash and participated to other financial institutions. The
following summarizes commitments outstanding on December 31 (dollars in
millions):
1995 1994
Commitments to extend credit
Credit card commitments...... $21,033 $15,921
Other loan commitments....... 66,638 58,813
Standby letters of credit and
financial guarantees......... 8,356 6,884
Commercial letters of credit... 986 1,282
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 59
<PAGE>
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 normal
credit approval and monitoring processes and protecting against deterioration in
the borrowers' abilities to pay through adverse-change clauses which require
borrowers to maintain various credit and liquidity measures. Credit card lines
are unsecured commitments which are reviewed at least annually by management.
Upon evaluation of the customers' creditworthiness, the Corporation has the
right to change or terminate the terms of the credit card lines. Of the December
31, 1995 total other loan commitments, $28.7 billion is scheduled to expire in
less than one year, $29.1 billion in one to five years and $8.8 billion after
five years.
Standby letters of credit (SBLC) and financial guarantees are issued to
support the debt obligations of customers. If a SBLC or financial guarantee is
drawn upon, the Corporation looks to its customer for payment. SBLCs and
financial guarantees are subject to the same approval and collateral policies as
other extensions of credit. Of the December 31, 1995 total SBLCs and financial
guarantees, $5.0 billion is scheduled to expire in less than one year, $3.1
billion in one to five years and $296 million after five years.
Commercial letters of credit, issued primarily to facilitate customer trade
finance activities, are collateralized by the underlying goods being shipped by
the customer and are generally short term.
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.
DERIVATIVES
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 TABLES ELEVEN and TWELVE on
pages 29 and 30 and the discussion under Off-Balance Sheet beginning on page 29
regarding the Corporation's use of derivatives for risk management purposes. See
TABLE SIXTEEN on page 35, the discussion under Derivatives Activities beginning
on page 35 and Note Four regarding the Corporation's derivative trading
activities.
SECURITIES LENDING
The Corporation executes securities lending transactions on behalf of
certain customers. In certain instances, the Corporation indemnifies the
customer against certain losses. The Corporation obtains collateral with a
market value in excess of the market value of the securities loaned. On December
31, 1995 and 1994, indemnified securities lending transactions totaled $2.6
billion and $5.7 billion, respectively. Collateral with a market value of $2.7
billion and $5.9 billion on December 31, 1995 and 1994, respectively, was
obtained by the Corporation in support of these transactions.
WHEN ISSUED SECURITIES
When issued securities are commitments entered into to purchase or sell
securities in the time period between the announcement of a securities offering
and the issuance of those securities. On December 31, 1995, the Corporation had
commitments to purchase and sell when issued securities of $4.4 billion and $4.3
billion, respectively. This compares to commitments to purchase and sell when
issued securities of $2.2 billion and $2.5 billion, respectively, on December
31, 1994.
LITIGATION
In the ordinary course of business, the Corporation and its subsidiaries are
routinely defendants in or parties to a number of pending and threatened legal
actions and proceedings, including several actions brought on behalf of various
classes of claimants. In certain of these actions and proceedings, substantial
money damages are asserted against the Corporation and its subsidiaries and
certain of these actions and proceedings are based on alleged violations of
consumer protection, securities, banking and other laws. Management believes,
based upon the advice of counsel, that the actions and proceedings and losses,
if any, resulting from the final outcome thereof, will not be material in the
aggregate to the Corporation's financial position or results of operations.
NOTE NINE
REGULATORY REQUIREMENTS AND RESTRICTIONS
The Corporation's banking subsidiaries are required to maintain average
reserve balances with the Federal Reserve Bank based on a percentage of certain
deposits. The average of those reserve balances amounted to $1.1 billion and
$1.4 billion for 1995 and 1994, 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 1996,
without prior regulatory approval, of $905 million plus an additional amount
equal to their net profits, as defined by statute, for 1996 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. On December 31, 1995, the total amount which could be loaned to the
Corporation by its banking subsidiaries was approximately $1.4 billion. On
December 31, 1995, no loans to the Corporation from its banking subsidiaries
were outstanding.
On December 31, 1995, 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.
60 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
NOTE TEN
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.
The following table sets forth the plans' estimated status on December 31
(dollars in millions):
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Actuarial present value of benefit obligation
Accumulated benefit obligation, including vested
benefits of $864 and $711............................... $ (884) $ (734)
Projected benefit obligation for service rendered to
date.................................................... $ (1,047) $ (869)
Plan assets at fair value, primarily listed stocks, fixed-
income securities and real estate......................... 1,091 964
Plan assets in excess of projected benefit obligation....... 44 95
Unrecognized net loss....................................... 398 135
Unrecognized net transition asset being amortized........... (13) (15)
Unrecognized prior service benefit being amortized.......... (29) (34)
Deferred investment (gain) loss............................. (97) 126
Prepaid pension cost...................................... $ 303 $ 307
</TABLE>
Net periodic pension expense (income) for the years ended December 31
included the following components (dollars in millions):
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service cost-benefits earned during the period... $ 35 $ 39 $ 31
Interest cost on projected benefit obligation.... 74 72 58
Actual return on plan assets..................... (199) 22 (101)
Net amortization and deferral.................... 95 (121) 3
Net periodic pension expense (income).......... $ 5 $ 12 $ (9)
</TABLE>
For December 31, 1995, 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 7.50 percent and 4.0 percent,
respectively. The related expected long-term rate of return on plan assets was
10.0 percent. For December 31, 1994, the weighted average discount rate, rate of
increase in future compensation and expected long-term rate of return on plan
assets were 8.50 percent, 4.25 percent and 10.0 percent, respectively.
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.
All of the Corporation's accrued postemployment benefit liability was
unfunded at year-end 1995. 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 benefit
obligation on December 31 is as follows (dollars in millions):
1995 1994
Accumulated postretirement benefit obligation
Retirees................................... $ (136) $ (128)
Fully eligible active participants......... (2) (3)
Other active plan participants............. (49) (47)
(187) (178)
Unamortized transition obligation............ 118 125
Unrecognized net loss (gain)................. 3 (9)
Accrued postemployment benefit liability... $ (66) $ (62)
Net periodic postretirement benefit cost for the years ended December 31
included the following (dollars in millions):
1995 1994 1993
Service cost................. $ 2 $ 3 $ 2
Interest cost on accumulated
postretirement
benefit obligation......... 15 14 15
Amortization of transition
obligation over 20 years... 7 7 7
Amortization of gains........ (5) (6) -
Net periodic postretirement
benefit cost............. $ 19 $ 18 $ 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 61
<PAGE>
The health care cost trend rates used in determining the accumulated
postretirement benefit obligation were 6.0 percent for pre-65 benefits and 4.75
percent for post-65 benefits. A one-percent change in the average health care
cost trend rates would increase the accumulated postretirement benefit
obligation by 5.50 percent and the aggregate of the service cost and interest
cost components of net periodic postretirement benefit cost by 4.56 percent. The
weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.50 percent in 1995 and 8.50 percent in
1994.
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 1995, 1994 and 1993, the Corporation contributed to the plans
approximately $43 million, $41 million and $35 million, respectively, in cash
which was utilized primarily to purchase the Corporation's common 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 $8 million for 1995 and $9 million for both 1994
and 1993. Interest incurred to service the ESOP debt amounted to $4 million for
1995 and $5 million for both 1994 and 1993.
