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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1998 - Commission File Number 1-6523
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BankAmerica Corporation
(Exact name of registrant as specified in its charter)
Delaware 56-0906609
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(State of incorporation) (IRS Employer Identification No.)
Bank of America Corporate Center
Charlotte, North Carolina
28255
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(Address of principal executive offices)
(Zip Code)
704/386-5000
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(Registrant's telephone number, including area code)
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
London Stock Exchange
Pacific Stock Exchange
Tokyo Stock Exchange
7 3/4% Debentures, due 2002 American Stock Exchange
9 7/8% Subordinated Notes, due 2001 New York Stock Exchange
8 1/2% Subordinated Notes, due 2007 New York Stock Exchange
10 7/8% Subordinated Notes, due 2003 New York Stock Exchange
</TABLE>
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 this Form 10-K or in any amendment to
this Form 10-K. [ ]
The aggregate market value of the registrant's common stock held by
non-affiliates is approximately $126,732,283,000 (based on the March 15, 1999,
closing price of such common stock of $73.75 per share). As of March 15, 1999,
there were 1,739,020,301 shares of the registrant's common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
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Document of the Registrant Form 10-K Reference Location
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Portions of the 1999 Proxy Statement PART III
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BANKAMERICA CORPORATION
Form 10-K Index
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Page
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PART I
Item 1. Business ..................................................................... 2
Primary Market Areas ......................................................... 2
Acquisition and Disposition Activity ......................................... 2
Government Supervision and Regulation ........................................ 3
Competition .................................................................. 5
Employees .................................................................... 6
Business Segment Operations .................................................. 13-16
Net Interest Income .......................................................... 16-18
Securities ................................................................... 26, 56,
64-66
Loans and Leases ............................................................. 19, 26-27,
34-44, 57-
58, 67-68
Deposits ..................................................................... 27, 68
Short-Term Borrowings and Trading Account Liabilities ........................ 27-28, 69
Market Risk Management ....................................................... 29-33
Selected Quarterly Operating Results ......................................... 45
Item 2. Properties ................................................................... 6
Item 3. Legal Proceedings ............................................................ 6
Item 4. Submission of Matters to a Vote of Security Holders .......................... 7
Item 4A. Executive Officers of the Registrant ......................................... 7
PART II
Item 5. Market for Registrant's Common Stock and Related Security Holder Matters ..... 8
Item 6. Selected Financial Data ...................................................... 9
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations ................................................................... 9
Item 7A. Quantitative and Qualitative Disclosures about Market Risk ................... 50
Item 8. Consolidated Financial Statements and Supplementary Data ..................... 50
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure ................................................................... 96
PART III
Item 10. Directors and Executive Officers of the Registrant ........................... 96
Item 11. Executive Compensation ....................................................... 96
Item 12. Security Ownership of Certain Beneficial Owners and Management ............... 96
Item 13. Certain Relationships and Related Transactions ............................... 96
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K .............. 97
</TABLE>
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PART I
Item 1. BUSINESS
General
On September 25, 1998, NationsBank Corporation, a North Carolina
corporation ("NationsBank"), was reincorporated in Delaware by forming a new,
wholly owned Delaware subsidiary named NationsBank (DE) Corporation
("NationsBank (DE)"), and merging NationsBank with and into NationsBank (DE).
As the surviving corporation in this merger, NationsBank (DE) was renamed
"NationsBank Corporation." On September 30, 1998, the former BankAmerica
Corporation, a Delaware corporation ("BankAmerica"), merged with and into
NationsBank Corporation, with NationsBank Corporation as the surviving
corporation in this merger. In connection with this merger, NationsBank
Corporation changed its name to "BankAmerica Corporation" (the "Corporation").
As the successor issuer of NationsBank, the Corporation's predecessor companies
were initially incorporated in 1968. The Corporation has announced that it will
operate under the "Bank of America" name.
The Corporation is a multi-bank holding company registered under the Bank
Holding Company Act of 1956, as amended, with its principal assets being the
stock of its subsidiaries. The Corporation and its subsidiaries are subject to
supervision by various U.S. federal and state banking and other regulatory
authorities.
For additional information about the Corporation and its operations, see
Table Two and the narrative comments under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Business
Segment Operations."
The principal executive offices of the Corporation are located in the Bank
of America Corporate Center, Charlotte, North Carolina 28255.
Primary Market Areas
Through its banking subsidiaries (the "Banks") and various non-banking
subsidiaries, the Corporation provides a diversified range of banking and
non-banking financial services and products, primarily throughout the
Mid-Atlantic (Maryland, Virginia and the District of Columbia), the Midwest
(Illinois, Iowa, Kansas and Missouri), the Southeast (Florida, Georgia, North
Carolina, South Carolina and Tennessee), the Southwest (Arizona, Arkansas, New
Mexico, Oklahoma and Texas), the Northwest (Alaska, Oregon and Washington) and
the West (California, Idaho and Nevada) regions of the United States and in
selected international markets. The Corporation serves an aggregate of
approximately 30 million households and two million businesses in these
regions, and management believes that these are desirable regions in which to
be located. Based on the most recent available data, personal income levels in
the states in these regions as a whole rose 5.9 percent (annualized) in the
first half of 1998. In addition, the population in these states as a whole rose
an estimated 1.4 percent between 1997 and 1998. The number of housing permits
authorized increased 12.8 percent between 1997 and 1998, ranging from an
increase of 5.2 percent in the Midwest to an increase of 21.3 percent in the
Southwest. Between 1997 and 1998, the levels of unemployment in these states as
a whole fell by approximately .03 percentage points, for an unemployment rate
in the Corporation's overall market area of 4.5 percent at year-end 1998. These
states created more than 1.7 million new jobs in 1998, 2.5 percent above 1997,
compared to 1.4 percent job growth in the other states.
The Corporation has the leading bank deposit market share position in
California, Florida, Georgia, Maryland, New Mexico, North Carolina, Texas and
Washington. In addition, the Corporation ranks second in terms of bank deposit
market share in Arizona, Arkansas, Kansas, Missouri, Nevada, Oregon, South
Carolina, Virginia and the District of Columbia; third in Oklahoma; fifth in
Illinois and Tennessee; sixth in Alaska and Idaho; and eighth in Iowa. The
Corporation has announced its intention to exit the Alaska retail market.
Acquisition and Disposition Activity
As part of its operations, the Corporation regularly evaluates the
potential acquisition of, and holds discussions with, various financial
institutions and other businesses of a type eligible for bank holding company
ownership or control. In addition, the Corporation 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. The Corporation also regularly considers the potential disposition
of certain of its assets, branches, subsidiaries
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or lines of businesses. As a general rule, the Corporation publicly announces
any material acquisitions or dispositions when a definitive agreement has been
reached.
For additional information regarding the Corporation's acquisition
activity, see Note Two of the consolidated financial statements on page 61.
Government Supervision and Regulation
General
As a registered bank holding company, the Corporation is subject to the
supervision of, and to regular inspection by, the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"). The Banks are organized
principally 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 and state
regulatory agencies. In addition to banking laws, regulations and regulatory
agencies, the Corporation 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 Corporation and its ability to make distributions. The
following discussion summarizes certain aspects of those laws and regulations
that affect the Corporation.
The activities of the Corporation, and those of companies which it
controls or in which it holds more than 5 percent of the voting stock, are
limited to banking or managing or controlling banks, 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 Corporation, are
required to obtain prior approval of, or provide prior notice to, the Federal
Reserve Board to engage in any new activity or to acquire more than 5 percent
of any class of voting stock of any company.
Bank holding companies are also required to obtain the prior approval of
the Federal Reserve Board before acquiring more than 5 percent 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"), a bank
holding company may acquire banks in states other than its home state without
regard to the permissibility of such acquisitions under state law, but 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 percent of the total amount of deposits of insured depository
institutions in the United States and no more than 30 percent of such deposits
in that state (or such lesser or greater amount set by state law).
Subject to certain restrictions, the Interstate Banking and Branching Act
also authorizes banks to merge across state lines, thereby creating interstate
branches. Furthermore, pursuant to the Interstate Banking and Branching Act, a
bank may 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. To the
extent permitted under these laws, the Corporation plans to consolidate its
banking subsidiaries into a single bank as soon as practicable (with the
exception of its two limited purpose credit card banks which are headquartered
in Arizona and Delaware, which the Corporation intends to merge into a single
credit card bank). The Corporation currently operates two interstate banks
(i.e., banks with branch offices in more than one state): NationsBank, N.A.,
headquartered in Charlotte, North Carolina, with branch offices primarily in
Arkansas, Florida, Georgia, Illinois, Iowa, Kansas, Maryland, Missouri, New
Mexico, North Carolina, Oklahoma, South Carolina, Virginia, Tennessee, Texas
and the District of Columbia; and Bank of America NT&SA, headquartered in San
Francisco, California, with branch offices primarily in Alaska, Arizona,
California, Florida, Idaho, Illinois, Nevada, New Mexico, Oregon and
Washington. Separate banks continue to operate in Arizona, California, Delaware
and Texas. In addition, the Corporation has
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a federal savings bank headquartered in Portland, Oregon with branch offices in
a number of states. As previously described, the Corporation regularly
evaluates merger and acquisition opportunities, and it anticipates that it will
continue to evaluate such opportunities.
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. At the present time, Congress is
considering legislation that would increase the permissible scope of securities
and insurance activities in which a bank holding company or its affiliates may
engage. The likelihood and timing of any such proposals or legislation and the
impact they might have on the Corporation and its subsidiaries cannot be
determined at this time.
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, these 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 Federal Reserve Board risk-based guidelines define a
three-tier capital framework. Tier 1 capital consists of common and qualifying
preferred shareholders' equity, less certain intangibles and other adjustments.
Tier 2 capital consists of preferred stock not qualifying as Tier 1 capital,
subordinated and other qualifying debt, and the allowance for credit losses up
to 1.25 percent of risk-weighted assets. Tier 3 capital includes subordinated
debt that is unsecured, fully paid, has an original maturity of at least two
years, is not redeemable before maturity without prior approval by the Federal
Reserve and includes a lock-in clause precluding payment of either interest or
principal if the payment would cause the issuing bank's risk-based capital
ratio to fall or remain below the required minimum. The sum of Tier 1 and Tier
2 capital less investments in unconsolidated subsidiaries represents qualifying
total capital, at least 50 percent of which must consist of Tier 1 capital.
Risk-based capital ratios are calculated by dividing Tier 1 and total capital
by risk-weighted assets. Assets and off-balance sheet exposures are assigned to
one of four categories of risk-weights, based primarily on relative credit
risk. The minimum Tier 1 capital ratio is 4 percent and the minimum total
capital ratio is 8 percent. The Corporation's Tier 1 and total risk-based
capital ratios under these guidelines at December 31, 1998 were 7.06 percent
and 10.94 percent, respectively. At December 31, 1998, the Corporation had no
subordinated debt that qualified as Tier 3 capital.
The leverage ratio is determined by dividing Tier 1 capital by adjusted
average total assets. Although the stated minimum ratio is 3 percent, most
banking organizations are required to maintain ratios of at least 100 to 200
basis points above 3 percent. The Corporation's leverage ratio at December 31,
1998 was 6.22 percent. Management believes that the Corporation meets its
leverage ratio requirement.
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 percent 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
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ratio of at least 5 percent and not be subject to a capital directive order.
Under these guidelines, each of the Banks is considered well capitalized.
Banking agencies have also adopted final regulations which mandate that
regulators take into consideration (i) concentrations of credit risk; (ii)
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); and (iii) 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. In addition, the
banking agencies have amended their regulatory capital guidelines to
incorporate a measure for market risk. In accordance with the amended
guidelines, the Corporation and any Bank with significant trading activity (as
defined in the amendment) must incorporate a measure for market risk in their
regulatory capital calculations effective for reporting periods after January
1, 1998. The revised guidelines did not have a material impact on the
Corporation or the Banks' regulatory capital ratios or their well capitalized
status.
Distributions
The Corporation's funds for cash distributions to its stockholders 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. Each of the Banks is subject to various regulatory policies and
requirements relating to the payment of dividends, including requirements to
maintain capital above regulatory minimums. The appropriate federal regulatory
authority is authorized to determine under certain circumstances relating to
the financial condition of the bank or bank holding company that the payment of
dividends would be an unsafe or unsound practice and to prohibit payment
thereof.
In addition to the foregoing, the ability of the Corporation 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. The right of the Corporation, its stockholders 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
Corporation 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.
Competition
The activities in which the Corporation and its four major business
segments (Consumer Banking, Commercial Banking, Global Corporate and Investment
Banking, and Principal Investing and Wealth Management) engage are highly
competitive. Generally, the lines of activity and markets served involve
competition with other banks, thrifts, credit unions and other non-bank
financial institutions, such as investment banking firms, brokerage firms,
investment companies and insurance companies, as well as other entities which
offer financial services, located both domestically and internationally. 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
Corporation's business segments is highly competitive. The four major business
segments compete with other commercial banks, thrifts, finance companies and
other businesses which provide similar services. The business segments 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 Corporation's non-banking subsidiaries and the Banks. In its
consumer lending operations, the competitors of the business segments include
other banks, thrifts, credit unions, regulated small loan companies and other
non-bank organizations offering financial services. In the investment banking,
investment advisory and brokerage business, the Corporation's non-banking
subsidiaries compete with
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other banking and investment banking firms, investment advisory firms,
brokerage firms, investment companies and other organizations offering similar
services. The Corporation's mortgage banking units compete with commercial
banks, thrifts, 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, trust companies,
insurance agents, thrifts, financial counselors and other fiduciaries for
personal trust business. The Corporation and its four 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, thrifts, and credit unions, as well as
money market mutual funds.
The Corporation'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
As of December 31, 1998, there were 170,975 full-time equivalent employees
within the Corporation and its subsidiaries. Of the foregoing employees, 90,029
were employed within Consumer Banking, 5,196 were employed within Commercial
Banking, 11,758 were employed within Global Corporate and Investment Banking,
and 7,109 were employed within Principal Investing and Wealth Management. The
remainder were employed within the Corporation and its other subsidiaries.
Approximately 5,000 non-officer employees in the State of Washington are
covered by a collective bargaining agreement. These employees work for the
Washington division of Bank of America NT&SA, which is doing business as
Seafirst Bank. None of the Corporation's other domestic employees are covered
by a collective bargaining agreement. Management considers its employee
relations to be good.
Item 2. PROPERTIES
As of December 31, 1998, the principal offices of the Corporation, and its
Consumer and Commercial Banking business segments, were located in the 60-story
Bank of America Corporate Center in Charlotte, North Carolina, which is owned
by a subsidiary of the Corporation. The Corporation occupies approximately
521,000 square feet and leases approximately 593,000 square feet to third
parties at market rates, which represents substantially all of the space in
this facility. As of December 31, 1998, the principal offices of Global
Corporate and Investment Banking and Principal Investing and Wealth Management
were located at 555 California Street in San Francisco, California. A
subsidiary of the Corporation has a 50% ownership interest in this building
through a joint venture partnership, and the Corporation leases approximately
479,000 square feet in this building from the partnership.
The Corporation also leases or owns a significant amount of space
worldwide, in addition to these facilities in Charlotte and San Francisco. As
of December 31, 1998, the Corporation and its subsidiaries owned or leased
approximately 11,500 locations in 47 states, the District of Columbia and 37
foreign countries.
Item 3. LEGAL PROCEEDINGS
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 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, environmental, banking and other laws.
The Corporation's predecessor, BankAmerica, and certain of its
subsidiaries, including Bank of America NT&SA, were named in one such suit by
the City of San Francisco and several related public entities, and by the State
of California, in an action entitled State of California, etc ex rel Stull v.
Bank of America NT&SA, et al. (No. 968-484). The case was instituted on April
1, 1995 in the Superior Court for the City and County of San Francisco. The
City of San Francisco and related public entities intervened in the case on May
1, 1997, and the State of California took over prosecution of the case on May
5, 1997. The chief allegation of this suit is that Bank of America NT&SA and
its predecessors retained unclaimed funds related to bonds and coupons that
were not
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presented by bondholders rather than returning them to certain bond issuers or
escheating such funds to the State. The suit also alleges False Claims Act
exposure for alleged fee overcharges and claims that Bank of America NT&SA and
its predecessors improperly invested bond program funds. On November 12, 1998,
the plaintiffs and the Corporation and its named subsidiaires settled this suit
whereby the Corporation and its named subsidiaries agreed to pay $187.5 million
to the plaintiffs. The settlement is subject to court approval.