STOCK OPTION AND AWARD PLANS
Under the 1992 Associates Stock Option Plan, on July 1, 1992, 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. 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 Restricted Stock Award Plan, key employees were
awarded shares of the Corporation's common stock subject to certain vesting
requirements. Generally, vesting occurred in five equal annual installments with
related deferred compensation expensed over the same period.
The Key Employee Stock Plan, approved by shareholders in 1995, replaced the
Restricted Stock Award Plan and provides for different types of awards including
stock options, restricted stock and performance shares. Under this plan, certain
key employees received stock options effective July 1, 1995, entitling them to
purchase shares of the Corporation's common stock at the previous day's closing
market price of $53 5/8 per share. Options to purchase 3.96 million shares of
common stock were granted. Twenty-five percent of the options immediately vested
and became exercisable. The remaining 75 percent vest and become exercisable in
three equal installments on July 1, 1996, 1997 and 1998. Any unexercised options
will expire on July 1, 2005.
Under the Key Employee Stock Plan, on January 2, 1996, ten-year options to
purchase 1.8 million shares of common stock at $69 3/8 per share were granted to
certain employees. Additionally, on February 1, 1996, ten-year options to
purchase .9 million shares of common stock at $68 3/4 per share were granted to
certain employees. For both grants, twenty-five percent of the options
immediately vested and became exercisable. The remainder vest and become
exercisable in three equal annual installments.
The following table summarizes activity under the option and award plans for
1995 and the status on December 31, 1995:
<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, 1994....................... 6,370,751 $ 40.68 6,358,151 $40.69
Shares due to acquisition.......................... 132,223 39.10 83,552 34.41
Became exercisable................................. - - 1,015,462 53.34
Additional stock grants............................ 3,960,000 53.63 - -
Less
Exercised........................................ (3,845,593) 42.78 (3,845,593) 42.78
Expired or canceled.............................. (223,000) 50.86 (208,600) 50.97
Balance on December 31, 1995....................... 6,394,381 47.04 3,402,972 41.32
AVERAGE
GRANT
Restricted Stock Award Plan SHARES PRICE
Outstanding unvested grants on December 31, 1994... 1,816,852 $ 45.86
Additional stock grants............................ 62,500 49.00
Less
Shares vested.................................... (568,366) 44.77
Shares canceled.................................. (50,540) 45.49
Outstanding unvested grants on December 31, 1995... 1,260,446 46.46
</TABLE>
62 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
NOTE ELEVEN
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>
1995 1994 1993
<S> <C> <C> <C>
NONINTEREST INCOME
Service charges on deposit accounts........... $ 884 $ 797 $ 681
Mortgage servicing and related fees........... 138 86 77
Fees on factored accounts receivable.......... 68 74 74
Investment banking income..................... 192 138 94
Other nondeposit-related service fees......... 156 138 118
Asset management and fiduciary service fees... 444 435 371
Credit card income............................ 277 280 198
Trading account profits and fees.............. 306 273 152
Other income.................................. 613 376 336
$3,078 $2,597 $2,101
NONINTEREST EXPENSE
Personnel..................................... $2,491 $2,311 $1,903
Occupancy, net................................ 495 487 434
Equipment..................................... 397 364 317
Marketing..................................... 217 161 138
Professional fees............................. 182 171 168
Amortization of intangibles................... 119 141 110
Credit card................................... 55 71 86
Deposit insurance............................. 118 211 205
Data processing............................... 229 235 190
Telecommunications............................ 150 137 122
Postage and courier........................... 135 126 120
Other general operating....................... 411 388 370
General administrative and miscellaneous...... 164 139 130
$5,163 $4,942 $4,293
</TABLE>
NOTE TWELVE
INCOME TAXES
The components of income tax expense for the years ended December 31 were
(dollars in millions):
1995 1994 1993
Current expense
Federal............... $ 776 $451 $419
State................. 58 37 54
Foreign............... 15 5 7
849 493 480
Deferred expense
Federal............... 179 350 218
State................. 13 21 (11)
Foreign............... - 1 3
192 372 210
Total tax expense... $1,041 $865 $690
The Corporation's current income tax expense of $849 million, $493 million
and $480 million for 1995, 1994 and 1993, respectively, includes amounts
computed under the regular and alternative minimum tax (AMT) systems and
approxi-mates the amounts payable for those years.
Deferred expense represents the change in the deferred tax asset or
liability and is discussed further below.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 63
<PAGE>
A reconciliation of the expected federal tax expense, based on the federal
statutory rate of 35 percent for 1995, 1994 and 1993, to the actual
consolidated tax expense for the years ended December 31 is as follows
(dollars in millions):
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Expected federal tax expense............................. $1,047 $894 $697
Increase (decrease) in taxes resulting from
Tax-exempt income...................................... (32) (35) (33)
State tax expense, net of federal benefit.............. 52 46 30
Tax rate change on beginning net deferred tax
assets............................................... - - (6)
Other.................................................. (26) (40) 2
Total tax expense.................................... $1,041 $865 $690
</TABLE>
Significant components of the Corporation's deferred tax (liabilities) and
assets on December 31 are as follows (dollars in millions):
1995 1994
Deferred tax liabilities
Equipment lease financing.............. $ (789) $ (599)
Securities available for sale.......... (192) -
Depreciation........................... (108) (115)
Intangibles............................ (48) (62)
Employee retirement benefits........... (21) (36)
Other, net............................. (207) (202)
Gross deferred tax liabilities....... (1,365) (1,014)
Deferred tax assets
Allowance for credit losses............ 751 755
Loan fees and expenses................. 35 32
Other real estate owned................ 20 37
Net operating loss carryforwards....... 12 16
Securities available for sale.......... - 80
AMT credit carryforwards............... - 10
Other, net............................. 155 166
Gross deferred tax assets............ 973 1,096
Valuation allowance.................... (30) (47)
Deferred tax assets, net of valuation
allowance............................ 943 1,049
Net deferred tax (liabilities) assets.... $ (422) $ 35
The Corporation's deferred tax assets include a valuation allowance of $30
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 a decrease of $17 million, due to the realization of certain
state deferred tax assets.
During the first quarter of 1993, the Corporation adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
109), which superseded Statement of Financial Accounting Standards No. 96,
"Accounting for Income Taxes." SFAS 109 allows for the recognition of deferred
tax assets with respect to previously unrecognized operating loss and AMT credit
carryforwards. The cumulative benefit of adopting the accounting principle was
$200 million.
NOTE THIRTEEN
FAIR VALUES OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments" (SFAS 107), requires the disclosure of the
estimated fair values of financial instruments. The fair value of a financial
instrument is the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation sale.
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. The estimation methods for individual
classifications of financial instruments are described more fully below.
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 the value of individual
financial instruments and should not be considered an indication of the fair
value of the combined Corporation.
The provisions of SFAS 107 do not require the disclosure of nonfinancial
instruments, including intangible assets. The value of the Corporation's
intangibles such as franchise, credit card and trust relationships and mortgage
servicing rights is significant.