The Corporation and certain present and former officers have been named as
defendants in approximately 24 uncertified class actions filed in federal court
alleging, among other things, that the defendants failed to disclose material
facts about BankAmerica's losses relating to D.E. Shaw & Co., L.P. until
mid-October 1998, in violation of various provisions of the federal securities
laws. The uncertified classes consist generally of persons who were entitled to
vote on the merger of NationsBank and BankAmerica, or who purchased or acquired
securities of the Corporation or its predecessors between August 4, 1998 and
October 13, 1998. Similar actions are pending in California state court,
alleging violations of the California Corporations Code and involving factual
allegations essentially the same as the federal actions. In addition, certain
cases filed in California state court have alleged that the proxy
statement-prospectus of August 4, 1998, falsely stated that the merger would be
one of equals, and allege a conspiracy on the part of certain executives to
gain control over the newly merged entity. At least one such complaint seeks
recovery under various state common law theories. The Corporation believes the
actions lack merit and will defend them vigorously. The amount of any ultimate
exposure cannot be determined with certainty at this time.
Management believes that the actions and proceedings and the 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.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of stockholders during the
quarter ended December 31, 1998.
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 current executive officer and the
principal accounting officer of the Corporation 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 stockholders.
James H. Hance, Jr., age 54, Vice Chairman and Chief Financial Officer.
Mr. Hance was named Chief Financial Officer in August 1988, and was named Vice
Chairman in October 1993. He first became an officer in 1987. He also serves as
Vice Chairman, Chief Financial Officer and a director of NationsBank, N.A. and
Bank of America NT&SA.
Kenneth D. Lewis, age 51, President. Mr. Lewis was named to his present
position in January 1999. Prior to that time, he served as President, Consumer
and Commercial Banking, from October 1998 to January 1999, and as President
from October 1993 to October 1998. He first became an officer in 1971. Mr.
Lewis also serves as President and a director of NationsBank, N.A. and as a
director of Bank of America NT&SA.
Hugh L. McColl, Jr., age 63, Chairman of the Board and Chief Executive
Officer of the Corporation and the Banks. Mr. McColl has served as Chairman of
the Board of the Corporation for at least five years except from January 7,
1997 until September 30, 1998. He first became an officer in 1962. He also
serves as a director of the Corporation, NationsBank, N.A. and Bank of America
NT&SA.
Michael J. Murray, age 54, President, Global Corporate and Investment
Banking. Mr. Murray first became an officer and was named to his present
position in October 1998. Prior to that time, he served as President, Global
Wholesale Bank of BankAmerica from 1997 to 1998, as Vice Chairman of
BankAmerica from 1995 to 1997 and as Group Executive Vice President, U.S.
Corporate Group of Bank of America NT&SA from 1994 to 1995. From 1993 to 1994,
he served as Vice Chairman of Continental Bank Corporation. He also serves as
President and a director of Bank of America NT&SA and as a director of
NationsBank, N.A.
Marc D. Oken, age 52, Executive Vice President and Principal Financial
Executive. Mr. Oken was named to his present position in October 1998. From
June 1989 to October 1998, he served as Chief Accounting Officer. He first
became an officer in 1989.
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F. William Vandiver, Jr., age 56, Corporate Risk Management Executive. Mr.
Vandiver was named to his present position in October 1998. From June 1997 to
October 1998, he served as Chairman, Corporate Risk Policy. Prior to that time,
from January 1996 to June 1997, he served as President, Global Finance, and
from January 1994 to January 1996 he served as President, Specialized Finance
Group. He first became an officer in 1968. He also serves as Corporate Risk
Management Executive and a director of NationsBank, N.A. and Bank of America
NT&SA.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
The principal market on which the Common Stock is traded is the New York
Stock Exchange. The Common Stock is also listed on the London Stock Exchange
and the Pacific Stock Exchange, and certain shares are listed on the Tokyo
Stock Exchange. The following table sets forth the high and low sales prices of
the Common Stock on the New York Stock Exchange Composite Transactions List for
the periods indicated:
<TABLE>
<CAPTION>
Quarter High Low
--------- ------------ ----------
<S> <C> <C> <C>
1997 first $65 $48
second 70 54
third 71 11/16 56 5/8
fourth 66 3/8 55
1998 first 75 1/8 56 1/4
second 85 72 1/16
third 88 7/16 47 7/8
fourth 66 5/8 44
</TABLE>
As of December 31, 1998, there were 295,937 record holders of Common
Stock. During 1997 and 1998, the Corporation paid dividends on the Common Stock
on a quarterly basis. The following table sets forth dividends declared per
share of Common Stock for the periods indicated:
<TABLE>
<CAPTION>
Quarter Dividend
--------- ---------
<S> <C> <C>
1997 first $.33
second .33
third .33
fourth .38
1998 first .38
second .38
third .38
fourth .45
</TABLE>
For additional information regarding the Corporation's ability to pay
dividends, see "Government Supervision and Regulation - Distributions" and Note
Twelve of the consolidated financial statements on page 78.
8
<PAGE>
Item 6. SELECTED FINANCIAL DATA
See Table One for Selected Financial Data.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
On September 25, 1998, BankAmerica Corporation (the Corporation)
reincorporated in Delaware and on September 30, 1998, NationsBank Corporation
(NationsBank) completed its merger with the former BankAmerica Corporation
(BankAmerica) and changed its name to "BankAmerica Corporation". In addition,
on January 9, 1998, the Corporation completed its merger with Barnett Banks,
Inc. (Barnett). The BankAmerica and Barnett mergers were each accounted for as
a pooling of interests and, accordingly, all financial information has been
restated for all periods presented.
This report contains certain forward-looking statements that are subject
to risks and uncertainties and include information about possible or assumed
future results of operations. Many possible events or factors could affect the
future financial results and performance of the Corporation. This could cause
results or performance to differ materially from those expressed in our
forward-looking statements. Words such as "expects", "anticipates", "believes",
"estimates", variations of such words and other similar expressions are
intended to identify such forward-looking statements. These statements are not
guarantees of future performance and involve certain risks, uncertainties and
assumptions, which are difficult to predict. Therefore, actual outcomes and
results may differ materially from what is expressed or forecasted in, or
implied by, such forward-looking statements. Readers of this report should not
rely solely on the forward-looking statements and should consider all
uncertainties and risks discussed throughout this report. These statements are
representative only on the date hereof, and the Corporation undertakes no
obligation to update any forward-looking statements made.
The possible events or factors include the following: the Corporation's
loan growth is dependent on economic conditions as well as various
discretionary factors, such as decisions to securitize, sell, or purchase
certain loans or loan portfolios, syndications or participations of loans,
retention of residential mortgage loans generated by the mortgage subsidiaries,
the management of borrower, industry, product and geographic concentrations and
the mix of the loan portfolio. The rate of charge-offs and provision expense
can be affected by local, regional and international economic and market
conditions, concentrations of borrowers, industries, products and geographic
locations, the mix of the loan portfolio and management's judgments regarding
the collectibility of loans. Liquidity requirements may change as a result of
fluctuations in assets and liabilities and off-balance sheet exposures, which
will impact the capital and debt financing needs of the Corporation and the mix
of funding sources. Decisions to purchase, hold or sell securities are also
dependent on liquidity requirements and market volatility, as well as, on- and
off-balance sheet positions. Factors that may impact interest rate risk include
local, regional and international economic conditions, levels, mix, maturities,
yields or rates of assets and liabilities, utilization and effectiveness of
interest rate contracts and the wholesale and retail funding sources of the
Corporation. Factors that may cause actual noninterest expense to differ from
estimates include uncertainties relating to the Corporation's efforts to
prepare its information technology systems and non-information technology
systems for the Year 2000 and the Euro conversion, as well as uncertainties
relating to the ability of third parties with whom the Corporation has business
relationships to address the Year 2000 issue and the Euro conversion issue in a
timely and adequate manner. The Corporation is also exposed to the potential of
losses arising from adverse changes in market rates and prices which can
adversely impact the value of financial products, including securities, loans,
deposits, debt and derivative financial instruments, such as futures, forwards,
swaps, options and other financial instruments with similar characteristics.
In addition, the banking industry in general is subject to various
monetary and fiscal policies and regulations, which include those determined by
the Federal Reserve Board, the Office of the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, state regulators and the Office of
Thrift Supervision, which policies and regulations could affect the
Corporation's results. Other factors that may cause actual results to differ
from the forward-looking statements include competition with other local,
regional and international banks, savings and loan associations, credit unions
and other non-bank financial institutions, such as investment banking firms,
investment advisory firms, brokerage firms, mutual funds and insurance
companies, as well as other entities
9
<PAGE>
which offer financial services, located both within and outside the United
States; interest rate, market and monetary fluctuations; inflation; market
volatility; general economic conditions and economic conditions in the
geographic regions and industries in which the Corporation operates;
introduction and acceptance of new banking-related products, services and
enhancements; fee pricing strategies, mergers and acquisitions and their
integration into the Corporation, and management's ability to manage these and
other risks.
1998 Compared to 1997
Overview
The Corporation is a multi-bank holding company headquartered in
Charlotte, North Carolina, providing a diversified range of banking and certain
non-banking financial services both domestically and internationally through
four major Business Segments: Consumer Banking, Commercial Banking, Global
Corporate and Investment Banking, and Principal Investing and Wealth
Management. On December 31, 1998, the Corporation had $618 billion in assets,
making it the largest banking company in the United States. On September 30,
1998, the Corporation completed its merger with BankAmerica, a multinational
bank holding company headquartered in San Francisco, California. In addition,
on January 9, 1998, the Corporation merged with Barnett, a multi-bank holding
company headquartered in Jacksonville, Florida. The Corporation accounted for
each transaction as a pooling of interests and, accordingly, all financial
information has been restated for all periods presented.
On October 1, 1997, the Corporation completed the acquisitions of
Montgomery Securities, Inc. (NationsBanc Montgomery Securities) and Robertson,
Stephens & Company Group, L.L.C. (Robertson Stephens). The Corporation
accounted for both acquisitions as purchases. The Corporation sold the
investment banking operations of Robertson Stephens on August 31, 1998 and sold
the investment management operations on February 26, 1999.
Significant changes in the Corporation's results of operations and
financial position are described in the following sections.
Refer to Table One and Table Twenty for annual and quarterly selected
financial data, respectively.
Key performance highlights for 1998 were:
o Operating net income (net income excluding merger-related charges) totaled
$6.49 billion, or $3.73 per common share, in 1998 compared to $6.81 billion,
or $3.86 per common share in 1997. Diluted operating earnings per common share
were $3.64 for 1998 compared to $3.76 for 1997. Including merger-related
charges of $1.80 billion ($1.33 billion, net of tax) and $374 million ($264
million, net of tax) for 1998 and 1997, respectively, net income was $5.17
billion and $6.54 billion, respectively. Earnings per common share and diluted
earnings per common share including merger-related charges were $2.97 and
$2.90, respectively for 1998 and $3.71 and $3.61, respectively, for 1997.
o Taxable-equivalent net interest income declined less than 1 percent to $18.46
billion in 1998 as an 8 percent increase in managed loans and an increase in
core deposits were offset by the impact of spread compression,
securitizations, divestitures and earning asset sales. Excluding the impact of
securitizations, divestitures and earning asset sales, net interest income
increased $526 million, or 3 percent over 1997. The net interest yield
decreased to 3.69 percent in 1998 compared to 4.00 percent in 1997, primarily
reflecting higher levels of investment securities, which have a lower yield
than loans, and a decrease in spreads between loans and deposits.
o The provision for credit losses covered net charge-offs and totaled $2.92
billion in 1998, compared to $1.90 billion in 1997. The increase was partially
due to a $500 million provision related to international economic conditions
and higher net commercial charge-offs. For additional discussion see "Recent
International Developments" on page 42. Net charge-offs totaled $2.47 billion
in 1998 compared to $1.85 billion in 1997, while net charge-offs as a
percentage of average loans and leases were 0.71 percent in 1998 compared to
0.54 percent in 1997. Higher net charge-offs were primarily the result of a
$372 million write-down of a credit agreement with DE Shaw Securities Group,
Inc. (DE Shaw), a trading and investment firm. Nonperforming assets were $2.76
billion on December 31, 1998 compared to $2.42 billion on December 31, 1997,
mainly the result of higher commercial nonperforming loans.
o Noninterest income increased approximately 4 percent to $12.2 billion in 1998.
This growth was attributable to higher levels of income from most categories,
including investment banking income, brokerage income, credit card income, and
other income, which included gains on securitizations, as well as the sale of
a partial
10
<PAGE>
ownership interest in a mortgage company and the sale of the manufactured
housing lending business. Partially offsetting these increases were
securities trading losses and a decrease in mortgage servicing income.
Trading account profits and fees totaled $171 million in 1998 compared to
$976 million in 1997. The decrease was primarily attributed to a write-down
of Russian securities and losses in corporate bonds and commercial mortgage
products as spreads widened during the third quarter of 1998. Mortgage
servicing income for 1998 totaled $115 million compared to $401 million in
1997. The decrease was due to a $250 million write-down of mortgage
servicing assets resulting from an increase in anticipated prepayment rates.
o Merger-related charges totaled $1.8 billion and $374 million for the years
ended December 31, 1998 and 1997, respectively. The total $1.8 billion charge
for 1998 included $1.3 billion associated with the BankAmerica merger, as well
as $900 million associated with the Barnett merger, which was offset by a $430
million gain resulting from the regulatory required divestitures of certain
Barnett branches. See Note Two of the consolidated financial statements on
page 61 for additional information.
o Other noninterest expense increased 6 percent to $18.7 billion in 1998, mainly
as a result of increases in personnel and data processing expenses associated
with the purchases of Oxford Resources, Corp. (NationsBanc Auto Leasing, Inc.)
NationsBanc Montgomery Securities and Robertson Stephens, which was sold in
the third quarter of 1998, and costs of the BankAmerica and Barnett transition
projects.
o Operating cash basis ratios, which measure operating performance excluding
merger-related charges, intangible assets and the related amortization
expense, declined with cash basis diluted earnings per common share of $4.15
in 1998 compared to $4.24 in 1997. Return on average tangible common
shareholders' equity, excluding merger-related charges, decreased to 25.24
percent compared to 27.77 percent in 1997. The cash basis efficiency ratio was
58.2 percent in 1998, an increase of 293 basis points from 55.27 in 1997 due
to the increase in noninterest expense associated with the NationsBanc
Montgomery Securities, Robertson Stephens and NationsBanc Auto Leasing, Inc.
acquisitions in the fourth quarter of 1997.
As of the end of the third quarter of 1998, a banking subsidiary of the
Corporation charged off $372 million of a credit agreement to DE Shaw, to which
the banking subsidiary had outstanding balances of approximately $1.4 billion
prior to the charge-off. The outstanding credit agreement with DE Shaw was
restructured to provide, among other things, for an accelerated schedule of
repayments.
Throughout the fourth quarter of 1998, the Corporation reduced its
exposure to DE Shaw. During the fourth quarter of 1998, the banking subsidiary
purchased approximately $20 billion of fixed income securities and related
hedge positions from DE Shaw. Of the $20 billion of fixed income securities
purchased, $13.6 billion was subsequently sold and $5.8 billion has been
incorporated into the Corporation's trading and investment portfolio. In
addition, the Corporation is carrying the original loan to DE Shaw as an
investment on its books and marking it to market each quarter. During the
fourth quarter of 1998, the Corporation marked down the investment by $158
million. In addition, DE Shaw made a regularly scheduled payment of $100
million. As a result of the write-down and repayment, the investment was $770
million at December 31, 1998.
Losses associated with DE Shaw originated primarily as a result of global
market turbulence and uncertainties during the third quarter of 1998.
Uncertainties continue to exist in overseas economies and global markets, which
may be volatile in 1999. Accordingly, the Corporation may experience weakness
in 1999 relating to the impact of such conditions on the Corporation's credit
and trading portfolios and weaknesses in income from operating units, such as
investment banking, that may be adversely impacted by such conditions.
The remainder of management's discussion and analysis of the consolidated
financial condition and results of operations of the Corporation should be read
in conjunction with the consolidated financial statements and related notes
presented on pages 50 through 95.