SHORT-TERM FINANCIAL INSTRUMENTS
The carrying values of short-term financial instruments, including cash and
cash equivalents, federal funds sold and purchased, resale and repurchase
agreements and commercial paper and short-term borrowings, approximate the fair
values
64 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
of these instruments. 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 available for sale, loans held
for sale, trading account instruments and long-term debt which are traded
actively in the secondary market have been valued using quoted market prices.
LOANS
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
December 31 origination rate for similar loans. Contractual cash flows for
consumer loans were adjusted for prepayments using published industry data. For
variable-rate loans, the carrying amount 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. Where
quoted market prices were available, primarily for certain residential mortgage
loans, such market prices were utilized as estimates for fair value.
DEPOSITS
The fair value for fixed-rate deposits with stated maturities was calculated
by discounting the difference between the cash flows on a contractual basis and
current market rates for instruments with similar maturities. For variable-rate
deposits, the carrying amount was considered to approximate fair value.
The book and fair values of financial instruments on December 31 were
(dollars in millions):
<TABLE>
<CAPTION>
1995 1994
BOOK FAIR BOOK FAIR
VALUE VALUE VALUE VALUE
<S> <C> <C> <C> <C>
FINANCIAL ASSETS
Cash and cash equivalents............................... $ 8,448 $ 8,448 $ 9,582 $ 9,582
Time deposits placed and other short-term
investments........................................... 1,296 1,296 2,159 2,159
Securities held for investment.......................... 4,432 4,432 17,800 17,101
Securities available for sale........................... 19,415 19,415 8,025 8,025
Loans held for sale..................................... 1,663 1,663 318 318
Federal funds sold and securities purchased under
agreements to resell.................................. 6,230 6,230 11,112 11,112
Trading account assets.................................. 18,867 18,867 9,941 9,941
Loans, net of unearned income
Commercial and foreign................................ 50,240 50,495 46,649 46,375
Real estate commercial and construction............... 9,159 9,182 10,330 10,227
Residential mortgage.................................. 24,026 24,198 17,244 16,251
Credit card........................................... 6,532 6,581 4,753 4,782
Other consumer........................................ 22,287 22,329 20,511 20,328
Allowance for credit losses............................. (2,163) - (2,186) -
FINANCIAL LIABILITIES
Deposits
Noninterest-bearing................................... 23,414 23,414 21,380 21,380
Savings............................................... 8,257 8,257 9,037 9,037
NOW and money market deposit accounts................. 28,160 28,160 29,752 29,752
Consumer CDs.......................................... 19,545 19,593 19,369 19,001
Other time deposits................................... 21,315 21,419 20,932 20,721
Federal funds purchased and securities sold under
agreements to repurchase.............................. 28,974 28,974 25,970 25,970
Trading account liabilities............................. 15,177 15,177 11,426 11,426
Commercial paper........................................ 2,773 2,773 2,519 2,519
Other short-term borrowings............................. 4,143 4,143 5,640 5,640
Long-term debt.......................................... 17,753 18,077 8,464 8,199
</TABLE>
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
The fair value of the Corporation's asset and liability management and other
interest rate swaps is presented in TABLE TWELVE on page 30.
The fair value of liabilities on binding commitments to lend is based on the
net present value of cash flow streams using fee rates currently charged for
similar agreements versus original contractual fee rates, taking into account
the creditworthiness of the borrowers. The fair value was a liability of $111
million and $92 million on December 31, 1995 and 1994, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 65
<PAGE>
NOTE FOURTEEN
PARENT COMPANY FINANCIAL INFORMATION
The following tables present consolidated parent company financial
information:
NationsBank Corporation (Parent Company)
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
<S> <C> <C> <C>
Income
Dividends from consolidated
Subsidiary banks and bank holding companies............. $ 999 $1,864 $ 894
Other subsidiaries...................................... 7 5 -
Interest from consolidated subsidiaries................... 635 355 172
Other income.............................................. 547 501 533
2,188 2,725 1,599
Expenses
Interest on borrowed funds................................ 835 582 389
Noninterest expense....................................... 462 442 453
1,297 1,024 842
Earnings
Income before equity in undistributed earnings of
consolidated subsidiaries and taxes..................... 891 1,701 757
Equity in undistributed earnings of consolidated
Subsidiary banks and bank holding companies............. 830 (247) 742
Other subsidiaries...................................... 208 140 73
1,038 (107) 815
Income before income taxes and effect of change in method
of accounting for income taxes............................ 1,929 1,594 1,572
Income tax benefit.......................................... (21) (96) (56)
Income before effect of change in method of accounting for
income taxes.............................................. 1,950 1,690 1,628
Effect of change in method of accounting for income
taxes..................................................... - - (127)
Net income.................................................. $1,950 $1,690 $1,501
Net income available to common shareholders................. $1,942 $1,680 $1,491
</TABLE>
NationsBank Corporation (Parent Company)
CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31
1995 1994
<S> <C> <C>
Assets
Cash held at subsidiary banks................... $ 8 $ 4
Temporary investments........................... 396 583
Receivables from consolidated
Subsidiary banks and bank holding companies... 3,116 1,187
Other subsidiaries............................ 8,633 7,407
Investment in consolidated
Subsidiary banks and bank holding companies... 12,255 10,739
Other subsidiaries............................ 1,728 1,173
Other assets.................................... 1,095 616
$27,231 $21,709
Liabilities and Shareholders' Equity
Commercial paper and other notes payable........ $ 2,494 $ 2,426
Accrued expenses and other liabilities.......... 737 674
Long-term debt.................................. 11,199 7,598
Shareholders' equity............................ 12,801 11,011
$27,231 $21,709
</TABLE>
66 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
NationsBank Corporation (Parent Company)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
<S> <C> <C> <C>
Operating Activities
Net income................................................ $ 1,950 $ 1,690 $ 1,501
Reconciliation of net income to net cash provided by
operating activities
Equity in undistributed earnings of consolidated
subsidiaries.......................................... (1,038) 107 (815)
Effect of change in method of accounting for
income taxes.......................................... - - 127
Other operating activities.............................. (380) 142 113
Net cash provided by operating activities............. 532 1,939 926
Investing Activities
Net (increase) decrease in temporary investments.......... 187 (271) (134)
Net increase in receivables from consolidated
subsidiaries............................................ (3,155) (1,416) (231)
Additional capital investment in subsidiaries............. (384) (764) (1,428)
(Acquisitions) sales of subsidiaries, net of cash......... - 101 (4,220)
Net cash used in investing activities................... (3,352) (2,350) (6,013)
Financing Activities
Net increase in commercial paper and other notes
payable................................................. 68 144 1,332
Proceeds from issuance of long-term debt.................. 4,606 1,159 4,125
Retirement of long-term debt.............................. (1,005) (438) (174)
Preferred stock repurchased and redeemed.................. - (94) -
Proceeds from issuance of common stock.................... 239 267 197
Common stock repurchased.................................. (522) (180) -
Cash dividends paid....................................... (575) (527) (433)
Other financing activities................................ 13 73 30
Net cash provided by financing activities............... 2,824 404 5,077
Net increase (decrease) in cash held at subsidiary
banks..................................................... 4 (7) (10)
Cash held at subsidiary banks on January 1.................. 4 11 21