11
<PAGE>
Table One
Five-Year Summary of Selected Financial Data
(Dollars in Millions Except Per-Share Information)
<TABLE>
<CAPTION>
1998 1997
-------------- --------------
<S> <C> <C>
Income statement
Interest income ......................................................... $ 38,588 $ 37,333
Interest expense ........................................................ 20,290 18,901
Net interest income (taxable-equivalent) ................................ 18,461 18,589
Net interest income ..................................................... 18,298 18,432
Provision for credit losses ............................................. 2,920 1,904
Gains (losses) on sales of securities ................................... 1,017 271
Noninterest income ...................................................... 12,189 11,756
Merger-related charges, net ............................................. 1,795 374
Other noninterest expense ............................................... 18,741 17,625
Income before taxes ..................................................... 8,048 10,556
Income tax expense ...................................................... 2,883 4,014
Net income .............................................................. 5,165 6,542
Net income available to common shareholders ............................. 5,140 6,431
Net income (excluding merger-related charges) ........................... 6,490 6,806
Average common shares issued and outstanding (in thousands) ............. 1,732,057 1,733,194
Per common share
Earnings ................................................................ $ 2.97 $ 3.71
Earnings (excluding merger-related charges) ............................. 3.73 3.86
Diluted earnings ........................................................ 2.90 3.61
Diluted earnings (excluding merger-related charges) ..................... 3.64 3.76
Cash dividends paid ..................................................... 1.59 1.37
Shareholders' equity (year-end) ......................................... 26.60 25.49
Balance sheet (year-end)
Total loans and leases .................................................. 357,328 342,140
Total assets ............................................................ 617,679 570,983
Total deposits .......................................................... 357,260 346,297
Long-term debt .......................................................... 45,888 42,887
Common shareholders' equity ............................................. 45,866 43,907
Total shareholders' equity .............................................. 45,938 44,584
Performance ratios
Return on average assets ................................................ .88% 1.20%
Return on average assets (excluding merger-related charges) ............. 1.11 1.25
Return on average common shareholders' equity ........................... 11.56 15.26
Return on average common shareholders' equity
(excluding merger-related charges) ..................................... 14.54 15.88
Efficiency ratio (excluding merger-related charges) ..................... 61.15 58.08
Total equity to total assets (year-end) ................................. 7.44 7.81
Total average equity to total average assets ............................ 7.67 8.02
Dividend payout ratio ................................................... 50.18 32.09
Risk-based capital ratios (year-end) (1)
Tier 1 .................................................................. 7.06 6.50
Total ................................................................... 10.94 10.89
Leverage capital ratio .................................................. 6.22 5.57
Cash basis financial data (2)
Earnings per common share ............................................... $ 3.49 $ 4.20
Earnings per common share (excluding merger-related charges) ............ 4.25 4.36
Diluted earnings per common share ....................................... 3.41 4.09
Diluted earnings per common share (excluding merger-related
charges) ............................................................... 4.15 4.24
Return on average tangible assets ....................................... 1.07% 1.40%
Return on average tangible assets (excluding merger-related charges)..... 1.30 1.45
Return on average tangible common shareholders' equity .................. 20.70 26.80
Return on average tangible common shareholders' equity
(excluding merger-related charges) ..................................... 25.24 27.77
Efficiency ratio (excluding merger-related charges) ..................... 58.20 55.27
Tangible equity to tangible assets ...................................... 5.18 5.19
Market price per share of common stock
Closing price ........................................................... $ 60 1/8 $ 60 13/16
High for the period ..................................................... 88 7/16 71 11/16
Low for the period ...................................................... 44 48
<CAPTION>
1996 1995 1994
-------------- -------------- -------------
<S> <C> <C> <C>
Income statement
Interest income ......................................................... $ 33,636 $ 32,158 $ 25,562
Interest expense ........................................................ 16,682 16,369 11,080
Net interest income (taxable-equivalent) ................................ 17,082 15,824 14,549
Net interest income ..................................................... 16,954 15,789 14,482
Provision for credit losses ............................................. 1,645 945 798
Gains (losses) on sales of securities ................................... 147 68 (48)
Noninterest income ...................................................... 9,604 8,132 7,124
Merger-related charges, net ............................................. 398 -- --
Other noninterest expense ............................................... 15,351 14,667 13,750
Income before taxes ..................................................... 9,311 8,377 7,010
Income tax expense ...................................................... 3,498 3,230 2,656
Net income .............................................................. 5,813 5,147 4,354
Net income available to common shareholders ............................. 5,611 4,896 4,078
Net income (excluding merger-related charges) ........................... 6,058 5,147 4,354
Average common shares issued and outstanding (in thousands) ............. 1,638,382 1,613,404 1,590,925
Per common share
Earnings ................................................................ $ 3.42 $ 3.03 $ 2.56
Earnings (excluding merger-related charges) ............................. 3.58 3.03 2.56
Diluted earnings ........................................................ 3.36 2.98 2.54
Diluted earnings (excluding merger-related charges) ..................... 3.51 2.98 2.54
Cash dividends paid ..................................................... 1.20 1.04 0.94
Shareholders' equity (year-end) ......................................... 22.10 20.89 18.31
Balance sheet (year-end)
Total loans and leases .................................................. 317,709 302,804 273,615
Total assets ............................................................ 477,702 461,775 426,997
Total deposits .......................................................... 309,100 296,316 291,127
Long-term debt .......................................................... 40,041 34,349 24,748
Common shareholders' equity ............................................. 35,429 33,532 29,718
Total shareholders' equity .............................................. 37,793 36,295 33,036
Performance ratios
Return on average assets ................................................ 1.20% 1.13% 1.07%
Return on average assets (excluding merger-related charges) ............. 1.25 1.13 1.07
Return on average common shareholders' equity ........................... 16.32 15.52 14.46
Return on average common shareholders' equity
(excluding merger-related charges) ..................................... 17.04 15.52 14.46
Efficiency ratio (excluding merger-related charges) ..................... 57.52 61.22 63.44
Total equity to total assets (year-end) ................................. 7.91 7.86 7.74
Total average equity to total average assets ............................ 7.61 7.51 7.68
Dividend payout ratio ................................................... 30.05 29.13 30.53
Risk-based capital ratios (year-end) (1)
Tier 1 .................................................................. 7.76 7.24 7.43
Total ................................................................... 12.66 11.58 11.47
Leverage capital ratio .................................................. 7.09 6.27 6.18
Cash basis financial data (2)
Earnings per common share ............................................... $ 3.76 $ 3.38 $ 2.90
Earnings per common share (excluding merger-related charges) ............ 3.91 3.38 2.90
Diluted earnings per common share ....................................... 3.69 3.32 2.87
Diluted earnings per common share (excluding merger-related
charges) ............................................................... 3.84 3.32 2.87
Return on average tangible assets ....................................... 1.34% 1.27% 1.22%
Return on average tangible assets (excluding merger-related charges)..... 1.39 1.27 1.22
Return on average tangible common shareholders' equity .................. 23.65 23.56 22.56
Return on average tangible common shareholders' equity
(excluding merger-related charges) ..................................... 24.60 23.56 22.56
Efficiency ratio (excluding merger-related charges) ..................... 55.49 58.89 61.01
Tangible equity to tangible assets ...................................... 6.31 6.19 5.91
Market price per share of common stock
Closing price ........................................................... $ 48 7/8 $ 34 13/16 $ 22 9/16
High for the period ..................................................... 52 5/8 37 3/8 28 11/16
Low for the period ...................................................... 32 3/16 22 5/16 21 11/16
</TABLE>
(1) Ratios prior to 1998 are former NationsBank ratios and have not been
restated to reflect the impact of the BankAmerica and Barnett mergers.
(2) Cash basis calculations exclude intangible assets and the related
amortization expense.
12
<PAGE>
Business Segment Operations
The Corporation provides a diversified range of banking and certain
nonbanking financial services and products through its various subsidiaries.
Management reports the results of the Corporation's operations through four
business segments: Consumer Banking, Commercial Banking, Global Corporate and
Investment Banking, and Principal Investing and Wealth Management.
The business segments summarized in Table Two are primarily managed with a
focus on various performance objectives including net income, return on average
equity and operating efficiency. These performance objectives are also
presented on a cash basis, which excludes the impact of goodwill and other
intangible assets and related amortization expense. The net interest income of
the business segments 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 segment based on an assessment of its inherent
risk.
See Note Sixteen of the consolidated financial statements on page 90 for
additional business segment information, including adjustments and
reconciliations to consolidated amounts.
Consumer Banking
The Consumer Banking segment provides comprehensive retail banking
services to individuals and small businesses through multiple delivery channels
including approximately 4,700 banking centers and 14,000 automated teller
machines (ATMs). These banking centers and ATMs are located principally
throughout the Corporation's franchise and serve approximately 30 million
households in 22 states and the District of Columbia. This segment also
provides specialized services such as the origination and servicing of
residential mortgage loans, issuance and servicing of credit cards, direct
banking via telephone and personal computer, student lending and certain
insurance services. The consumer finance component provides personal, mortgage,
home equity and automobile loans to consumers, retail finance programs to
dealers and lease financing to purchasers of new and used cars.
Consumer Banking's earnings increased 14 percent to $4.0 billion in 1998.
Taxable-equivalent net interest income decreased 3 percent to $12.0 billion in
1998, primarily reflecting the impact of securitizations, divestitures and loan
sales, partially offset by reduced funding costs from deposit expense
management. As the Corporation continues to securitize loans, its role becomes
that of a servicer and the servicing income, as well as the gains on
securitizations are reflected in noninterest income. The net interest yield
increased 3 basis points in 1998, reflecting the impact of lower earning assets
coupled with changes in spreads on loans and deposits. Excluding the impact of
securitizations, acquisitions and divestitures, average total loans and leases
increased approximately 6 percent over average levels in 1997. Average total
deposits of $232.3 billion declined slightly from the 1997 level of $234.2
billion, primarily due to $3.5 billion in divestitures in 1998 and 1997,
partially offset by core deposit growth.
The provision for credit losses decreased $306 million to $1.3 billion in
1998 from $1.6 billion in 1997 primarily due to securitizations, loan sales and
divestitures.
Noninterest income in Consumer Banking rose 6 percent to $6.7 billion in
1998 due to increased credit card fee income, non-deposit service charges and
fee income, and miscellaneous income primarily related to a $479 million gain
on the sale of a manufactured housing unit and loan sales. These gains were
partially offset by lower mortgage servicing income resulting from a write-down
of mortgage servicing rights of approximately $250 million.
Noninterest expense decreased 2 percent to $11.1 billion. This reflects
the efficiencies obtained from the successful integration of the former
Boatmen's Bancshares, Inc. (Boatmen's) and Barnett franchises and expense
management efforts. The cash basis efficiency ratio was 56.3 percent, an
improvement of approximately 140 basis points compared to 1997. The return on
risk-adjusted tangible equity increased to 30 percent in 1998 compared to 26
percent in 1997.
Consumer Banking's earnings in 1997 increased 21 percent to $3.5 billion
compared to $2.9 billion for 1996. Taxable-equivalent net interest income in
1997 of $12.4 billion increased 8 percent from 1996. Noninterest income
increased 26 percent in 1997 to $6.3 billion compared to $5.0 billion for 1996.
The net interest yield decreased 13 basis points from 1996 to 4.73 percent.
13
<PAGE>
Commercial Banking
The Commercial Banking segment provides a wide range of commercial banking
services for businesses with annual revenues of up to $500 million. Services
provided include commercial lending, treasury and cash management services,
asset-backed lending, leasing and factoring. Also included in this segment are
the Corporation's commercial finance operations which provide: equipment loans
and leases, loans for debt restructuring, mergers and working capital, real
estate and health care financing and inventory financing to manufacturers,
distributors and dealers.
Commercial Banking's earnings rose 2 percent to $875 million in 1998.
Taxable-equivalent net interest income decreased $42 million from 1997
primarily reflecting higher costs of funds partially offset by higher loan
levels. Commercial Banking's average loan and lease portfolio during 1998
increased 8 percent to $51.1 billion compared to $47.3 billion in 1997.
Noninterest income rose 23 percent to $699 million in 1998 primarily due
to increased investment banking fees as well as deposit service charges.
Noninterest expense in 1998 increased 10 percent to $1.3 billion, primarily due
to increases in data processing and personnel expenses. The cash basis
efficiency ratio increased approximately 310 basis points to 45.1 percent. The
return on risk-adjusted tangible equity decreased to 25 percent from 29
percent.
Commercial Banking's earnings in 1997 increased 18 percent to $861 million
compared to $729 million for 1996. Taxable-equivalent net interest income in
1997 of $2.0 billion increased 14 percent from 1996. Noninterest income
increased 18 percent in 1997 to $568 million compared to $480 million for 1996.
The net interest yield decreased 9 basis points from 1996 to 3.79 percent.
Global Corporate and Investment Banking
The Global Corporate and Investment Banking segment provides a broad array
of financial and investment banking products such as capital-raising products,
trade finance, treasury management, investment banking, capital markets and
financial advisory services to domestic and international corporations,
financial institutions and government entities. Clients are supported through
offices in 37 countries in four distinct geographic regions: U.S. and Canada;
Asia; Europe, Middle East and Africa; and Latin America. Products and services
provided include loan origination, cash management, foreign exchange, leasing,
leveraged finance, project finance, real estate, senior bank debt, structured
finance, and trade services. Through its Section 20 subsidiary, NationsBanc
Montgomery Securities, the Global Corporate and Investment Banking segment is a
primary dealer of U.S. Government Securities. This segment underwrites,
distributes and makes markets in high-grade and high-yield debt securities,
municipal bonds and equity securities. Asset-backed securitization, commercial
paper, debt and equity securities research, loan syndications, mergers and
acquisitions consulting and private placements are also provided through
NationsBanc Montgomery Securities. Additionally, Global Corporate and
Investment Banking is a market maker in risk management products which include
swap agreements, option contracts, forward settlement contracts, financial
futures, and other derivative products in certain interest rate, foreign
exchange, commodity and equity markets. In support of these activities, Global
Corporate and Investment Banking takes positions to support client demands and
its own account.
Global Corporate and Investment Banking's net income decreased to $244
million in 1998 compared to $1.6 billion in 1997. Taxable-equivalent net
interest income increased 8 percent in 1998 to $3.7 billion compared to $3.4
billion in 1997, reflecting higher loan volumes and increased trading related
activities. Excluding the impact of a $4.2 billion securitization completed in
1997, the Global Corporate and Investment Banking average loan and lease
portfolio increased approximately 11 percent over the levels in 1997.
The provision for credit losses increased from $342 million in 1997 to
$1.6 billion in 1998 primarily due to international economic conditions and
higher net commercial charge-offs.
14
<PAGE>
Table Two
Business Segment Summary
For the Year Ended December 31
(Dollars in Millions)
<TABLE>
<CAPTION>
Consumer Banking Commercial Banking
----------------------------------- --------------------------------
1998 1997 1996 1998 1997 1996
----------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net income .................................... $ 3,999 $ 3,523 $ 2,918 $ 875 $ 861 $ 729
Cash basis earnings (1) ....................... 4,545 4,089 3,257 966 953 771
Net interest yield ............................ 4.76% 4.73% 4.86% 3.39% 3.79% 3.88%
Average equity to average assets .............. 7.35 7.26 6.51 7.29 7.06 5.69
Return on risk-adjusted average equity ........ 20 17 17 19 21 26
Return on risk-adjusted tangible equity (1) ... 30 26 24 25 29 31
Efficiency ratio .............................. 59.5 60.9 60.6 48.8 45.9 45.7
Cash basis efficiency ratio (1) ............... 56.3 57.7 58.2 45.1 42.0 43.6
Average
Total loans and leases ....................... $174,409 $183,627 $51,120 $47,319
Total deposits ............................... 232,324 234,226 18,081 16,906
Total assets ................................. 277,820 291,210 64,881 59,299
Year-end
Total loans and leases ....................... 175,471 177,200 53,372 49,031
Total deposits ............................... 237,816 233,732 20,948 19,672
Total assets ................................. 269,458 285,686 67,366 65,243
</TABLE>
<TABLE>
<CAPTION>
Global Corporate & Principal Investing &
Investment Banking Wealth Management
------------------------------------ --------------------------------
1998 1997 1996 1998 1997 1996
------------ ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net income ...................................... $ 244 $ 1,632 $ 1,537 $ 497 $ 560 $ 520
Cash basis earnings (1) ......................... 383 1,725 1,593 517 580 542
Net interest yield .............................. 1.97% 2.01% 2.04% 2.81% 3.30% 3.39%
Average equity to average assets ................ 5.65 5.30 4.76 12.73 13.01 14.63
Return on risk-adjusted average equity .......... 2 15 20 20 28 29
Return on risk-adjusted tangible equity (1) ..... 4 18 22 23 32 35
Efficiency ratio ................................ 71.3 54.8 52.1 66.9 61.4 58.6
Cash basis efficiency ratio (1) ................. 68.7 53.0 50.8 65.8 60.3 57.2
Average
Total loans and leases ........................ $107,279 $ 99,191 $15,183 $12,001
Total deposits ................................ 63,174 59,746 11,865 10,883
Total assets .................................. 223,143 199,766 19,317 15,569
Year-end ........................................
Total loans and leases ........................ 111,550 101,870 17,853 13,123
Total deposits ................................ 68,915 60,477 12,621 11,573
Total assets .................................. 248,264 204,862 22,246 18,320
</TABLE>
(1) Cash basis calculations exclude intangible assets and the related
amortization expense.
Noninterest income in 1998 was $2.8 billion, a decrease of 8 percent from
1997, reflecting lower trading income due to weaker global markets and lower
miscellaneous income due to $158 million of losses associated with the
investment in DE Shaw, as well as a $112 million write-down of other equity
investments. Partially offsetting these decreases were higher investment
banking fees and brokerage income due to the NationsBanc Montgomery Securities
and Robertson Stephens acquisitions in the fourth quarter of 1997.
Noninterest expense rose to $4.7 billion due primarily to higher personnel
expenses associated with the NationsBanc Montgomery Securities and Robertson
Stephens acquisitions. Expenses in most other categories also increased in 1998
due to the NationsBanc Montgomery Securities and Robertson Stephens
acquisitions. The cash basis efficiency ratio increased to 68.7 percent
primarily due to higher expense ratios at NationsBanc Montgomery Securities and
Robertson Stephens. The return on risk-adjusted tangible equity decreased to 4
percent in 1998 from 18 percent in 1997 reflecting difficult international
market conditions.
15
<PAGE>
Global Corporate and Investment Banking earnings in 1997 increased 6
percent to $1.6 billion compared to $1.5 billion for 1996. Taxable-equivalent
net interest income in 1997 of $3.4 billion increased 9 percent from 1996.
Noninterest income increased 26 percent in 1997 to $3.1 billion compared to
$2.5 billion for 1996. The net interest yield decreased 3 basis points from
1996 to 2.01 percent.
Principal Investing and Wealth Management
The Principal Investing and Wealth Management segment includes Wealth
Management which provides asset management, banking and trust services for high
net worth clients both in the U.S. and internationally through its Private
Bank. In addition, this segment provides full service and discount brokerage,
investment advisory and investment management, as well as advisory services for
the Corporation's affiliated family of mutual funds. The Principal Investing
area includes direct equity investments in businesses and investments in
general partnership funds.
Principal Investing and Wealth Management earned $497 million in 1998
compared to $560 million in 1997, a decrease of 11 percent. The results are due
to strong growth in the segment's core business, offset by the sales of certain
corporate and institutional trust businesses during the third quarter of 1997.
Taxable-equivalent net interest income increased 8 percent in 1998 to $451
million compared to $418 million a year ago, reflecting income from increased
loan levels. The average loan and lease portfolio in 1998 increased to $15.2
billion compared to $12.0 billion in 1997.
Noninterest income remained essentially level with 1997 at $1.9 billion in
1998. Core revenue growth was offset by the sales of certain corporate and
institutional businesses, which occurred in the third quarter of 1997.
Noninterest expense increased 10 percent due primarily to increases in
personnel expense, support costs and a bond litigation settlement during the
fourth quarter of 1998. See Note Eleven of the consolidated financial
statements on page 74 for additional information on litigation. The cash basis
efficiency ratio increased approximately 550 basis points to 65.8 percent in
1998 compared to 60.3 percent in 1997. The return on risk-adjusted tangible
equity decreased to 23 percent.
Principal Investing and Wealth Management earnings in 1997 increased 8
percent to $560 million compared to $520 million for 1996. Taxable-equivalent
net interest income in 1997 of $418 million increased 29 percent from 1996.
Noninterest income increased 12 percent in 1997 to $1.9 billion compared to
$1.7 billion for 1996. The net interest yield decreased 9 basis points from
1996 to 3.30 percent.
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 and most recent five
quarters is presented in Tables Three and Twenty-One, respectively. The changes
in net interest income from year to year are analyzed in Table Four.
Taxable-equivalent net interest income decreased approximately 1 percent
to $18.5 billion in 1998 compared to $18.6 billion in 1997 due primarily to a
reduction in the net difference between loan and deposit rates and the impact
of securitizations, divestitures and asset sales. The decrease was partially
offset by loan growth and increased core funding. As the Corporation continues
to securitize loans, its role becomes that of a servicer and the servicing
income, as well as the gains on securitizations are reflected in noninterest
income.
Average earning assets increased nearly $35 billion from 1997 to $499.7
billion in 1998, driven primarily by an increase in investment securities.
These security additions were mainly funded with short-term borrowings,
accounting for the majority of the increases in interest income and interest
expense, respectively. Loan yields declined 33 basis points during 1998,
reflecting lower market interest rates, the competitive market environment and
a change in loan mix resulting from strong growth in both consumer and
commercial products, offset by securitizations and divestitures, primarily in
the consumer product lines.
The net interest yield decreased 31 basis points to 3.69 percent in 1998
compared to 4.00 percent in 1997, primarily reflecting higher levels of
investment securities, which have a lower yield than loans, and a reduction in
the net difference between loan and deposit rates.
Loan growth is dependent on economic conditions as well as various
discretionary factors, such as decisions to securitize certain loan portfolios
and the management of borrower, industry, product and geographic
concentrations.
16
<PAGE>
Table Three
12-Month Taxable-Equivalent Data
(Dollars in Millions)
<TABLE>
<CAPTION>
1998 1997
------------------------------- -------------------------------
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 (1)
Commercial - domestic ........................................ $130,177 $ 9,988 7.67% $117,465 $ 9,386 7.99%
Commercial - foreign ......................................... 31,015 2,246 7.24 28,295 1,995 7.05
Commercial real estate - domestic ............................ 28,418 2,503 8.81 29,468 2,748 9.33
Commercial real estate - foreign ............................. 330 33 10.05 156 30 19.24
-------- ------- ----- -------- ------- -----
Total commercial ............................................ 189,940 14,770 7.78 175,384 14,159 8.07
-------- ------- ----- -------- ------- -----
Residential mortgage ......................................... 70,842 4,880 6.89 80,593 5,683 7.05
Home equity lines ............................................ 16,129 1,741 10.79 14,760 1,813 12.29
Direct/Indirect consumer ..................................... 40,204 3,506 8.72 39,270 3,464 8.82
Consumer finance ............................................. 14,368 1,529 10.64 13,845 1,625 11.73
Bankcard ..................................................... 12,960 1,638 12.64 15,920 2,127 13.36
Foreign consumer ............................................. 3,397 357 10.51 3,379 301 8.90
-------- ------- ----- -------- ------- -----
Total consumer .............................................. 157,900 13,651 8.65 167,767 15,013 8.95
-------- ------- ----- -------- ------- -----
Total loans and leases ...................................... 347,840 28,421 8.17 343,151 29,172 8.50
-------- ------- ----- -------- ------- -----
Securities
Held for investment .......................................... 4,113 282 6.88 5,402 389 7.19
Available for sale (2) ....................................... 62,571 4,286 6.85 42,867 2,959 6.90
-------- ------- ----- -------- ------- -----
Total securities ............................................ 66,684 4,568 6.85 48,269 3,348 6.94
-------- ------- ----- -------- ------- -----
Federal funds sold and securities purchased under
agreements to resell ......................................... 27,288 1,828 6.70 23,437 1,516 6.47
Time deposits placed and other short-term investments ......... 7,649 514 6.72 8,379 541 6.46
Trading account securities .................................... 39,774 2,634 6.62 38,284 2,588 6.76
Other earning assets .......................................... 10,504 786 7.49 3,442 325 9.46
-------- ------- ----- -------- ------- -----
Total earning assets (3) .................................... 499,739 38,751 7.75 464,962 37,490 8.06
-------- ------- ----- -------- ------- -----
Cash and cash equivalents ...................................... 24,907 24,187
Other assets, less allowance for credit losses ................. 59,841 54,647
-------- --------
Total assets ................................................ $584,487 $543,796
======== ========
Interest-bearing liabilities
Domestic interest-bearing deposits
Savings ...................................................... $ 22,692 421 1.86 $ 24,559 490 2.00
NOW and money market deposit accounts ........................ 96,541 2,536 2.63 95,204 2,529 2.66
Consumer CDs and IRAs ........................................ 74,655 3,915 5.24 77,479 4,101 5.29
Negotiated CDs, public funds and other time deposits ......... 7,604 414 5.44 6,412 360 5.62
-------- ------- ----- -------- ------- -----
Total domestic interest-bearing deposits .................... 201,492 7,286 3.62 203,654 7,480 3.67
-------- ------- ----- -------- ------- -----
Foreign interest-bearing deposits (4)
Banks located in foreign countries ........................... 24,587 1,405 5.72 22,100 1,274 5.77
Governments and official institutions ........................ 10,517 590 5.61 10,801 591 5.47
Time, savings and other ...................................... 24,261 1,530 6.30 22,093 1,339 6.06
-------- ------- ----- -------- ------- -----
Total foreign interest-bearing deposits ..................... 59,365 3,525 5.94 54,994 3,204 5.83
-------- ------- ----- -------- ------- -----
Total interest-bearing deposits ............................. 260,857 10,811 4.14 258,648 10,684 4.13
-------- ------- ----- -------- ------- -----
Federal funds purchased and securities sold under
agreements to repurchase and other short-term
borrowings ................................................... 90,630 5,239 5.78 70,399 4,105 5.83
Trading account liabilities ................................... 17,472 895 5.12 15,285 975 6.38
Long-term debt (5) ............................................ 49,969 3,345 6.69 46,337 3,137 6.77
-------- ------- ----- -------- ------- -----
Total interest-bearing liabilities (6) ...................... 418,928 20,290 4.84 390,669 18,901 4.84
-------- ------- ----- -------- ------- -----
Noninterest-bearing sources
Noninterest-bearing deposits .................................. 84,628 78,235
Other liabilities ............................................. 36,102 31,282
Shareholders' equity .......................................... 44,829 43,610
-------- --------
Total liabilities and shareholders' equity .................. $584,487 $543,796
======== ========
Net interest spread ............................................ 2.91 3.22
Impact of noninterest-bearing sources .......................... .78 .78
----- -----
Net interest income/yield on earning assets .................... $18,461 3.69% $18,589 4.00%
======= ===== ======= =====
<CAPTION>
1996
--------------------------------
Average
Balance Income
Sheet or Yields/
Amounts Expense Rates
----------- --------- ----------
<S> <C> <C> <C>
Earning assets
Loans and leases (1)
Commercial - domestic ........................................ $102,176 $ 7,963 7.79%
Commercial - foreign ......................................... 24,357 1,768 7.25
Commercial real estate - domestic ............................ 26,563 2,434 9.16
Commercial real estate - foreign ............................. 365 20 5.50
-------- ------- -----
Total commercial ............................................ 153,461 12,185 7.94
-------- ------- -----
Residential mortgage ......................................... 81,375 6,234 7.66
Home equity lines ............................................ 11,694 1,012 8.66
Direct/Indirect consumer ..................................... 34,442 3,089 8.97
Consumer finance ............................................. 11,955 1,459 12.20
Bankcard ..................................................... 16,655 2,251 13.52
Foreign consumer ............................................. 2,749 284 10.36
-------- ------- -----
Total consumer .............................................. 158,870 14,329 9.02
-------- ------- -----
Total loans and leases ...................................... 312,331 26,514 8.49
-------- ------- -----
Securities
Held for investment .......................................... 7,788 514 6.61
Available for sale (2) ....................................... 33,791 2,333 6.90
-------- ------- -----
Total securities ............................................ 41,579 2,847 6.85
-------- ------- -----
Federal funds sold and securities purchased under
agreements to resell ......................................... 24,166 1,371 5.67
Time deposits placed and other short-term investments ......... 7,208 536 7.43
Trading account securities .................................... 31,753 2,232 7.03
Other earning assets .......................................... 2,068 264 12.77
-------- ------- -----
Total earning assets (3) .................................... 419,105 33,764 8.06
-------- ------- -----
Cash and cash equivalents ...................................... 22,800
Other assets, less allowance for credit losses ................. 42,285
--------
Total assets ................................................ $484,190
========
Interest-bearing liabilities
Domestic interest-bearing deposits
Savings ...................................................... $ 25,063 519 2.07
NOW and money market deposit accounts ........................ 82,854 2,057 2.48
Consumer CDs and IRAs ........................................ 68,998 3,537 5.13
Negotiated CDs, public funds and other time deposits ......... 6,614 387 5.85
-------- ------- -----
Total domestic interest-bearing deposits .................... 183,529 6,500 3.54
-------- ------- -----
Foreign interest-bearing deposits (4)
Banks located in foreign countries ........................... 24,043 1,361 5.66
Governments and official institutions ........................ 9,582 501 5.23
Time, savings and other ...................................... 19,158 1,238 6.46
-------- ------- -----
Total foreign interest-bearing deposits ..................... 52,783 3,100 5.87
-------- ------- -----
Total interest-bearing deposits ............................. 236,312 9,600 4.06
-------- ------- -----
Federal funds purchased and securities sold under
agreements to repurchase and other short-term
borrowings ................................................... 65,834 3,699 5.62
Trading account liabilities ................................... 13,643 880 6.45
Long-term debt (5) ............................................ 37,444 2,503 6.69
-------- ------- -----
Total interest-bearing liabilities (6) ...................... 353,233 16,682 4.72
-------- ------- -----
Noninterest-bearing sources
Noninterest-bearing deposits .................................. 66,816
Other liabilities ............................................. 27,283
Shareholders' equity .......................................... 36,858
--------
Total liabilities and shareholders' equity .................. $484,190
========
Net interest spread ............................................ 3.34
Impact of noninterest-bearing sources .......................... .74
-----
Net interest income/yield on earning assets .................... $17,082 4.08%
======= =====
</TABLE>
(1) Nonperforming loans are included in the respective average loan balances.
Income on such nonperforming loans is recognized on a cash basis.
(2) The average balance sheet amounts and yields on securities available for
sale are based on the average of historical amortized cost balances.
(3) Interest income includes taxable-equivalent adjustments of $163, $157 and
$128 in 1998, 1997 and 1996, respectively. Interest income also includes the
impact of risk management interest rate contracts, which increased interest
income on the underlying linked assets $174, $159, and $31 in 1998, 1997 and
1996, respectively.
(4) Primarily consists of time deposits in denominations of $100,000 or more.
(5) Long-term debt includes trust preferred securities.
(6) Interest expense includes the impact of risk management interest rate
contracts, which increased (decreased) interest expense on the underlying
linked liabilities of $45, $(15) and $50 in 1998, 1997, and 1996,
respectively.