Cash held at subsidiary banks on December 31................ $ 8 $ 4 $ 11
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 67
<PAGE>
NationsBank Corporation And Subsidiaries
SIX-YEAR CONSOLIDATED STATISTICAL SUMMARY
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
TAXABLE-EQUIVALENT YIELDS EARNED
Loans and leases, net of unearned income
Commercial............................................ 8.19% 7.56% 6.96% 7.08% 8.70% 10.44%
Real estate commercial................................ 9.30 8.18 7.59 7.78 9.13 10.49
Real estate construction.............................. 9.73 8.49 7.50 7.17 8.82 10.84
Total commercial.................................... 8.42 7.71 7.09 7.20 8.78 10.50
Residential mortgage.................................. 7.78 7.62 8.27 9.33 10.47 9.55
Credit card........................................... 12.78 12.84 13.62 14.45 15.22 15.78
Other consumer........................................ 10.07 9.26 9.24 10.07 11.13 12.47
Total consumer...................................... 9.37 8.99 9.51 10.50 11.47 11.81
Foreign............................................... 7.71 6.10 5.49 6.63 8.47 13.28
Lease financing....................................... 7.59 7.50 7.96 8.25 10.89 9.53
Total loans and leases, net......................... 8.79 8.20 8.06 8.49 9.83 11.00
Securities
Held for investment................................... 5.57 5.06 5.54 6.84 8.61 9.15
Available for sale.................................... 6.25 5.20 4.80 5.77 - -
Total securities.................................... 5.84 5.12 5.51 6.76 8.61 9.15
Loans held for sale..................................... 7.47 6.63 6.73 7.22 8.74 11.49
Federal funds sold and securities
purchased under agreements to resell.................. 6.18 4.09 3.21 3.77 5.89 8.16
Time deposits placed and other short-term investments... 6.87 5.12 3.91 5.09 6.89 8.95
Trading account securities.............................. 7.76 7.32 5.43 4.64 6.99 8.43
Total earning assets................................ 7.98 7.16 7.06 7.70 9.25 10.37
RATES PAID
Savings................................................. 2.37 2.33 2.38 2.86 4.55 5.15
NOW and money market deposit accounts................... 2.68 2.34 2.24 2.82 4.96 6.02
Consumer CDs and IRAs................................... 5.19 4.17 4.52 5.58 7.01 7.94
Negotiated CDs, public funds and other time deposits.... 5.56 4.02 3.97 4.93 7.08 8.13
Foreign time deposits................................... 6.25 4.98 4.05 5.52 6.70 8.89
Borrowed funds and trading account liabilities.......... 6.40 4.87 3.45 3.33 5.64 7.93
Long-term debt.......................................... 7.00 6.85 7.44 8.92 8.88 9.18
Special Asset Division net funding allocation........... - - - - (6.20) (7.49)
Total interest-bearing liabilities.................. 5.28 4.09 3.53 4.12 6.09 7.37
PROFIT MARGINS
Net interest spread..................................... 2.70 3.07 3.53 3.58 3.16 3.00
Net interest yield...................................... 3.33 3.58 3.96 4.10 3.82 3.75
YEAR-END DATA
(DOLLARS IN MILLIONS)
Loans, leases and factored accounts
receivable, net of unearned income.................... $117,033 $103,371 $ 92,007 $ 72,714 $ 69,108 $ 70,891
Securities held for investment.......................... 4,432 17,800 13,584 23,355 16,275 25,530
Securities available for sale........................... 19,415 8,025 15,470 1,374 8,904 -
Loans held for sale..................................... 1,663 318 1,697 1,236 585 315
Time deposits placed and other short-term investments... 1,296 2,159 1,479 1,994 1,622 1,289
Total earning assets.................................... 167,945 151,722 140,890 103,872 96,491 98,754
Total assets (1)........................................ 187,298 169,604 157,686 118,059 110,319 112,791
Noninterest-bearing deposits............................ 23,414 21,380 20,723 17,702 16,356 16,850
Domestic savings and time deposits...................... 64,388 66,487 66,356 62,988 70,359 70,091
Foreign time deposits................................... 12,889 12,603 4,034 2,037 1,360 2,124
Total savings and time deposits......................... 77,277 79,090 70,390 65,025 71,719 72,215
Total deposits.......................................... 100,691 100,470 91,113 82,727 88,075 89,065
Borrowed funds and trading account liabilities.......... 51,067 45,555 44,248 21,957 9,846 15,474
Long-term debt.......................................... 17,775 8,488 8,352 3,066 2,876 2,766
Total shareholders' equity.............................. 12,801 11,011 9,979 7,814 6,518 6,283
</TABLE>
(1) EXCLUDES ASSETS OF NATIONSBANK OF TEXAS SPECIAL ASSET DIVISION IN 1991
AND 1990.
68 NATIONSBANK CORPORATION ANNUAL REPORT 1995
<PAGE>
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
EARNINGS RATIOS
Return on average
Total assets (1)......................................... 1.03% 1.02% .97% 1.00% .17% .52%
Earning assets (1)....................................... 1.17 1.14 1.09 1.12 .20 .59
Common shareholders' equity.............................. 17.01 16.10 15.00 15.83 2.70 9.56
EARNINGS ANALYSIS (TAXABLE-EQUIVALENT)
Noninterest income as a percentage of net interest
income................................................... 55.36 48.96 44.48 45.65 44.22 42.56
Noninterest expense, excluding restructuring,
as a percentage of net interest income................... 92.85 93.16 90.90 94.64 97.62 92.10
Efficiency ratio: noninterest expense, excluding
restructuring, divided by the sum of net interest
income and noninterest income............................ 59.77 62.54 62.91 64.98 67.69 64.60
Overhead ratio: noninterest expense, excluding
restructuring, less noninterest income
divided by net interest income........................... 37.50 44.20 46.42 48.99 53.40 49.54
Net income as a percentage of net
interest income.......................................... 35.07 31.86 31.79 27.33 5.12 15.77
ASSET QUALITY
FOR THE YEAR
Net charge-offs as a percentage of average
loans, leases and factored accounts receivable........... .38 .33 .51 1.25 1.86 .88
Net charge-offs as a percentage of the
provision for credit losses.............................. 110.21 101.79 95.76 121.15 82.70 59.24
AT YEAR END
Allowance for credit losses as a percentage of net
loans, leases and factored accounts receivable........... 1.85 2.11 2.36 2.00 2.32 1.86
Allowance for credit losses as a percentage of
nonperforming loans...................................... 306.49 273.07 193.38 103.11 81.82 100.46
Nonperforming assets as a percentage of net
loans, leases, factored accounts receivable
and other real estate owned.............................. .73 1.10 1.92 2.72 4.01 2.32
Nonperforming assets as a percentage of total assets (1)
......................................................... .46 .67 1.13 1.69 2.54 1.46
Nonperforming assets (in millions)......................... $ 853 $ 1,138 $ 1,783 $ 1,997 $ 2,804 $ 1,651
RISK-BASED CAPITAL RATIOS
Tier 1..................................................... 7.24% 7.43% 7.41% 7.54% 6.38% 5.79%
Total...................................................... 11.58 11.47 11.73 11.52 10.30 9.58
Common shareholders' equity as a
percentage of total assets at year end (1)............... 6.81 6.47 6.25 6.60 5.67 5.23
Dividend payout ratio (per common share)................... 29.17 30.78 28.38 33.07 215.36 61.54
Shareholders' equity per common share
Average.................................................. $ 41.89 $ 37.99 $ 33.36 $ 29.05 $ 27.97 $ 27.31
At year end.............................................. 46.52 39.70 36.39 30.80 27.03 27.30
OTHER STATISTICS
Number of full-time equivalent employees................... 58,322 61,484 57,742 50,828 57,177 58,449
Rate of increase (decrease) in average
Total loans and leases, net of unearned income........... 15.24% 20.29% 15.83% (1.70)% 1.82% 8.36%
Earning assets........................................... 12.55 24.50 16.59 (.84) 2.42 12.42
Total assets (1)......................................... 13.36 23.75 16.82 (.64) 1.85 12.19
Total deposits........................................... 5.91 12.30 .97 (5.59) 3.44 8.99
Total shareholders' equity............................... 9.22 21.19 18.73 10.31 6.16 18.15
COMMON STOCK INFORMATION
Market price per share
High for the year........................................ $ 74 3/4 $ 57 3/8 $ 58 $ 53 3/8 $ 42 3/4 $ 47 1/4
Low for the year......................................... 44 5/8 43 3/8 44 1/2 39 5/8 21 1/2 16 7/8
Close at the end of the year............................. 69 5/8 45 1/8 49 51 3/8 40 5/8 22 7/8
Daily average trading volume............................... 726,467 753,515 666,591 727,578 397,054 405,087
Number of shareholders of record........................... 103,137 105,774 108,435 89,371 102,209 30,824
</TABLE>
SIX-YEAR CONSOLIDATED STATISTICAL SUMMARY 69
<PAGE>
Subsidiaries of NationsBank Corporation and Its Subsidiaries at 12/31/95
(100% Owned by NationsBank Corporation Unless Otherwise Noted)
American Security Insurance Corporation
ASB Capital Management, Inc.