17
<PAGE>
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 1997 to 1998
------------------------------------------------
Increase (Decrease)
in Income/Expense
Due to Change in
---------------------
Percentage
Average Yields/ Increase
Levels Rates Total (Decrease)
--------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Earning assets:
Loans and leases
Commercial - domestic ....................... $ 986 $ (384) $ 602 6.41%
Commercial - foreign ........................ 196 55 251 12.58
Commercial real estate - domestic .......... (96) (149) (245) ( 8.92)
Commercial real estate - foreign ........... 22 (19) 3 10.00
--------
Total commercial ........................... 1,145 (534) 611 4.32
--------
Residential mortgage ........................ (674) (129) (803) (14.13)
Home equity lines ........................... 159 (231) (72) ( 3.97)
Direct/Indirect consumer .................... 82 (40) 42 1.21
Consumer finance ............................ 60 (156) (96) ( 5.91)
Bankcard .................................... (379) (110) (489) (22.99)
Foreign consumer ............................ 2 54 56 18.60
--------
Total consumer ............................. (864) (498) (1,362) ( 9.07)
--------
Total loans and leases .................... 395 (1,146) (751) ( 2.57)
--------
Securities:
Held for investment ......................... (89) (18) (107) (27.51)
Available for sale .......................... 1,350 (23) 1,327 44.85
--------
Total securities ........................... 1,262 (42) 1,220 36.44
--------
Federal funds sold and securities
purchased under agreements to resell ........ 256 56 312 20.58
Time deposits placed and other short-term
investments ................................. (48) 21 (27) ( 4.99)
Trading account securities ................... 99 (53) 46 1.78
Other earning assets ......................... 541 (80) 461 141.85
--------
Total interest income ...................... 2,733 (1,472) 1,261 3.36
--------
Interest-bearing liabilities:
Domestic interest-bearing deposits:
Savings ..................................... (36) (33) (69) (14.08)
NOW and money market deposit
accounts ................................... 35 (28) 7 .28
Consumer CDs and IRAs ....................... (148) (38) (186) ( 4.54)
Negotiated CDs, public funds and other
time deposits .............................. 65 (11) 54 15.00
--------
Total domestic interest-bearing
deposits .................................. (79) (115) (194) ( 2.59)
Foreign interest-bearing deposits:
Banks located in foreign countries .......... 142 (11) 131 10.28
Governments and official institutions ....... (16) 15 (1) ( .17)
Time, savings and other ..................... 135 56 191 14.26
----------
Total foreign interest-bearing deposits..... 259 62 321 10.02
----------
Total interest-bearing deposits ............ 91 36 127 1.19
----------
Federal funds purchased, securities sold
under agreements to repurchase and
other short-term borrowings ................. 1,170 (36) 1,134 27.62
Trading account liabilities .................. 128 (208) (80) ( 8.21)
Long-term debt ............................... 243 (35) 208 6.63
----------
Total interest expense ..................... 1,369 20 1,389 7.35
----------
Net interest income ........................... 1,560 (1,688) $ (128) ( .69)
==========
<CAPTION>
From 1996 to 1997
-----------------------------------------
Increase (Decrease)
in Income/Expense
Due to Change in
-------------------
Percentage
Average Yields/ Increase
Levels Rates Total (Decrease)
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
Earning assets:
Loans and leases
Commercial - domestic ....................... $1,217 $ 206 $1,423 17.87%
Commercial - foreign ........................ 279 (52) 227 12.84
Commercial real estate - domestic .......... 270 44 314 12.90
Commercial real estate - foreign ........... (17) 27 10 50.00
------
Total commercial ........................... 1,767 207 1,974 16.20
------
Residential mortgage ........................ (59) (492) (551) ( 8.84)
Home equity lines ........................... 308 493 801 79.15
Direct/Indirect consumer .................... 427 (52) 375 12.14
Consumer finance ............................ 224 (58) 166 11.38
Bankcard .................................... (98) (26) (124) ( 5.51)
Foreign consumer ............................ 59 (42) 17 5.99
------
Total consumer ............................. 797 (113) 684 4.77
------
Total loans and leases .................... 2,620 38 2,658 10.02
------
Securities:
Held for investment ......................... (169) 44 (125) (24.32)
Available for sale .......................... 626 -- 626 26.83
------
Total securities ........................... 464 37 501 17.60
------
Federal funds sold and securities
purchased under agreements to resell ........ (42) 187 145 10.58
Time deposits placed and other short-term
investments ................................. 81 (76) 5 .93
Trading account securities ................... 444 (88) 356 15.95
Other earning assets ......................... 143 (82) 61 23.11
------
Total interest income ...................... 3,697 29 3,726 11.04
------
Interest-bearing liabilities:
Domestic interest-bearing deposits:
Savings ..................................... (10) (19) (29) ( 5.59)
NOW and money market deposit
accounts ................................... 321 151 472 22.95
Consumer CDs and IRAs ....................... 446 118 564 15.95
Negotiated CDs, public funds and other
time deposits .............................. (12) (15) (27) ( 6.98)
------
Total domestic interest-bearing
deposits .................................. 733 247 980 15.08
Foreign interest-bearing deposits:
Banks located in foreign countries .......... (112) 25 (87) ( 6.39)
Governments and official institutions ....... 66 24 90 17.96
Time, savings and other ..................... 181 (80) 101 8.16
------
Total foreign interest-bearing deposits..... 129 (25) 104 3.35
------
Total interest-bearing deposits ............ 920 164 1,084 11.29
------
Federal funds purchased, securities sold
under agreements to repurchase and
other short-term borrowings ................. 263 143 406 10.98
Trading account liabilities .................. 105 (10) 95 10.80
Long-term debt ............................... 602 32 634 25.33
------
Total interest expense ..................... 1,803 416 2,219 13.30
------
Net interest income ........................... 2,124 (617) $1,507 8.82
======
</TABLE>
18
<PAGE>
Provision for Credit Losses
The provision for credit losses was $2.9 billion in 1998 compared to $1.9
billion in 1997. The increase in the provision for credit losses was primarily
due to the establishment of a $500 million provision related to international
economic conditions and higher net commercial charge-offs. The provision for
credit losses for 1998 and 1997 covered net charge-offs of $2.5 billion and
$1.9 billion, respectively. Higher commercial net charge-offs in 1998 included
a credit agreement with DE Shaw. Higher commercial net charge-offs were
partially offset by lower net charge-offs in the consumer loan portfolio. For
additional information on the allowance for credit losses, certain credit
quality ratios and credit quality information on specific loan categories see
the "Credit Risk Management and Credit Portfolio Review" section beginning on
page 34.
Gains on Sales of Securities
Gains on sales of debt securities were $1.0 billion in 1998 compared to
$271 million in 1997. Securities gains were higher in 1998 as a result of
increased activity connected with the Corporation's overall risk management
activity and favorable market conditions for certain debt instruments caused by
turbulence in equity markets.
Noninterest Income
As presented in Table Five, noninterest income increased approximately 4
percent to $12.2 billion in 1998, primarily reflecting higher levels of income
from investment banking, brokerage, and credit card activities, offset by
declines in mortgage banking and trading income.
Table Five
Noninterest Income
(Dollars in Millions)
<TABLE>
<CAPTION>
Change
-------------------
1998 1997 Amount Percent
--------- --------- -------- ----------
<S> <C> <C> <C> <C>
Service charges on deposit accounts ..................... $ 3,396 $ 3,373 $ 23 .7%
Mortgage servicing and other mortgage-related income .... 115 401 (286) (71.3)
Investment banking income ............................... 2,009 1,476 533 36.1
Trading account profits and fees ........................ 171 976 (805) (82.5)
Brokerage income ........................................ 728 355 373 105.1
Other nondeposit-related service fees ................... 652 680 (28) ( 4.1)
Asset management and fiduciary service fees ............. 973 990 (17) ( 1.7)
Credit card income ...................................... 1,448 1,231 217 17.6
Other income ............................................ 2,697 2,274 423 18.6
------- ------- ------ -----
$12,189 $11,756 $ 433 3.7%
======= ======= ====== =====
</TABLE>
o Mortgage servicing and other mortgage-related income decreased to $115
million in 1998, primarily due to a $250 million write-down of mortgage
servicing rights caused by an increase in anticipated prepayment rates. The
average portfolio of loans serviced increased 9 percent from $204 billion in
1997 to $222 billion in 1998. Mortgage loan originations through the
Corporation's mortgage units increased to $65.1 billion in 1998 compared to
$35.7 billion in 1997, primarily due to a decline in interest rates.
Origination volume in 1998 was composed of approximately $30.1 billion of
retail loan volume and $35.0 billion of correspondent and wholesale loan
volume.
In conducting its mortgage production activities, the Corporation is exposed
to interest rate risk for the period between loan commitment date and
subsequent delivery date. To manage this risk, the Corporation enters into
various financial instruments including forward delivery and option contracts.
The notional amount of such contracts was approximately $9.8 billion on
December 31, 1998 with associated net unrealized losses of $8.0 million. These
contracts generally have an average expected maturity of less than 90 days. To
manage risk associated with changes in prepayment rates and the impact on
mortgage servicing rights, the Corporation uses various financial instruments
including options and certain interest rate swaps. The notional amount
19
<PAGE>
of such contracts on December 31, 1998 was $22.4 billion with an associated
net unrealized gain of $190 million. As of December 31, 1998, the amount of
net realized deferred gains associated with terminated derivative products
related to the mortgage servicing portfolio was $266 million. For additional
information on mortgage banking activities, see Note One of the consolidated
financial statements on page 56.
o Investment banking income increased 36 percent to $2.0 billion in 1998,
mainly reflecting changes in the levels of syndication fees, securities
underwriting activity and advisory fees, primarily due to the acquisitions
of NationsBanc Montgomery Securities and Robertson Stephens in the fourth
quarter of 1997. Securities underwriting fees increased $289 million to $558
million in 1998 as a result of the NationsBanc Montgomery Securities and
Robertson Stephens acquisitions. Syndication fees increased 28 percent due
to increased syndication activities in 1998. Advisory services fees
increased $204 million to $384 million reflecting the impact of the
NationsBanc Montgomery Securities and Robertson Stephens acquisitions. On
August 31,1998, as a result of the BankAmerica merger, the Corporation sold
the investment banking operations of Robertson Stephens. Investment banking
income by major business activity follows:
<TABLE>
<CAPTION>
1998 1997
(Dollars in Millions) --------- ---------
<S> <C> <C>
Investment Banking Income
Principal investing ............. $ 570 $ 581
Securities underwriting ......... 558 269
Syndications .................... 426 333
Advisory services ............... 384 180
Other ........................... 71 113
------ ------
Total ........................... $2,009 $1,476
====== ======
</TABLE>
o Trading account profits and fees totaled $171 million in 1998 compared to
$976 million in 1997. The decrease is primarily attributable to a write-down
of Russian securities and losses in corporate bonds and commercial mortgage
products as spreads widened in the third quarter. The fair values of the
components of the Corporation's trading account assets and liabilities on
December 31, 1998 and 1997 as well as their average fair values for 1998 and
1997 are disclosed in Note Four of the consolidated financial statements on
page 66. Trading account profits and fees by major business activity
follows:
<TABLE>
<CAPTION>
1998 1997
(Dollars in Millions) --------- -------
<S> <C> <C>
Trading Account Profits and Fees
Foreign exchange contracts ............ $ 531 $478
Interest rate contracts ............... 209 166
Securities trading .................... (610) 287
Other ................................. 41 45
------ ----
Total ................................. $ 171 $976
====== ====
</TABLE>
o Brokerage income increased 105 percent to $728 million in 1998, due mainly to
the acquisitions of NationsBanc Montgomery Securities and Robertson Stephens
as well as continued internal growth.
o Asset management and fiduciary service fees decreased $17 million in 1998,
reflecting the impact of the third quarter 1997 sales of certain corporate
and institutional trust businesses, which included businesses that provided
administrative and record-keeping services for employee benefit plans. An
analysis of asset management and fiduciary service fees by major business
activity follows:
20
<PAGE>
<TABLE>
<CAPTION>
1998 1997
(Dollars in Millions) ----------- -----------
<S> <C> <C>
Asset Management and Fiduciary Service Fees
Private bank .............................. $ 728 $ 690
Funds and institutional investment management 182 154
Retirement services, corporate trust and other 63 146
-------- --------
Total ................................... $ 973 $ 990
======== ========
Market Value of Assets
Assets under management ................... $233,500 $211,470
Assets under administration ............... 300,167 372,040
</TABLE>
The Private Bank provides investment management, personal trust, tax and estate
planning, customized lending and banking for high-net-worth clients and private
businesses. Funds and Institutional Investment Management includes brokerage
(full-service and discount services with access to a wide range of
non-FDIC-insured investments, including stocks, bonds, fixed-income securities
and mutual funds), mutual funds (investment advisor to over 50 funds including
money market, fixed-income and equity funds), and institutional investment
management (investment advisory and management services for institutional
clients are offered by TradeStreet Investment Associates, Inc., Chicago Equity
Partners, Sovran Capital Management Corporation and Boatmen's Capital
Management, Inc.). Fees received by Retirement Services and Corporate Trust
decreased in 1998 from 1997 as the result of the sale of certain businesses
which provided administrative, fiduciary and record-keeping services for
businesses and institutional customers.
o Credit card income increased 18 percent to $1.4 billion in 1998 due primarily
to higher transaction volume and exchange fees. Credit card income includes
$178 million and $98 million from credit card securitizations in 1998 and
1997, respectively.
o Other income totaled $2.7 billion in 1998, an increase of $423 million over
1997. The increase over 1997 was due primarily to the $479 million gain from
the sale of the manufactured housing lending business and a $110 million
gain on the sale of a partial ownership interest in a mortgage company,
partially offset by write-downs of $158 million of losses associated with
the investment in DE Shaw in the fourth quarter of 1998 and other equity
investments of $162 million. Other income also includes certain prepayment
fees and other fees, net rental income on automobile leases classified as
operating leases, servicing and related fees from the consumer finance
business, insurance commissions and earnings and bankers' acceptances and
letters of credit fees.
Other Noninterest Expense
As presented in Table Six, the Corporation's other noninterest expense
increased 6 percent in 1998 over 1997. Excluding acquisitions and related
transition expenses, other noninterest expense increased 3 percent over 1997.
Table Six
Other Noninterest Expense
(Dollars in Millions)
<TABLE>
<CAPTION>
1998 1997 Change
------------------------ ------------------------ -----------------------
Amount Percent (1) Amount Percent (1) Amount Percent
---------- ------------- ---------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Personnel ................................... $ 9,412 30.7% $ 8,703 28.7% $ 709 8.1%
Occupancy, net .............................. 1,643 5.4 1,576 5.2 67 4.3
Equipment ................................... 1,404 4.6 1,408 4.6 (4) ( .3)
Marketing ................................... 581 1.9 655 2.2 (74) (11.3)
Professional fees ........................... 843 2.8 763 2.5 80 10.5
Amortization of intangibles ................. 902 2.9 855 2.8 47 5.5
Data processing ............................. 765 2.5 626 2.1 139 22.2
Telecommunications .......................... 563 1.8 491 1.6 72 14.7
Other general operating ..................... 2,044 6.6 2,059 6.8 (15) ( .7)
General administrative and miscellaneous..... 584 1.9 489 1.6 95 19.4
------- ---- ------- ---- ------ -----
$18,741 61.1% $17,625 58.1% $1,116 6.3%
======= ==== ======= ==== ====== =====
</TABLE>
(1) Percent of taxable-equivalent net interest and noninterest income.
21
<PAGE>
A discussion of the significant components and changes in other
noninterest expense in 1998 compared to 1997 follows:
o Personnel expense increased 8 percent to $9.4 billion in 1998, primarily due
to the acquisitions of NationsBanc Montgomery Securities, Robertson Stephens
and NationsBanc Auto Leasing, Inc. Excluding these acquisitions, 1998
personnel expense increased by 3 percent over 1997. On December 31, 1998,
the Corporation had approximately 171,000 full-time equivalent employees
compared to approximately 181,000 full-time equivalent employees on December
31, 1997.
o Marketing expense amounted to $581 million in 1998, a decrease of
approximately 11 percent from 1997, reflecting a decline in advertising and
promotional expenses.
o Professional fees increased $80 million over 1997 to $843 million, primarily
due to increases in outside legal fees.
o Data processing expense increased to $765 million in 1998 compared to $626
million in 1997 due to increased processing costs associated with the
NationsBanc Montgomery Securities, Robertson Stephens and NationsBanc Auto
Leasing, Inc. acquisitions.
o Telecommunications expense increased $72 million over 1997 to $563 million,
mainly due to acquisition and transition efforts, expenses related to the
implementation of Model Bank, a banking platform, and increased call volume.
o General administrative and miscellaneous expense increased to $584 million
compared to $489 million in 1997, primarily due to the addition of
NationsBanc Montgomery Securities, Robertson Stephens and NationsBanc Auto
Leasing, Inc.
Year 2000 Project
The following is a Year 2000 Readiness Disclosure.
General
Because computers frequently use only two digits to recognize years, on
January 1, 2000, many computer systems, as well as equipment that uses embedded
computer chips, may be unable to distinguish between 1900 and 2000. If not
-- --
remediated, this problem could create system errors and failures resulting in
the disruption of normal business operations. Since the Year 2000 is a leap
year, there could also be business disruptions as a result of the inability of
many computer systems to recognize February 29, 2000.
In October 1995 and February 1996, respectively, NationsBank and
BankAmerica established project teams to address these issues. Each of these
teams remains in place and continues to work on solving problems related to the
Year 2000. Although each of these Year 2000 teams proceeds according to its
respective work plan, they are capitalizing on the best practices of both
teams. Going forward, the Year 2000 efforts of both teams are being integrated.
Personnel from the Corporation's business segments and project teams have
identified and analyzed, and are correcting and testing, computer systems
throughout the Corporation ("Systems"). Personnel have also taken inventory of
equipment that uses embedded computer chips (i.e., "non-information technology
systems" or "Infrastructure") and scheduled remediation or replacement of this
Infrastructure, as necessary. Examples of Infrastructure include ATMs, building
security systems, fire alarm systems, identification and access cards, date
stamps and elevators. The NationsBank team tracks Systems and Infrastructure
separately, whereas the BankAmerica team tracks Systems and Infrastructure
collectively ("Projects"). For purposes of this section, the information
provided for Systems and Projects is generally provided on a combined basis.
State of Readiness
The Corporation's Year 2000 efforts are generally divided into phases for
analysis, remediation, testing and compliance. In the analysis phase, the
Corporation identifies Systems/Projects and Infrastructure that have Year 2000
issues and determines the steps necessary to remediate these issues. In the
remediation phase, the Corporation replaces, modifies or retires
Systems/Projects or Infrastructure, as necessary. During the testing phase, the
Corporation performs testing to determine whether the remediated
Systems/Projects and Infrastructure
22
<PAGE>
accurately process and identify dates. In the compliance phase, the Corporation
internally certifies the Systems/Projects and Infrastructure that are Year
2000 ready and implements processes to enable these Systems/Projects and
Infrastructure to continue to identify and process dates accurately through the
Year 2000 and thereafter.
As of December 31, 1998, the NationsBank team has identified over 1,500
Systems, and the BankAmerica team has identified approximately 2,900 Projects,
for a total of approximately 4,400 Systems/Projects. In addition, the
NationsBank team has identified over 17,000 Infrastructure items that may have
Year 2000 implications. For Systems/Projects, as of December 31, 1998, the
analysis and remediation phases were substantially complete, the testing phase
was approximately 95% complete and the compliance phase was approximately 90%
complete. For Infrastructure, as of December 31, 1998, the analysis phase was
approximately 98% complete, the remediation phase was approximately 91%
complete, the testing phase was approximately 89% complete and the compliance
phase was approximately 84% complete. The Corporation expects to substantially
complete all phases by June 30, 1999, in accordance with guidelines established
by the Federal Financial Institutions Examination Council (FFIEC).
The Corporation tracks Systems/Projects and Infrastructure for Year
2000-required changes based on a risk evaluation. Of the identified
Systems/Projects and Infrastructure, approximately 1,900 Systems/Projects and
1,100 Infrastructure items have been designated "mission critical" (i.e., if
not made Year 2000 ready, these Systems/Projects or Infrastructure items
would substantially impact the normal conduct of business). For mission
critical Systems/Projects, as of December 31, 1998, the analysis and
remediation phases were substantially complete, the testing phase was
approximately 96% complete and the compliance phase was approximately 90%
complete. The Corporation will also perform "time machine testing" (i.e.,
emulate Year 2000 conditions in a dedicated environment) on selected mission
critical Systems. For mission critical Infrastructure items, as of December 31,
1998, the analysis phase was approximately 98% complete, the remediation phase
was approximately 77% complete, the testing phase was approximately 86%
complete and the compliance phase was approximately 70% complete.
Ultimately, the potential impact of Year 2000 issues will depend not only
on the corrective measures the Corporation undertakes, but also on the way in
which Year 2000 issues are addressed by governmental agencies, businesses and
other entities which provide data to, or receive data from, the Corporation, or
whose financial condition or operational capability is important to the
Corporation as borrowers, vendors, customers, investment opportunities (either
for the Corporation's accounts or for the accounts of others) or lenders. In
addition, the Corporation's business may be affected by the corrective measures
taken by the landlords and managers of buildings leased by the Corporation.
Accordingly, the Corporation is communicating with certain of these parties to
evaluate any potential impact on the Corporation.
In particular, the Corporation is contacting its service providers and
software vendors (collectively, "Vendors") and requesting information on their
Year 2000 project plans. The Corporation has designated approximately 36% of
these Vendors as "mission critical." As of December 31, 1998, the Corporation
has received assurances that approximately 78% of its Vendors, and
approximately 85% of its mission critical Vendors, are Year 2000 ready. At the
end of 1998, any Vendor which had not provided appropriate documentation, had
not responded timely to the Corporation's inquiries or did not expect to be
Year 2000 ready until 1999 was placed in an "at risk" category. As of December
31, 1998, the Corporation has placed approximately 16% of its Vendors, and
approximately 7% of its mission critical Vendors, in an "at risk" category. In
accordance with its contingency plans, the Corporation will continue to focus
on these "at risk" mission critical Vendors in order to mitigate any potential
risk.
The Corporation is also tracking the Year 2000 compliance efforts of
certain domestic and foreign agencies involved with payment systems, such as
clearing houses, security clearings and central banks. The Corporation has
identified 29 of 195 agencies, or 15%, which have neither responded to the
Corporation's inquiries or which were not Year 2000 ready as of December 31,
1998. Although work involved with the implementation of the Euro resulted in
some delay with respect to the agencies' efforts in this area, the Corporation
will continue to monitor those agencies of particular concern.
In addition, the Corporation has completed Year 2000 risk assessments for
the majority of its commercial credit customers. For any customers deemed
higher risk, on a quarterly basis, the Corporation's Credit Review Committee
reviews the results of customer assessments prepared by the customers'
relationship managers. By July 1, 1999, the Corporation will reassess any
customers deemed "medium risk." Weakness in a borrower's Year
23
<PAGE>
2000 strategy is part of the overall risk assessment process. Risk ratings and
exposure strategy are adjusted as required after consideration of all risk
issues. Any impact on the allowance for credit losses is determined through the
normal risk rating process.
The Corporation is also assessing potential Year 2000 risks associated
with its investment advisory and fiduciary activities. Each investment
subsidiary has a defined investment process and is integrating the
consideration of Year 2000 issues into that process. When making investment
decisions or recommendations, the Corporation's investment research areas
consider the Year 2000 issue as a factor in their analysis, and may take
certain steps to investigate Year 2000 readiness, such as reviewing ratings,
research reports and other publicly available information. In the fiduciary
area, the Corporation is assessing Year 2000 risks for business, real estate,
oil and gas, and mineral interests that are held in Trust.
Following the merger with BankAmerica, the Corporation identified its
significant depositors and assessed the Year 2000 readiness of these customers.
The Corporation will continue to monitor these depositors for purposes of
determining any potential liquidity risks to the Corporation.
Costs
The Corporation currently estimates the total cost of the Year 2000
project to be approximately $550 million. Of this amount, the Corporation has
incurred cumulative Year 2000 costs of approximately $410 million through
December 31, 1998. A significant portion of the foregoing cost is not expected
to be incremental to the Corporation but instead will constitute a reallocation
of existing internal systems technology resources and, accordingly, will be
funded from normal operations.
Contingency Plans
The Corporation has existing business continuity plans that address its
response to disruptions to business due to natural disasters, civil unrest,
utility outages or other occurrences. The Corporation is developing business
continuity plans specific to Year 2000 issues that are based on these existing
plans.
The Corporation has made substantial progress on an inventory and
assessment of the existing business contingency plans. Supplements to the
existing plans to address Year 2000 issues are being finalized and will include
detailed plans to respond to these events. The Corporation substantially
completed these supplemental business continuity plans in January 1999. During
the remainder of 1999, the business continuity plans are being tested and
validated with particular attention to event management and communication
processes.
Risks
Although the Corporation's remediation efforts are directed at reducing
its Year 2000 exposure, there can be no assurance that these efforts will fully
mitigate the effect of Year 2000 issues and it is likely that one or more
events may disrupt the Corporation's normal business operations. In the event
the Corporation fails to identify or correct a material Year 2000 problem,
there could be disruptions in normal business operations, which could have a
material adverse effect on the Corporation's results of operations, liquidity
or financial condition. In addition, there can be no assurance that significant
foreign and domestic third parties will adequately address their Year 2000
issues. Further, there may be some such parties, such as governmental agencies,
utilities, telecommunication companies, financial services vendors and other
providers, where alternative arrangements or resources are not available. Also,
risks associated with some foreign third parties may be greater since there is
general concern that some entities operating outside the United States are not
addressing Year 2000 issues on a timely basis.
In addition to the foregoing, the Corporation is subject to credit risk to
the extent borrowers fail to adequately address Year 2000 issues, to fiduciary
risk to the extent fiduciary assets fail to adequately address Year 2000
issues, and to liquidity risk to the extent of deposit withdrawals and to the
extent its lenders are unable to provide the Corporation with funds due to Year
2000 issues. Although it is not possible to quantify the potential impact of
these risks at this time, in future years, there may be increases in problem
loans, credit losses, losses in the fiduciary business and liquidity problems,
as well as the risk of litigation and potential losses from litigation related
to the foregoing.
24
<PAGE>
Forward-looking statements contained in the foregoing "Year 2000 Project"
section should be read in conjunction with the cautionary statements included
in the introductory paragraphs under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 9 and 10.
Economic and Monetary Unit (EMU) in Europe
On January 1, 1999, 11 member countries of the European Union launched a
common legal currency called the Euro. EMU monetary policy, including the money
supply and official interest rates for the Euro, is now under the direction of
the European Central Bank. During the transition period, January 1, 1999
through January 1, 2002, the old national currencies will remain legal tender
as denominations of the Euro. Beginning January 1, 2002, Euro denominated bills
and coins will be issued for use in cash transactions, and by July 1, 2002, all
legacy currencies will cease to be legal tender. EMU will impact the
Corporation's payment and clearing systems.
Management expects the elimination of national currencies in favor of the
single Euro currency to reduce cross border barriers to business and reduce the
previous competitive advantage of national firms. The Corporation believes that
it is favorably positioned to benefit from these changes. In addition,
management believes that the Euro conversion presents significant business
opportunities for major pan-European providers of cash management services,
such as the Corporation.
The Corporation prepared actively for the Euro conversion, utilizing a
dedicated EMU project team to ensure that the Corporation's technology and
operations were appropriately modified by January 1, 1999. The project team
also communicated extensively with the Corporation's clients and counterparties
regarding the implications of EMU and the effect it would have on their
business relationships and contracts with the Corporation. The Corporation
completed the initial redenomination event on January 3, 1999.
Most of the costs associated with the Euro conversion were incurred by the
end of fiscal 1998, and these costs have not been material. Such costs have
been and will continue to be expensed by the Corporation during the period in
which they are incurred, and any ongoing costs are not currently anticipated to
be material. The Corporation does not expect the formation of the EMU to have a
material impact on its results of operations or financial condition.
Income Taxes
The Corporation's income tax expense for 1998 and 1997 was $2.9 billion
and $4.0 billion, respectively. Excluding merger-related charges, the effective
tax rates for 1998 and 1997 were 34 percent and 38 percent, respectively. The
reduction in the effective tax rate is due primarily to the reorganization of
certain subsidiaries of the Corporation in 1998. Note Fourteen of the
consolidated financial statements on page 87 includes a reconciliation of
federal income tax expense computed using the federal statutory rate of 35
percent to actual income tax expense.
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 its capital position. The average balances discussed below
can be derived from Table Three. The following discussion addresses changes in
average balances in 1998 compared to 1997.
Average customer-based funds increased $4.2 billion to $286.1 billion in
1998 compared to average levels for 1997. As a percentage of total sources,
average customer-based funds decreased to 49 percent in 1998 from 52 percent in
1997.
Average market-based funds increased $26.8 billion in 1998 to $167.5
billion and comprised a larger portion of total sources of funds at 29 percent
in 1998 compared to 26 percent in 1997. In addition, 1998 levels of long-term
debt increased by $3.6 billion over 1997, mainly the result of borrowings to
fund business development opportunities and to replace debt maturities.
Average loans and leases, the Corporation's primary use of funds,
increased $4.7 billion to $347.8 billion during 1998. As a percentage of total
uses of funds, average loans and leases decreased to 60 percent in 1998
25
<PAGE>
from 63 percent in 1997. The increase in average loans and leases was due
primarily to core loan growth, partially offset by the impact of $19.3 billion
of securitizations in 1997, most of which occurred in the third quarter. The
ratio of average loans and leases to customer-based funds was 122 percent for
both 1998 and 1997.
Average other assets and cash and cash equivalents increased $5.9 billion
to $84.7 billion in 1998 due largely to an increase in derivative-dealer assets
associated with interest rate fluctuations and goodwill associated mainly with
the NationsBanc Montgomery Securities and NationsBanc Auto Leasing, Inc.
acquisitions.
The average securities portfolio in 1998 increased $18.4 billion over 1997
levels, amounting to 11 percent of total uses of funds in 1998 compared to 9
percent in 1997. See the following "Securities" section for additional
information on the securities portfolio.
Cash and cash equivalents were $28.3 billion on December 31, 1998, a
decrease of $189 million from December 31, 1997. During 1998, net cash provided
by operating activities was $10.9 billion, net cash used in investing
activities was $47.2 billion and net cash provided by financing activities was
$36.1 billion. For further information on cash flows, see the Consolidated
Statement of Cash Flows on page 54 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 monitors its assets and liabilities and
modifies 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. Management believes
that the Corporation's sources of liquidity are more than adequate to meet its
cash requirements.
The following discussion provides an overview of significant on- and
off-balance sheet components.
Securities
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, liquidity requirements and
on- and off-balance sheet positions.
The securities portfolio on December 31, 1998 consisted of securities held
for investment totaling $2.0 billion and securities available for sale totaling
$78.6 billion compared to $4.8 billion and $62.2 billion, respectively, on
December 31, 1997. The increase in available for sale securities reflects the
management of the Corporation's interest rate sensitivity by adding
fixed-income assets.
On December 31, 1998 and 1997, the market value of the Corporation's
securities held for investment reflected net unrealized losses of $144 million
and net unrealized gains of $83 million, respectively.
The valuation allowance for securities available for sale and marketable
equity securities included in shareholders' equity was $292 million on December
31, 1998, reflecting pre-tax appreciation of $354 million on debt securities
and $165 million on marketable equity securities. The valuation allowance
increased shareholders' equity by $545 million on December 31, 1997. The
decrease in the valuation allowance was primarily attributable to the
realization of securities gains during 1998 and lower market interest rates at
December 31, 1998.
The estimated average duration of securities held for investment and
securities available for sale portfolios were 5.59 and 4.14, respectively, on
December 31, 1998 compared to 4.90 and 4.91, respectively, on December 31,
1997.
Loans and Leases
Total loans and leases increased approximately 4 percent to $357.3 billion
on December 31, 1998 compared to $342.1 billion on December 31, 1997. As
presented in Table Three, average total loans and leases increased 1 percent to
$347.8 billion in 1998 compared to $343.2 billion in 1997 primarily due to core
loan growth, partially offset by the impact of $11.6 billion of securitizations
in 1998 and $19.3 billion of securitizations in 1997.
Average commercial loans increased to $189.9 billion in 1998 compared to
$175.4 billion in 1997, due largely to core loan growth, partially offset by
the impact of $4.2 billion of securitizations in 1997. Average domestic
commercial real estate loans decreased to $28.4 billion in 1998 due mainly to
loan sales.
26
<PAGE>
Average residential mortgage loans decreased 12 percent to $70.8 billion
in 1998 compared to $80.6 billion in 1997, mainly the result of loan sales and
the impact of $5.1 billion of securitizations in 1998 and $9.6 billion of
securitizations in 1997.
Average bankcard and other consumer loans, including direct and indirect
consumer loans and home equity loans, decreased $116 million to $87.1 billion
in 1998 due primarily to a decrease in bankcard loans, which included the
impact of $2.0 billion of securitizations in 1998, partially offset by an
increase in other consumer loans.
A significant source of liquidity for the Corporation is the repayments
and maturities of loans. Table Seven shows selected loan maturity data on
December 31, 1998 and indicates that approximately 48 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.
Table Seven
Selected Loan Maturity Data
December 31, 1998
(Dollars in Millions)
This table presents the maturity distribution and interest sensitivity of
selected loan categories (excluding residential mortgage, bankcard, other
consumer loans and lease financing). Maturities are presented on a contractual
basis.
<TABLE>
<CAPTION>
Due after
Due in 1 year
1 year through Due after
or less 5 years 5 years Total
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Commercial - domestic ................................................... $ 65,256 $ 47,185 $ 16,195 $ 128,636
Commercial real estate - domestic ....................................... 3,409 6,990 9,405 19,804
Construction real estate - domestic ..................................... 3,866 2,864 378 7,108
Foreign ................................................................. 18,284 8,939 5,526 32,749
-------- -------- -------- ---------
Total selected loans ................................................... $ 90,815 $ 65,978 $ 31,504 $ 188,297
======== ======== ======== =========
Percent of total ........................................................ 48.2% 35.1% 16.7% 100%
Cumulative percent of total ............................................. 48.2 83.3 100.0
Sensitivity of loans to changes in interest rates for loans due after
one year
Predetermined interest rates ........................................... $ 15,154 $ 12,489 $ 27,643
Floating or adjustable interest rates .................................. 50,824 19,015 69,839
-------- -------- ---------
$ 65,978 $ 31,504 $ 97,482
======== ======== =========
</TABLE>
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 source of funds for the Corporation.
Average deposits increased 3 percent in 1998 over 1997 to $345.5 billion. See
Note Seven of the consolidated financial statements on page 68 for further
details on deposits.
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 Eight presents the categories of
short-term borrowings.
During 1998, total average short-term borrowings increased 29 percent to
$90.6 billion and average trading account liabilities increased 14 percent from
1997 levels, to $17.5 billion in 1998.
27
<PAGE>
Table Eight
Short-Term Borrowings
(Dollars in Millions)
<TABLE>
<CAPTION>
1998 1997 1996
-------------------- --------------------- --------------------
Amount Rate Amount Rate Amount Rate
--------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Federal funds purchased
On December 31 ............................. $ 7,316 5.25% $10,111 5.80% $ 6,187 6.06%
Average during year ........................ 8,201 5.42 6,551 5.54 6,662 5.35
Maximum month-end balance during year ...... 11,187 -- 10,111 -- 9,974 --
Securities sold under agreements to repurchase
On December 31 ............................. 60,227 5.08 51,303 5.83 24,279 5.58
Average during year ........................ 56,710 5.66 45,403 5.58 41,239 5.52
Maximum month-end balance during year ...... 71,595 -- 51,820 -- 43,120 --
Commercial paper
On December 31 ............................. 6,749 5.19 5,925 5.65 5,849 5.52
Average during year ........................ 6,419 5.56 6,184 5.64 6,036 5.66
Maximum month-end balance during year ...... 7,913 -- 6,689 -- 7,028 --
Other short-term borrowings
On December 31 ............................. 24,742 4.52 12,120 6.52 12,239 6.06
Average during year ........................ 19,300 6.35 12,261 7.02 11,897 6.09
Maximum month-end balance during year ...... 25,927 -- 13,974 -- 13,489 --
</TABLE>
Long-Term Debt
Long-term debt increased 7 percent from $42.9 billion at December 31, 1997
to $45.9 billion on December 31, 1998 mainly as a result of borrowings to fund
business development opportunities and to replace maturing debt. During 1998,
the Corporation issued $350 million of trust preferred securities and $12.5
billion in long-term senior and subordinated debt. See Notes Eight and Nine of
the consolidated financial statements on pages 69 and 71 for further details on
long-term debt and trust preferred securities.