Atlantic Equity Corporation
Carolina Mountain Holding Company
Equitable Bancorporation Overseas Finance N.V.
Export Funding Corporation
Fayette Insurance Corporation
MAR, Inc.
MN Credit Corporation
MN World Trade Corporation
MNC Affiliates Group, Inc.
MNC American Corporation 1
MNC Credit Corp 1
A/M Properties, Inc. 2
American Financial Service Group, Inc. (LEASEFIRST)2
Maryland National Realty Investors, Inc. 2
MNC Capital Corporation 2
Maryland National Leasing Services Corporation 2
MNC Canadian Real Property, Inc. 2
Nations Credit Funding Corporation
Greyrock Capital Group Inc. 3
ALS II, Inc. 4
ALS Superior, Inc. 4
American Acceptance Corporation 4
Cape Canterbury, Ltd. 4
Central Texas Small Business Investment Corporation 4
Portfolio Acceptance Corp. 4
Canterbury Indiana Holdings, Inc. 5
SunStar Acceptance Corporation 4
SunStar Acceptance Corporation (Hawaii) 4
USW SIS I, Inc. 4
USW SIS II, Inc. 4
USWFS/Oxford 1992-A Limited Partnership 6
USWFS/Oxford Fixed Rate, L.P. 7
NationsCredit Corporation 3
NationsCredit Acceptance Corporation 8
NationsCredit Commercial Corporation 8
Ariens Credit Corporation 9
Gravely Credit Corporation 9
Komatsu Forklift Credit Corporation 9
Korg Acceptance Corporation 9
Mercury Marine Acceptance Corporation 9
NationsCredit Commercial Corporation Ltd. 9
NIMAC Finance Corp. 9
Sea Ray Credit Corporation 9
Winnebago Acceptance Corporation 9
NationsCredit Consumer Discount Company 8
NationsCredit Consumer Services, Inc. 8
NationsCredit Finance Group Inc. 8
NationsCredit Financial Acceptance Corporation 8
1
<PAGE>
NationsCredit Financial Services Corporation 8
NationsCredit Financial Services Corporation of Alabama 8
NationsCredit Financial Services Corporation of America 8
NationsCredit Financial Services Corporation of Florida 8
NationsCredit Mortgage Corporation of Florida 10
NationsCredit Financial Services Corporation of Nevada 8
NationsCredit Financial Services Corporation of Virginia 8
NationsCredit Home Equity Corporation of Kentucky 8
NationsCredit Home Equity Corporation of Virginia 8
NationsCredit Insurance Agency, Inc. 8
NationsCredit Insurance Corporation 8
NationsCredit Management Corporation 3
NationsBanc Business Credit, Inc.
NationsBanc Capital Markets, Inc
NationsBanc-CRT Energy (U.K.), Ltd.
NationsBanc-CRT Services, Inc.
NationsBanc Leasing Corporation
Atlantic Credit Corporation 11
McCormick Realty Limited Partnership 11
NationsBanc Mortgage Capital Corporation
Tryon Mortgage Funding, Inc. 12
NB Holdings Corporation
NationsBank, N.A. 13
American Security (Louisiana) Ltd. 14
AS Land II, Inc. 14
ASB Realty, Inc. 14
Ashburn A Corp. 14
Baltic M Corp. 14
Baltin Yachting M Corp. 14
Beaumeade M Corp. 14
Bright Seat M Corp. 14
BT Building Corporation 14
Central City General, L.P. 15
Campus Hills M Corp. 14
Caradoc Estates, Inc. 14
Carlin M Springs Corp. 14
Carolina Pacific, Inc. 14
CC Plaza M Corp. 14
Chalmers M Corp. 14
Chesapeake M Corp. 14
Courtcom M Corp. 14
CSB Insurance Agency 14
Devon A Corp. 14
Down Under Finance Corporation 14
Dulaney Valley Corporation 14
Education Financing Services, LLC 16
Elwin Company, Inc. 14
FCOP, Inc. 14
Federal Properties I, Inc. 14
Fifty West Corp. 14
First Development Corporation 14
Floresville Company Ltd. 17
Fountain Square Corporation of Maryland 14
2
<PAGE>
Glen M Corp. 14
Hallmark-Renaissance M Corp. 14
Harper Farm M Corp. 14
HICO Park M Corp. 14
Madison Park A Corp. 14
Manab Properties, Inc. 14
Mar A Lowe Corp. 14
Marco Properties, Inc. 14
Greenburgh Marco, Inc. 18
Reprise, Inc. 18
Woodside Corporation 18
Maryland National Community Development Corporation 14
Greensides Elderly Limited Partnership 19
The Maryland National/Enterprise Equity Fund Limited Partnership 19
Montgomery Homes Limited Partnership II 20
Montgomery Homes Limited Partnership III 19
Montgomery Homes Limited Partnership IV 19
Neighborhood Rental Limited Partnership II 21
The Newington Limited Partnership 21
Rosedale Terrace Limited Partnership 21
St. Wenceslaus Limited Partnership 21
Maryland National Financial Corporation 14
Maryland Nationalease Corporation 14
Melwood M Corp. 14
Metropo M Corp. 14
Metropolitan Commercial Properties Corporation I 14
Metropolitan Commercial Properties Corporation VIII 14
Metropolitan Commercial Properties Corporation X 14
Mirror Ridge A Corp. 14
MNC Consumer Discount Company 14
MNC National Direct Mail Services Corp. 22
MNC Investment Bank, Ltd. 14
Multi-State Properties, Inc. 14
MYM Holdings Corporation 14
MECA Software L.L.C. 23
NationsBanc Advisors, Inc. 14
NationsBanc Charlotte Center, Inc. 14
Nations-CRT Options, Inc. 14
NationsBanc Dealer Leasing, Inc. 14
NationsBanc Discount Brokerage, Inc. 14
NationsBanc Enterprise, Inc. 14
NationsSecurities 24
NSI Agency, LLC 25
NationsBanc Equity Mortgage Corporation 14
NationsBanc Lease Investments, Inc. 14
NationsBanc Leasing Corporation of Virginia 14
NationsBanc SBIC Corporation 14
NationsBanc Venture Corporation 14
NationsBank Carolinas Merchant Services, Inc. 14
NationsBank Merchant Services 26
Unified Merchant Services 27
Terminal Management Systems, Inc. 28
NationsBank Community Development Corporation of Virginia 14
3
<PAGE>
NationsBank Europe Limited 14
Carolina Leasing Ltd. 29
Demandand Supply Company Ltd. 29
Friary Nominees Ltd. 29
NationsBank Panmure Investment Management Limited 29
Commonwealth Securities Limited 30
NCNB (Export Finance) Ltd. 29
Panmure Gordon & Co. Limited 29
NationsBank Securities Services Ltd. 31