Other
The Corporation has commercial paper back-up lines totaling $1.1 billion
of which $669 million expires in October 1999 and $479 million expires in
October 2002. In addition, the Corporation has a $1.6 billion line of credit
which expires in May 2001. No borrowings have been made under these lines.
The Corporation's financial position is reflected in the following debt
ratings, which include upgrades as applicable from December 31, 1997 ratings:
<TABLE>
<CAPTION>
Commercial Senior Subordinated
Paper Debt Debt
------------ -------- -------------
<S> <C> <C> <C>
Moody's Investors Service ......... P-1 Aa2 Aa3
Standard & Poor's Corporation ..... A-1 A+ A
Duff and Phelps, Inc .............. D-1+ AA- A+
Fitch IBCA, Inc ................... F-1+ AA- A+
Thomson BankWatch ................. TBW-1 AA- A+
</TABLE>
In managing liquidity, the Corporation takes into consideration the
ability of its subsidiary banks to pay dividends to the parent company. See
Note Twelve of the consolidated financial statements on page 78 for further
details on dividend capabilities of its subsidiary banks.
Capital Resources And Capital Management
Shareholders' equity on December 31, 1998 was $45.9 billion compared to
$44.6 billion on December 31, 1997. The increase was primarily due to net
earnings (net income less dividends) of $2.6 billion coupled with the issuance
of approximately 30.5 million shares of common stock under various employee
plans. The increase was partially offset by the repurchase of 29.3 million
shares of common stock for approximately $1.8 billion and a net decrease of
$242 million in the market value of securities available for sale and
marketable equity securities.
28
<PAGE>
The Corporation's and its significant banking subsidiaries' regulatory
capital ratios, along with a description of the components of risk-based
capital, capital adequacy requirements and prompt corrective action provisions,
are included in Note Twelve of the consolidated financial statements on page
78.
Off-Balance Sheet
Derivatives - Asset and Liability Management (ALM) Activities
Interest rate contracts are used in the asset and liability management
process. These contracts, which are generally non-leveraged generic interest
rate and basis swaps, options and futures, allow the Corporation to effectively
manage its interest rate risk position. Generic interest rate swaps involve the
exchange of fixed-rate and variable-rate interest payments based on the
contractual underlying notional amount. Basis swaps involve the exchange of
interest payments based on the contractual underlying notional amounts, where
both the pay rate and the receive rate are floating rates based on different
indices. Option products primarily consist of caps and floors. Interest rate
caps and floors are agreements where, for a fee, the purchaser obtains the
right to receive interest payments when a variable interest rate moves above or
below a specified cap or floor rate, respectively. Futures contracts used for
ALM activities are primarily index futures providing for cash payments based
upon the movements of a deposit rate index.
The amount of net realized deferred gains associated with terminated ALM
swaps were $294 million and $68 million on December 31, 1998 and December 31,
1997, respectively. The amount of net realized deferred losses associated with
terminated ALM futures and forward rate contracts was $1 million on December
31, 1998, compared to a gain of $9 million on December 31, 1997. The amount of
net realized deferred gains associated with terminated ALM options were $26
million and $13 million on December 31, 1998 and December 31, 1997,
respectively. See Note Eleven of the consolidated financial statements on page
74 for information on the notional amounts and fair values of the Corporation's
ALM interest rate contracts.
In addition, the Corporation uses foreign currency contracts to manage the
foreign exchange risk associated with foreign-denominated assets and
liabilities, as well as the Corporation's equity investments in foreign
subsidiaries. Foreign exchange contracts, which include spot, forward and
futures contracts, represent agreements to exchange the currency of one country
for the currency of another country at an agreed-upon price, on an agreed-upon
settlement date. On December 31, 1998, these contracts had a notional value of
$3.3 billion and a fair value of $72 million.
The fair values of the ALM interest rate and foreign exchange portfolios
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 positions should not
be viewed in isolation.
For a discussion of the Corporation's management of risk associated with
mortgage production and servicing activities, see the "Noninterest Income"
section on page 19.
Market Risk Management
In the normal course of conducting its business activities, the
Corporation is exposed to market risks which include both price and liquidity
risk. Market risk is the potential of loss arising from adverse changes in
market rates and prices, such as interest rates (interest rate risk), foreign
currency exchange rates (foreign exchange risk), commodity prices (commodity
risk) and prices of equity securities (equity risk). Financial products that
expose the Corporation to market risk include securities, loans, deposits,
debt, and derivative financial instruments such as futures, forwards, swaps,
options, and other financial instruments with similar characteristics.
Liquidity risk arises from the possibility that the Corporation may not be able
to satisfy current or future financial commitments or that the Corporation may
be more reliant on alternative funding sources such as long-term debt.
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
both earnings and capital of the current outlook in market rates, potential
changes in market rates, world and regional economies, liquidity, business
strategies and other factors.
For a discussion of non-trading, on-balance sheet financial instruments
see Table Nine in the following Market Risk Management section on page 31. For
information on market risk associated with ALM activities,
29
<PAGE>
see the following discussion on page 32 of the Market Risk Management section
and the mortgage banking section of Noninterest Income on page 19. Market risk
associated with the trading portfolio is discussed in the following Market Risk
Management section on page 32. The composition of the trading portfolio and
related fair values are included in Note Four of the consolidated financial
statements on page 66.
Prior to the BankAmerica merger, market risk exposure was managed by each
of the previously separate companies. Separate risk management models and
assumptions were used in accordance with each company's unique market risk
profile. The market risk information presented in this section is as of, or for
the year ended, December 31, 1998 and reflects the market risk profile of the
merged company. Prior period amounts have not been presented as such amounts
were based on the risk profiles of the previously separate entities and,
accordingly, are not comparable to current period amounts.
Non-Trading Portfolio
The Corporation's ALM process is used to manage interest rate risk through
the structuring of balance sheet and off-balance sheet portfolios and
identifying and linking such off-balance sheet positions to specific assets and
liabilities. Interest rate risk represents the only material market risk
exposure to the Corporation's non-trading on-balance sheet financial
instruments. To effectively measure and manage interest rate risk, the
Corporation uses sophisticated computer simulations which determine the impact
on net interest income of numerous interest rate scenarios, balance sheet
trends and strategies. These simulations cover the following financial
instruments: short-term financial instruments, securities, loans, deposits,
borrowings and off-balance sheet financial instruments. These simulations
incorporate assumptions about balance sheet dynamics, such as loan and deposit
growth and 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 senior management. Additionally,
duration and market value sensitivity measures are selectively utilized where
they provide added value to the overall interest rate risk management process.
On December 31, 1998, 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 interest income.
Table Nine below summarizes the expected maturities, unrealized gains and
losses and weighted average effective yields and rates associated with the
Corporation's significant non-trading on-balance sheet financial instruments.
Cash and cash equivalents, time deposits placed and other short-term
investments, federal funds sold and purchased, resale and repurchase
agreements, commercial paper, other short-term borrowings and foreign deposits,
which are similar in nature to other short-term borrowings, are excluded from
Table Nine as their respective carrying values approximate fair values. These
financial instruments generally expose the Corporation to insignificant market
risk as they have either no stated maturities or an average maturity of less
than 30 days and interest rates that approximate market rates. However, these
financial instruments could expose the Corporation to interest rate risk by
requiring more or less reliance on alternative funding sources, such as
long-term debt. Loans held for sale are also excluded as their carrying values
approximate their fair values, generally exposing the Corporation to
insignificant market risk. For further information on the fair value of
financial instruments see Notes Four and Fifteen of the consolidated financial
statements on pages 66 and 88, respectively.
30
<PAGE>
Table Nine
Non-Trading On-Balance Sheet Financial Instruments
December 31, 1998
(Dollars in Millions)
<TABLE>
<CAPTION>
Unrealized
Total Gain/(Loss)
------------- -------------
<S> <C> <C>
Assets (1)
Loans (2)(3)
Fixed rate
Book value ............................. $ 116,292 $ 3,331
Weighted average effective yield ....... 8.23%
Variable rate
Book value ............................. $ 221,011 2,591
Weighted average effective yield ....... 6.51%
Securities held for investment (2)
Fixed rate
Book value ............................. $ 1,858 (144)
Weighted average effective yield ....... 6.64%
Variable rate
Book value ............................. $ 139 --
Weighted average effective yield ....... 6.33%
Securities available for sale (2)
Fixed rate
Book value ............................. $ 73,595 237
Weighted average effective yield ....... 6.05%
Variable rate
Book value ............................. $ 4,641 117
Weighted average effective yield ....... 6.63%
Liabilities (1)
Total deposits (4)(5)
Fixed rate
Book value ............................. $ 212,586 (330)
Weighted average effective rate ........ 2.02%
Variable rate
Book value ............................. $ 86,504 5
Weighted average effective rate ........ 2.96%
Long-term debt (excluding obligations
under capital leases) (6)
Fixed rate
Book value ............................. $ 24,761 (1,491)
Weighted average effective rate ........ 7.42%
Variable rate
Book value ............................. $ 21,006 (66)
Weighted average effective rate ........ 5.35%
Trust preferred securities (6)
Fixed rate
Book value ............................. $ 3,811 (290)
Weighted average effective rate ........ 8.03%
Variable rate
Book value ............................. $ 1,143 --
Weighted average effective rate ........ 5.98%
<CAPTION>
Expected Maturity
----------------------------------------------------------------
After
1999 2000 2001 2002 2003 2003
---------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Assets (1)
Loans (2)(3)
Fixed rate
Book value ............................. $38,511 $21,075 $14,656 $10,037 $ 6,994 $25,019
Weighted average effective yield .......
Variable rate
Book value ............................. 90,003 35,016 26,197 25,458 14,637 29,700
Weighted average effective yield .......
Securities held for investment (2)
Fixed rate
Book value ............................. 808 147 124 71 119 589
Weighted average effective yield .......
Variable rate
Book value ............................. 80 19 7 18 4 11
Weighted average effective yield .......
Securities available for sale (2)
Fixed rate
Book value ............................. 855 1,448 3,433 6,338 9,050 52,471
Weighted average effective yield .......
Variable rate
Book value ............................. 66 260 333 3,221 66 695
Weighted average effective yield .......
Liabilities (1)
Total deposits (4)(5)
Fixed rate
Book value ............................. 70,087 12,876 12,723 12,034 11,372 93,494
Weighted average effective rate ........
Variable rate
Book value ............................. 19,864 14,087 11,557 9,709 8,191 23,096
Weighted average effective rate ........
Long-term debt (excluding obligations
under capital leases) (6)
Fixed rate
Book value ............................. 1,618 2,069 4,691 3,122 2,937 10,324
Weighted average effective rate ........
Variable rate
Book value ............................. 6,640 6,658 2,482 1,282 2,326 1,618
Weighted average effective rate ........
Trust preferred securities (6)
Fixed rate
Book value ............................. -- -- 900 -- 350 2,561
Weighted average effective rate ........
Variable rate
Book value ............................. -- -- -- 400 -- 743
Weighted average effective rate ........
</TABLE>
(1) Fixed and variable rate classifications are based on contractual rates and
are not modified for the impact of asset and liability management
contracts.
(2) Expected maturities reflect the impact of prepayment assumptions.
(3) Excludes leases.
(4) When measuring and managing market risk associated with domestic deposits,
the Corporation considers its long-term relationships with depositors. The
unrealized loss on deposits in this table does not consider these
long-term relationships, therefore only certificates of deposits reflect a
change in value.
(5) Excludes foreign time deposits.
(6) Expected maturities of long-term debt and trust preferred securities
reflect the Corporation's ability to redeem such debt prior to contractual
maturities.
31
<PAGE>
Risk management interest rate contracts are utilized in the ALM process.
Such contracts, which are generally non-leveraged generic interest rate and
basis swaps, futures, forwards, and options, allow the Corporation to
effectively manage its interest rate risk position. As reflected in Table Ten,
the notional amount of the Corporation's receive fixed and pay fixed interest
rate swaps on December 31, 1998 was $60.5 billion, primarily converting
variable-rate commercial loans to fixed rate, and $25.8 billion, respectively.
The net receive fixed position on December 31, 1998 was $34.7 billion compared
to $31.1 billion on December 31, 1997. In addition, the Corporation had $7.7
billion of basis swaps linked primarily to loans and long-term debt.
Table Ten also summarizes the expected maturities, weighted average pay
and receive rates and the unrealized gains and losses on December 31, 1998 of
the Corporation's ALM interest rate swaps, as well as the expected maturities
and unrealized gains and losses on December 31, 1998 of the Corporation's ALM
basis swaps, forwards, futures, and options contracts. Unrealized gains and
losses are based on the last repricing and will change in the future primarily
based on movements in one-, three- and six-month LIBOR rates.
The net unrealized gain on the ALM swap portfolio on December 31, 1998 was
$942 million compared to a net unrealized loss of $18 million on December 31,
1997, primarily reflecting a decrease in interest rates.
The net unrealized gain in the estimated value of the ALM interest rate
contracts 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
positions should not be viewed in isolation.
For a discussion of the Corporation's management of risk associated with
mortgage production and servicing activities, see the "Noninterest Income"
section on page 19.
Table Ten
Asset and Liability Management Interest Rate Contracts
December 31, 1998
(Dollars in Millions, Average Maturity in Years)
<TABLE>
<CAPTION>
Fair
Value
-----------
<S> <C>
Total receive fixed swaps ............. $ 1,958
Notional value ......................
Weighted average receive rate .......
Total pay fixed swaps ................. (1,006)
Notional value ......................
Weighted average pay rate ...........
Basis swaps ........................... (10)
---------
Notional value ......................
Total swaps ........................... 942
Futures and forward rate contracts..... 2
Notional amount .....................
Option products ....................... (46)
---------
Notional amount .....................
Total interest rate contracts ......... $ 898
=========
<CAPTION>
Maturity
---------------------------------------------------------------------------------------
After
Total 1999 2000 2001 2002 2003 2003
------------ ----------- ----------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total receive fixed swaps .............
Notional value ...................... $ 60,450 $ 4,492 $ 8,220 $ 12,213 $ 2,599 $ 15,826 $ 17,100
Weighted average receive rate ....... 6.16% 6.16% 6.28% 6.31% 6.93% 5.59% 6.43%
Total pay fixed swaps .................
Notional value ...................... $ 25,770 $ 6,062 $ 6,900 $ 4,356 $ 1,177 $ 2,481 $ 4,794
Weighted average pay rate ........... 6.73% 6.46% 6.89% 6.47% 7.31% 7.14% 6.76%
Basis swaps ...........................
Notional value ...................... $ 7,736 $ 1,685 $ 743 $ 625 $ 1,669 $ 3,014 $ --
Total swaps ...........................
Futures and forward rate contracts.....
Notional amount ..................... $ 6,348 $ 6,348 $ -- $ -- $ -- $ -- $ --
Option products .......................
Notional amount ..................... $ 26,836 $ 3,225 $ 543 $ 1,088 $ 938 $ 1,950 $ 19,092
Total interest rate contracts .........
<CAPTION>
Average
Expected
Maturity
---------
<S> <C>
Total receive fixed swaps ............. 4.55
Notional value ......................
Weighted average receive rate .......
Total pay fixed swaps ................. 3.18
Notional value ......................
Weighted average pay rate ...........
Basis swaps ........................... 2.88
Notional value ......................
Total swaps ...........................
Futures and forward rate contracts.....
Notional amount .....................
Option products .......................
Notional amount .....................
Total interest rate contracts .........
</TABLE>
Trading Portfolio
The Corporation manages its exposure to market risk resulting from trading
activities through a risk management function which is independent of the
various business units. The Trading Risk Committee (TRC) establishes and
monitors various limits on trading activities. These limits include product
volume, gross and net positions, and value-at-risk (VAR) and profit and loss
simulation limits. Product volume limits establish maximum aggregate amounts of
specific types of derivatives, foreign exchange contracts, and securities that
the Corporation may hold in its trading account at any point in time. Position
limits restrict the gross and net amount of contracts that can be held in the
trading account in any specific maturity grouping. VAR measures the potential
loss in future earnings due to market rate movements within the trading
portfolio using proprietary models that are based on statistical probability.