Panmure Gordon Financial Futures Limited 31
Parish Nominees Limited 31
Rectory Nominees Limited 31
St. Michael Nominees Limited 31
Panmure Gordon Investments Limited 29
NationsBank International 14
NationsBank Overseas Corporation 14
AF Funding (1993), Inc. 32
Kill Devil Hills Finance Limited Partnership 33
Air France/NationsBank (Grantor Trust) 34
Wrightbrothers Ltd. 35
AF Funding II (1993), Inc. 32
Kill Devil Hills II Limited Partnership 36
Air France/KDHF II (NGHGI)(Grantor Trust) 37
Florita Finance Ltd. 38
Binfield Ltd. 32
Carolina Investments Limited 32
Cathay Pacific/NationsBank Trust 1 (Grantor Trust) 32
Wanda Finance Ltd. 39
Clenston Ltd. 32
Friary Leasing Limited 32
Hatteras Finance Ltd. 32
InterFirst Leasing Ltd. (London) 40
Japan Airlines/NCNB 1993-1 (Grantor Trust) 32
First in Flight Finance Ltd. 41
Nations-CRT Asia, Inc. 32
Nations-CRT Hong Kong, Limited 32
Nations-CRT International, Inc. 32
Nations-CRT International 42
Nations . CRT Japan, Inc. 32
Nations-CRT Overseas, Inc. 32
Nations-CRT Overseas Inc. & Co. 43
Nations-CRT U.K. & Co. 32
NationsBank International Trust (Jersey) Limited 44
NCNB Lease Atlantic, Inc. 32
NCNB Lease Finance III 45
Blue Ridge Finance Ltd. 46
NCNB Lease Finance 32
Wingtip Finance Limited 47
NCNB Lease Finance IV 32
Sandhills Finance Ltd. 48
NCNB Lease Finance V 32
Piedmont Finance Ltd. 49
4
<PAGE>
NCNB Lease Finance VI 32
Kitty Hawk Finance Ltd. 50
NCNB Lease International, Inc. 32
Barnesbury, Ltd. 51
NCNB Lease Offshore, Inc. 32
NCNB Lease Finance II 52
Outerbanks Finance Ltd. 53
NCNB Overseas Services, Inc. 32
Phaestos FSC, Inc. 54
Republic Dallas Ltd. (U.K.) 55
TransPacific Funding (1993), Inc. 56
TransPacific Finance Limited Partnership 57
ANA II (Grantor Trust) 58
Fontana Finance Ltd. 59
NationsBank Trust Company, N.A. 14
NB Partner Corp. 14
NationsGartmore Investment Management 60
NCNB Community Development Corporation 61
Gateway Hotel Enterprises, Inc. 62
Trico Investment, Inc. 62
Occoquan M Corp. 14
Palisades A Corp. 14
Pratt Management Company 14
Quality A Corp. 14
Rabbit Road M Corp. 14
Ritchie Court M Corporation 14
Rive Gauche A Corp. 14
SCRC Carrolltowne, Inc. 14
SCRC Process Service Corp. 14
Service-Wright Corporation 14
Seventeenth Commerce Properties Corporation 14
Shockey M Corp. 14
SOB-A Corp. 14
SOP M Corp. 14
Sorrento M Corp. 14
South Charles Realty Corp 14
South Point Shopping Center, Inc. 14
Spotted Horse Holdings, Inc. 14
Stevens Pier A Corp. 14
Sully A Corp. 14
Sunset Hill Corporation 14
Sweitzer M Corp. 14
Sykesville M Corp. 14
Three Ponds M Corp. 14
Vernon M Corp. 14
Vigrun A Corp. 14
Wales B Corp. 14
Washington View (H) Corporation 63
Washington View (NH) Corporation 63
Wellington Land Co., Inc. 14
Westfields M Corp. 14
Wickliffe A Corp. 14
Windemere M Corp. 14
5
<PAGE>
Woods M Corp. 14
NationsBank of Delaware, N.A. 13
NationsBank, N.A. (South) 13
Atico Financial Corporation dba Cavalier Properties 64
Atico Investment Management 64
EXHO Properties, Inc. 64
First Land Sales, Inc. 64
NationsBanc Commercial Corporation 64
NationsBanc Leasing Corporation of North Carolina 64
DFF Funding I, Inc. 65
DFF Funding II, Inc. 65
DFF Funding III, Inc. 65
DFF Funding IV, Inc. 65
NNW Utility Funding I, Inc. 65
NNW Utility Funding II, Inc. 65
NationsBank Florida Merchant Services, Inc. 64
NationsBank Merchant Services 26
Unified Merchant Services 27
Terminal Management Systems, Inc. 28
The Ocmulgee Corporation 64
Pan American Mortgage Corp. 64
200 Service Corp. 64
NationsBank of Kentucky, N.A. 13
NationsBank of Tennessee, N.A. 13
Commerce Place Company 66
Commerce Trading Corporation 66
NationsBank Texas Bancorporation, Inc. 13
NationsBank of Texas, N.A. 67
APL, Inc. 68
Austin National Realty Corporation 68
Capitol Information Networks, Inc. 68
DPC, Inc. 68
Main Place Funding Corporation 68
NationsBanc Capital Corporation 68
NationsBanc Energy Group Denver, Inc. 68
NationsBanc Mortgage Corporation 68
NationsBanc Services, Inc. 68
Republic National Corporation 68
Texas Nationalease Corporation 68
RepublicBank Insurance Agency, Inc. 67
Bancshares Properties, Inc. 13
Cash Flow, Inc. 13
C&S Premises, Inc. 13
DC Bancorp Venture Capital Company 13
First Mortgage Corporation 13
NationsBanc Insurance Agency, Inc. 13
NationsBanc Insurance Company, Inc. 13
NationsBanc Insurance Inc. 13
NationsBanc Insurance Services, Inc. 13
NationsBanc Investment Corporation 13
NationsBanc Leasing & Finance Corporation 13
NationsBanc Mortgage Corporation of Georgia 13
6
<PAGE>
NationsBank Trust Company of New York 13
On Call, Inc. 13
Second Land Sales, Inc. 13
Sovran Capital Management Corporation 13
Suburban Service Corporation 13
Three Commercial Place Associates 69
NationsBank Community Development Corporation 70
Atlanta Affordable Housing Fund Limited Partnership 71
Biscayne Apartments, Inc. 72
Campbellton Glen Apartments LLC 72
The Charlotte Affordable Housing LLC 73
Carlton Court Community Development Corporation 72
Historic District Redevelopment Partnership 74
Kenilworth Industrial Park Limited Liability Company 75
Leon Avenue Redevelopment Company 76
NationsBank CDC Special Holding Company, Inc. 72
Southern Oaks Condominium Partners, Ltd. 77
Stanton Road LLC 78
Terry Street Redevelopment Limited Liability Company 79
University Park Shopping Center, LLC 80
NationsBank Housing Fund Investment Corporation 81
Nations Housing Fund Limited Partnership 82
Nations Housing Fund II Limited Partnership 82
NCNB Corporate Services, Inc.
NCNB Properties, Inc.
TIM, Inc.
Tryon Assurance Company, Ltd.
- --------
1 MNC Affiliates Group, Inc. owns 100% of this entity.
2 MNC Credit Corp owns 100% of this entity.
3 Nations Credit Funding Corporation owns 100% of this entity.
4 Greyrock Capital Group Inc. owns 100% of this entity.
5 Portfolio Acceptance Corp. owns 100% of this entity.
6 Greyrock Capital Group Inc. owns 67.33% of this entity.
7 Greyrock Capital Group Inc. owns 62.5% of this entity.
8 NationsCredit Corporation owns 100% of this entity.
9 NationsCredit Commercial Corporation owns 100% of this entity.
10 NationsCredit Financial Services Corporation of Florida owns 100% of this
entity.
11 NationsBanc Leasing Corporation owns 100% of this entity.
12 NationsBanc Mortgage Capital Corporation owns 100% of this entity.
13 NB Holdings Corporation owns 100% of this entity.
14 NationsBank, N.A. owns 100% of this entity.
15 BT Building Corporation has a 19% general partnership interest and a 43%
limited partnership interest in this entity.
16 NationsBank, N.A. owns up to 22.26% of this entity; definitive % depends on
total number of participants.
17 NationsBank, N.A. holds 100% of this entity in trust.
18 Marco Properties, Inc. owns 100% of this entity.
19 Maryland National Community Development Corporation owns 99% of this entity.
20 Maryland National Community Development Corporation and NationsBank, N.A.,
each, has a 33% interest in this entity.
21 Maryland National Community Development Corporation owns 98.99% of this
entity.
22 MNC Consumer Discount Company owns 100% of this entity.
23 MYM Holdings Corporation owns 50% of this entity.
7
<PAGE>
24 NationsBanc Enterprise, Inc. and NationsBanc Discount Brokerage, Inc., each,
has a 50% interest in this general partnership.
25 NationsSecurities and NationsBanc Enterprise, Inc. have 99% and 1% interests,
respectively, in this entity.
26 NationsBank Carolinas Merchant Services, Inc. and NationsBank Florida
Merchant Services, Inc. own 51% and 49%, respectively, of this entity.
27 NationsBank Merchant Services owns 20% of this entity.
28 Unified Merchant Services owns 100% of this entity.
29 NationsBank Europe Limited owns 100% of this entity.
30 NationsBank Panmure Investment Management Limited owns 100% of this entity.
31 Panmure Gordon & Co. Limited owns 100% of this entity.
32 NationsBank Overseas Corporation owns 100% of this entity.
33 AF Funding (1993), Inc. holds a 1% general partnership and a 49% limited
partnership interest in this entity.
34 Kill Devil Hills Finance Limited Partnership owns 100% of this entity.
35 Air France/NationsBank (Grantor Trust) owns 100% of this entity.
36 AF Funding II (1993), Inc. holds a 1% general partnership and a 34% limited
partnership interest in this entity.
37 Kill Devil Hills II Limited Partnership owns 100% of this entity.
38 Air France/KDHF II (NGHGI)(Grantor Trust) owns 100% of this entity.
39 Cathay Pacific/NationsBank Trust I (Grantor Trust) owns 100% of this entity.
40 NationsBank Overseas Corporation owns 99.5% of this entity.
41 Japan Airlines/NCNB 1993-1 (Grantor Trust) owns 100% of this entity.
42 Nations-CRT U.K. & Co. and Nations-CRT International, Inc., respectively,
have 1% and 99% general partnership interests in this entity.
43 Nations-CRT U.K. & Co. and Nations-CRT Overseas, Inc., respectively, have 1%
and 99% general partnership interests in this entity.
44 NationsBank Overseas Corporation and NationsBank, N.A. own 99.33% and .67%,
respectively, of this entity.
45 NCNB Lease Atlantic, Inc. owns 100% of this entity.
46 NCNB Lease Finance III owns 100% of this entity.
47 NCNB Lease Finance owns 100% of this entity.
48 NCNB Lease Finance IV owns 100% of this entity.
49 NCNB Lease Finance V owns 100% of this entity.
50 NCNB Lease Finance VI owns 100% of this entity.
51 NCNB Lease International, Inc. owns 99.9% of this entity.
52 NCNB Lease Offshore, Inc. owns 100% of this entity.
53 NCNB Lease Finance II owns 100% of this entity.
54 NationsBank Overseas Corporation owns 50% of this entity.
55 NationsBank Overseas Corporation owns 98% of this entity.
56 NationsBank Overseas Corporation owns 66% of this entity.
57 TransPacific Funding (1993), Inc. holds a 1% general partnership and a 65%
limited partnership interest in this entity.
58 TransPacific Finance Limited Partnership owns 100% of this entity.
59 ANA II (Grantor Trust) owns 100% of this entity.
60 NB Partner Corp. owns 50% of this entity.
61 NationsBank, N.A. is the sole member of this non-profit corporation.
62 NCNB Community Development Corporation owns 100% of this entity.
63 Washington View, Inc. owns 69% of this entity.
64 NationsBank, N.A. (South) owns 100% of this entity.
65 NationsBanc Leasing Corporation of North Carolina owns 100% of this entity.
66 NationsBank of Tennessee, N.A. owns 100% of this entity.
67 NationsBank Texas Bancorporation, Inc. owns 100% of this entity.
68 NationsBank of Texas, N.A. owns 100% of this entity.
69 NB Holdings Corporation owns 70% of this entity.
70 NationsBank, N.A. (South), NationsBank, N.A. and NationsBank of Texas, N.A.
own, respectively, 34%, 37% and 29% of this entity.
8
<PAGE>
71 NationsBank Community Development Corporation ("NBCDC")has a 95.4% general
partnership interest in this entity.
72 NBCDC owns 100% of this entity.
73 NBCDC and NCNB Community Development Corporation have 99% and 1% interests,
respectively, in this entity.