VAR limits establish the maximum amount of potential loss, based upon
sophisticated modeling techniques, that the Corporation is willing to assume at
any point in time. Additionally,
32
<PAGE>
the Corporation uses profit and loss simulations to measure the potential for
loss in various segments of the trading portfolio resulting from specific and
extremely adverse scenarios. These scenarios are projected without regard to
the statistical probability of their occurrences. Loss simulation limits
establish the maximum amount of projected loss computed by the simulation that
the Corporation is willing to assume.
The Corporation reduces the market risk to which it is exposed in the
trading account by executing offsetting transactions with other counterparties.
However, the Corporation may also retain, generally on a temporary basis, open
or uncovered trading account positions in an effort to generate revenue by
correctly anticipating future market conditions and customer demands or by
taking advantage of price differentials among the various markets in which it
operates.
The day-to-day management of interest rate and foreign exchange risks
takes place at a decentralized level within the Corporation's various trading
centers. Limits established by the TRC are assigned to each trading center. In
addition, documented trading policies and procedures define acceptable
boundaries within which traders can execute transactions in their assigned
markets.
The Corporation uses a VAR methodology to measure the interest rate,
foreign exchange, commodity and equity risks inherent in its trading
activities. Under this methodology, management models historical data to
statistically calculate, with 99 percent confidence, the potential loss in
earnings the Corporation might experience if an adverse one-day shift in market
prices was to occur.
The Corporation performs the VAR calculation for each major trading
portfolio segment on a daily basis. It then calculates the combined VAR across
these portfolio segments using two different sets of assumptions. The first
calculation assumes that each portfolio segment experiences adverse price
movements at the same time (i.e., the price movements are perfectly
correlated). The second calculation assumes that these adverse price movements
within the major portfolio segments do not occur at the same time (i.e., they
are uncorrelated).
Trading Activities Market Risk
(US Dollar Equivalents in Millions)
<TABLE>
<CAPTION>
Year Ended December 31, 1998
-----------------------------------------
Average VAR High VAR (1) Low VAR (1)
------------- -------------- ------------
<S> <C> <C> <C>
Based on perfect positive correlation:
Interest rate ..................... $ 120.2 $ 163.8 $ 92.7
Foreign currency .................. 28.5 46.0 8.3
Commodities ....................... 3.6 6.9 1.4
Equity ............................ 2.0 5.2 0.5
Based on zero correlation:
Interest rate ..................... 37.6 49.9 29.3
Foreign currency .................. 24.0 40.0 6.4
Commodities ....................... 2.7 5.3 1.1
Equity ............................ 1.7 5.2 0.5
</TABLE>
(1) The high and low for the entire trading account may not equal the sum of
the individual components as the highs or lows of the components occurred
on different trading days.
The table above sets forth the calculated VAR amounts for the year ended
1998. The amounts are calculated on a pre-tax basis. Although the Corporation's
trading positions have remained generally consistent during 1998, VAR levels
have been impacted by recent volatility in market conditions.
VAR modeling on trading is subject to numerous limitations. In addition,
the Corporation recognizes that there are numerous assumptions and estimates
associated with modeling and actual results could differ from these assumptions
and estimates. The Corporation mitigates these uncertainties through close
monitoring and by examining and updating assumptions on an ongoing basis. The
continual trading risk management process considers the impact of unanticipated
risk exposure and updates assumptions to reduce loss exposure.
33
<PAGE>
Credit Risk Management and Credit Portfolio Review
In conducting business activities, the Corporation is exposed to the risk
that borrowers or counterparties may default on their obligations to the
Corporation. Credit risk arises through the extension of loans and leases,
certain securities, letters of credit, financial guarantees and through
counterparty exposure on trading and capital markets transactions. To manage
this risk, the Credit Risk Management 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 events. 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 Risk Management 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 including loans and leases, securities,
letters of credit, bankers' acceptances, derivatives 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 risk management.
For commercial lending, the originating credit officer assigns borrowers
or counterparties an initial risk rating which is based primarily on the amount
of inherent credit risk and reviewed for appropriateness by senior line and
credit risk personnel. Credits are monitored by line and credit risk management
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 and actual payment experience to predict
portfolio behavior.
When required, 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. In
certain circumstances, 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 Global Corporate and
Investment Banking, 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 the
funded borrower, product or industry concentrations through loan sales.
Generally, these sales are without recourse to the Corporation.
In conducting derivatives activities in certain jurisdictions, the
Corporation reduces credit 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. For more information on the Corporation's off-balance sheet credit risk,
see Note Eleven of the consolidated financial statements on page 74.
An independent credit review group conducts ongoing reviews of credit
activities and portfolios, reexamining on a regular basis risk assessments for
credit exposures and overall compliance with policy.
Loans and Leases Portfolio - The Corporation's credit exposure is focused
in its loans and leases portfolio, which totaled $357.3 billion on December 31,
1998. Table Fifteen presents a distribution of loans and leases by category.
34
<PAGE>
Allowance for Credit Losses - The Corporation performs periodic and
systematic detailed reviews of its loan and lease portfolios to identify risks
inherent in and to assess the overall collectibility of those portfolios. These
detailed reviews, combined with historical loss experience, result in the
identification and quantification of loss factors which are used in determining
the amount of the allowance and related provision for credit losses. Consumer
loans and leases, which includes residential mortgages, home equity lines,
direct/indirect, consumer finance and foreign consumer loans, are generally
evaluated as a group, based on loan type. Remaining loans and leases are
evaluated individually due to a general lack of uniformity among individual
loans within each loan type and assigned a risk rating. The loss factors are
applied to each individual loan based on the particular item's risk ratings or
to specific loan groups in order to provide a basis for establishing an
adequate level of allowance for credit losses.
Portions of the allowance for credit losses, as presented on Table Twelve,
are allocated to cover the estimated losses inherent in each loan and lease
category based on the results of the Corporation's detail review process.
Further allocations are made based on specific existing economic conditions as
well as performance trends within specific portfolio segments and individual
concentrations of credit. The remaining unallocated portion of the allowance
for credit losses is determined based on general economic, performance and
credit concentration trends, including geographic concentrations.
The nature of the process by which the Corporation determines the
appropriate allowance for credit losses requires the exercise of considerable
judgment. After review of all relevant matters effecting loan collectibility,
management believes that the allowance for credit losses, see Note Twelve of
the consolidated financial statements on page 78, is appropriate given its
analysis of inherent credit losses on December 31, 1998.
The Corporation's allowance for credit losses was $7.1 billion, or 1.99
percent of loans and leases on December 31, 1998, compared to $6.8 billion, or
1.98 percent, on December 31, 1997, with the increase attributable to the
establishment of a $500 million reserve in the third quarter of 1998, related
to deterioration in certain international economic conditions that arose in the
third quarter of 1998. Table Eleven provides an analysis of the changes in the
allowance for credit losses. Total net charge-offs increased $615 million in
1998 to $2.5 billion, or .71 percent of average loans and leases, compared to
$1.9 billion, or .54 percent, in 1997. The increase was primarily caused by a
$372 million write-down of a credit agreement with DE Shaw and higher foreign
commercial net charge-offs. The increase was partially offset by lower consumer
net charge-offs during 1998.
35
<PAGE>
Table Eleven
Allowance For Credit Losses
(Dollars in Millions)
<TABLE>
<CAPTION>
1998 1997
------------ -------------
<S> <C> <C>
Beginning Balance .............................................. $ 6,778 $ 6,316
-------- ---------
Loans and leases charged off
Commercial - domestic ........................................ 714 328
Commercial - foreign ......................................... 262 54
Commercial real estate - domestic ............................ 21 59
Commercial real estate - foreign ............................. -- --
-------- ---------
Total commercial ........................................... 997 441
Residential mortgage ......................................... 33 50
Home equity lines ............................................ 27 36
Direct/Indirect consumer ..................................... 562 582
Consumer finance ............................................. 561 426
Bankcard ..................................................... 857 1,043
Other consumer - domestic .................................... -- 12
Foreign consumer ............................................. 13 13
-------- ---------
Total consumer ............................................. 2,053 2,162
-------- ---------
Total loans and leases charged off ........................ 3,050 2,603
-------- ---------
Recoveries of loans and leases previously charged off
Commercial - domestic ........................................ 97 226
Commercial - foreign ......................................... 20 25
Commercial real estate - domestic ............................ 21 59
Commercial real estate - foreign ............................. -- --
-------- ---------
Total commercial ........................................... 138 310
Residential mortgage ......................................... 4 5
Home equity lines ............................................ 10 9
Direct/Indirect consumer ..................................... 157 146
Consumer finance ............................................. 178 155
Bankcard ..................................................... 93 124
Other consumer - domestic .................................... -- --
Foreign consumer ............................................. 3 2
-------- ---------
Total consumer ............................................. 445 441
-------- ---------
Total recoveries of loans and leases previously
charged off .............................................. 583 751
-------- ---------
Net charge-offs .............................................. 2,467 1,852
-------- ---------
Provision for credit losses ................................... 2,920 1,904
Other, net .................................................... (109) 410
-------- ---------
Balance on December 31 ....................................... $ 7,122 $ 6,778
======== =========
Loans and leases outstanding on December 31 ................... $357,328 $ 342,140
Allowance for credit losses as a percentage of loans and
leases outstanding on December 31 ............................ 1.99% 1.98%
Average loans and leases outstanding during the year .......... $347,840 $ 343,151
Net charge-offs as a percentage of average loans and leases
outstanding during the year .................................. 0.71% 0.54%
Ratio of the allowance for credit losses on December 31 to
net charge-offs .............................................. 2.89 3.66
Allowance for credit losses as a percentage of
nonperforming loans .......................................... 287.01% 321.03%
<CAPTION>
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Beginning Balance .............................................. $ 6,222 $ 6,377 $ 6,199
--------- --------- ---------
Loans and leases charged off
Commercial - domestic ........................................ 376 329 294
Commercial - foreign ......................................... 29 11 35
Commercial real estate - domestic ............................ 131 105 134
Commercial real estate - foreign ............................. -- 2 6
--------- --------- ---------
Total commercial ........................................... 536 447 469
Residential mortgage ......................................... 61 60 60
Home equity lines ............................................ 47 47 44
Direct/Indirect consumer ..................................... 486 374 334
Consumer finance ............................................. 393 241 208
Bankcard ..................................................... 838 648 554
Other consumer - domestic .................................... 5 -- --
Foreign consumer ............................................. 3 2 1
--------- --------- ---------
Total consumer ............................................. 1,833 1,372 1,201
--------- --------- ---------
Total loans and leases charged off ........................ 2,369 1,819 1,670
--------- --------- ---------
Recoveries of loans and leases previously charged off
Commercial - domestic ........................................ 194 297 310
Commercial - foreign ......................................... 40 64 117
Commercial real estate - domestic ............................ 50 53 83
Commercial real estate - foreign ............................. 5 7 --
--------- --------- ---------
Total commercial ........................................... 289 421 510
Residential mortgage ......................................... 4 3 6
Home equity lines ............................................ 7 7 8
Direct/Indirect consumer ..................................... 137 111 124
Consumer finance ............................................. 156 69 58
Bankcard ..................................................... 108 76 84
Other consumer - domestic .................................... -- -- --
Foreign consumer ............................................. 1 1 1
--------- --------- ---------
Total consumer ............................................. 413 267 281
--------- --------- ---------
Total recoveries of loans and leases previously
charged off .............................................. 702 688 791
--------- --------- ---------
Net charge-offs .............................................. 1,667 1,131 879
--------- --------- ---------
Provision for credit losses ................................... 1,645 945 798
Other, net .................................................... 116 31 259
--------- --------- ---------
Balance on December 31 ....................................... $ 6,316 $ 6,222 $ 6,377
========= ========= =========
Loans and leases outstanding on December 31 ................... $ 317,709 $ 302,804 $ 273,615
Allowance for credit losses as a percentage of loans and
leases outstanding on December 31 ............................ 1.99% 2.05% 2.33%
Average loans and leases outstanding during the year .......... $ 312,331 $ 286,770 $ 251,489
Net charge-offs as a percentage of average loans and leases
outstanding during the year .................................. 0.53% 0.39% 0.35%
Ratio of the allowance for credit losses on December 31 to
net charge-offs .............................................. 3.79 5.50 7.25
Allowance for credit losses as a percentage of
nonperforming loans .......................................... 287.35% 224.86% 206.91%
</TABLE>
36
<PAGE>
Table Twelve
Allocation of the Allowance for Credit Losses
December 31
(Dollars in Millions)
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
------------------ ------------------ ------------------ ------------------ -------------------
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
-------- --------- -------- --------- -------- --------- -------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial - domestic..... $1,540 21.6% $1,580 23.4% $1,436 22.7% $1,306 21.1% $1,184 18.6%
Commercial - foreign ..... 1,327 18.6 1,013 14.9 427 6.8 432 6.9 396 6.2
Commercial real
estate - domestic ....... 925 13.0 847 12.5 764 12.1 992 15.9 1,218 19.1
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total commercial ........ 3,792 53.2 3,440 50.8 2,627 41.6 2,730 43.9 2,798 43.9
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Residential mortgage ..... 137 1.9 181 2.7 214 3.4 202 3.2 159 2.5
Home equity lines ........ 46 .6 84 1.2 87 1.4 74 1.2 60 .9
Bankcard ................. 501 7.0 790 11.7 671 10.6 709 11.4 568 8.9
Direct/Indirect
consumer ................ 527 7.5 608 9.0 618 9.8 604 9.7 462 7.3
Consumer finance ......... 658 9.2 785 11.6 645 10.2 460 7.4 413 6.5
Foreign consumer ......... 26 .4 23 .3 21 .3 17 .3 14 .2
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total consumer .......... 1,895 26.6 2,471 36.5 2,256 35.7 2,066 33.2 1,676 26.3
Unallocated .............. 1,435 20.2 867 12.7 1,433 22.7 1,426 22.9 1,903 29.8
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
$7,122 100.0% $6,778 100.0% $6,316 100.0% $6,222 100.0% $6,377 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
</TABLE>
Nonperforming Assets - As presented in Table Thirteen, nonperforming
assets were $2.8 billion, or .77 percent of net loans, leases and foreclosed
properties on December 31, 1998, compared to $2.4 billion, or .71 percent, on
December 31, 1997. Nonperforming loans were $2.5 billion at the end of 1998
compared to $2.1 billion at the end of 1997. The allowance coverage of
nonperforming loans was 287 percent on December 31, 1998 compared to 321
percent at the end of 1997.
Internal loan workout units are devoted to the management and/or
collection of certain nonperforming assets as well as certain performing loans.
Management believes concerted collection strategies and a proactive approach to
managing overall credit risk have expedited the disposition, collection and
renegotiation of nonperforming and other lower-quality assets. As part of this
process, management routinely evaluates all reasonable alternatives, including
the sale of assets individually or in groups, and selects the optimal strategy.
At December 31, 1998 and 1997 residential mortgage loans comprised 26
percent and 31 percent, respectively, of total nonperforming assets. Due to the
nature of the collateral securing residential mortgage loans and a history of
low losses, the Corporation considers these loans to be low risk nonperforming
assets.
Foreclosed properties decreased to $282 million on December 31, 1998
compared to $309 million on December 31, 1997.
37
<PAGE>
Table Thirteen
Nonperforming Assets
December 31
(Dollars in Millions)
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Nonperforming loans
Commercial - domestic ....................... $ 812 $ 563 $ 713 $ 914 $ 966
Commercial - foreign ........................ 314 155 110 121 179
Commercial real estate - domestic ........... 299 342 491 1,027 1,304
Commercial real estate - foreign ............ 4 2 2 22 38
------- ------- ------- ------- -------
Total commercial ........................... 1,429 1,062 1,316 2,084 2,487
------- ------- ------- ------- -------
Residential mortgage ........................ 722 744 676 464 437
Home equity lines ........................... 50 52 36 42 28
Direct/Indirect consumer .................... 21 43 53 57 60
Consumer finance ............................ 246 210 116 118 69
Foreign consumer ............................ 14 -- 1 2 1
------- ------- ------- ------- -------
Total consumer ............................. 1,053 1,049 882 683 595
------- ------- ------- ------- -------
Total nonperforming loans .................. 2,482 2,111 2,198 2,767 3,082
Foreclosed properties ......................... 282 309 511 675 981
------- ------- ------- ------- -------
Total nonperforming assets ................. $ 2,764 $ 2,420 $ 2,709 $ 3,442 $ 4,063
======= ======= ======= ======= =======
Nonperforming assets as a percentage of
Total assets ................................ .45% .42% .57% .75% .95%
Loans, leases and foreclosed properties ..... .77 .71 .85 1.14 1.49
</TABLE>
The loss of income associated with nonperforming loans on December 31 and
the cost of carrying foreclosed properties were:
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
--------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Income that would have been recorded in accordance
with original terms ................................. $ 367 $ 349 $ 388 $ 457 $ 268
Less income actually recorded ........................ (130) (130) (130) (135) (98)
------ ------ ------ ------ -----
Loss of income ....................................... $ 237 $ 219 $