74 NBCDC has a 94.89% interest in this entity.
75 NBCDC owns 70% of this entity.
76 NBCDC owns 80% of this entity.
77 NBCDC has a 50.26% interest in this entity.
78 NBCDC owns 99% of this entity.
79 NBCDC owns 98% of this entity.
80 NBCDC owns 81% of this entity.
81 NationsBank, N.A. and NationsBank of Texas, N.A., each, owns 25% of the
voting stock of this entity, and NationsBank, N.A. (South) owns 50%.
82 NationsBank Housing Fund Investment Corporation has a 99% limited
partnership interest in this entity.
9
<PAGE>
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,
33-57533 and 33-63097); the Registration Statements on Form S-8
(Nos. 2-91958; 2-73761; 2-80406; 33-45279; 33-48883 and 33-60695) and
the Post-Effective Amendments No. 1 on Form S-8 to Registration
Statements on Form S-4 (Nos. 33-43125; 33-55145; 33-63351; 33-62069
and 33-62208) of NationsBank Corporation of our report dated January 12,
1996, which appears on page 46 of the 1995 Annual Report to Shareholders
of NationsBank Corporation, which is incorporated by reference in the
NationsBank Corporation Annual Report on Form 10-K for the year ended
December 31, 1995.
PRICE WATERHOUSE LLP
Charlotte, North Carolina
March 29, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each of NationsBank Corporation
and the several undersigned officers and directors whose signatures appear
below, hereby makes, constitutes and appoints James W. Kiser and Charles M.
Berger, and each of them acting individually, its, his and her true and lawful
attorneys with power to act without any other and with full power of
substitution, to execute, deliver and file in its, his and her name and on its,
his and her behalf, and in each of the undersigned officer's and director's
capacity or capacities as shown below, an Annual Report on Form 10-K for the
year ended December 31, 1995, and all exhibits thereto and all documents in
support thereof or supplemental thereto, and any and all amendments or
supplements to the foregoing, hereby ratifying and confirming all acts and
things which said attorneys or attorney might do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, NationsBank Corporation has caused this power of
attorney to be signed on its behalf, and each of the undersigned officers and
directors, in the capacity or capacities noted, has hereunto set his or her hand
as of the date indicated below.
NATIONSBANK CORPORATION
By: /s/ HUGH L. MCCOLL, JR.
HUGH L. MCCOLL, JR.
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Dated: March 27, 1996
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>
/s/ HUGH L. MCCOLL, JR. Chairman of the Board and March 27, 1996
Chief Executive Officer
(HUGH L. MCCOLL, JR.) (Principal Executive Officer)
/s/ JAMES H. HANCE, JR. Vice Chairman and March 27, 1996
Chief Financial Officer
(JAMES H. HANCE, JR.) (Principal Financial Officer)
/s/ MARC D. OKEN Executive Vice President March 27, 1996
(Principal Accounting Officer)
(MARC D. OKEN)
/s/ RONALD W. ALLEN Director March 27, 1996
(RONALD W. ALLEN)
/s/ WILLIAM M. BARNHARDT Director March 27, 1996
(WILLIAM M. BARNHARDT)
/s/ THOMAS E. CAPPS Director March 27, 1996
(THOMAS E. CAPPS)
/s/ CHARLES W. COKER Director March 27, 1996
(CHARLES W. COKER)
/s/ THOMAS G. COUSINS Director March 27, 1996
(THOMAS G. COUSINS)
/s/ ALAN T. DICKSON Director March 27, 1996
(ALAN T. DICKSON)
<PAGE>
SIGNATURE TITLE DATE
/s/ W. FRANK DOWD, JR. Director March 27, 1996
(W. FRANK DOWD, JR.)
/s/ PAUL FULTON Director March 27, 1996
(PAUL FULTON)
/s/ L. L. GELLERSTEDT, JR. Director March 27, 1996
(L. L. GELLERSTEDT, JR.)
/s/ TIMOTHY L. GUZZLE Director March 27, 1996
(TIMOTHY L. GUZZLE)
/s/ W. W. JOHNSON Director March 27, 1996
(W. W. JOHNSON)
/s/ BUCK MICKEL Director March 27, 1996
(BUCK MICKEL)
Director March , 1996
(JOHN J. MURPHY)
/s/ JOHN C. SLANE Director March 27, 1996
(JOHN C. SLANE)
/s/ JOHN W. SNOW Director March 27, 1996
(JOHN W. SNOW)
/s/ MEREDITH R. SPANGLER Director March 27, 1996
(MEREDITH R. SPANGLER)
/s/ ROBERT H. SPILMAN Director March 27, 1996
(ROBERT H. SPILMAN)
/s/ RONALD TOWNSEND Director March 27, 1996
(RONALD TOWNSEND)
/s/ E. CRAIG WALL, JR. Director March 27, 1996
(E. CRAIG WALL, JR.)
/s/ JACKIE M. WARD Director March 27, 1996
(JACKIE M. WARD)
</TABLE>
NATIONSBANK CORPORATION
BOARD OF DIRECTORS
RESOLUTION
March 27, 1996
RESOLVED, that the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1995 (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.
<PAGE>
CERTIFICATE OF SECRETARY
I, ALLISON L. GILLIAM, 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
resolutions duly adopted by a majority of the entire Board of Directors of said
corporation at a meeting of said Board of Directors held March 27, 1996, at
which meeting a quorum was present and acted throughout and that said
resolutions are in full force and effect and have 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 28th day of March, 1996.
(CORPORATE SEAL)
(Signature of Allison L. Gilliam appears here)
Assistant Secretary
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE DECEMBER 31,
1995 FORM 10-K FOR NATIONSBANK CORPORATION AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 8,448
<INT-BEARING-DEPOSITS> 1,296
<FED-FUNDS-SOLD> 6,230
<TRADING-ASSETS> 18,867
<INVESTMENTS-HELD-FOR-SALE> 19,415
<INVESTMENTS-CARRYING> 4,432
<INVESTMENTS-MARKET> 4,432
<LOANS> 117,033
<ALLOWANCE> (2,163)
<TOTAL-ASSETS> 187,298
<DEPOSITS> 100,691
<SHORT-TERM> 51,067
<LIABILITIES-OTHER> 4,964
<LONG-TERM> 17,775
0
105
<COMMON> 4,655
<OTHER-SE> 8,041
<TOTAL-LIABILITIES-AND-EQUITY> 187,298
<INTEREST-LOAN> 9,331
<INTEREST-INVEST> 1,468
<INTEREST-OTHER> 2,421
<INTEREST-TOTAL> 13,220
<INTEREST-DEPOSIT> 3,281
<INTEREST-EXPENSE> 7,773
<INTEREST-INCOME-NET> 5,447
<LOAN-LOSSES> 382
<SECURITIES-GAINS> 29
<EXPENSE-OTHER> 5,181
<INCOME-PRETAX> 2,991
<INCOME-PRE-EXTRAORDINARY> 2,991
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,950
<EPS-PRIMARY> 7.13
<EPS-DILUTED> 7.04
<YIELD-ACTUAL> 3.33
<LOANS-NON> 706
<LOANS-PAST> 174
<LOANS-TROUBLED> 0
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<ALLOWANCE-OPEN> 2,186
<CHARGE-OFFS> (636)
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<ALLOWANCE-UNALLOCATED> 949
</TABLE>
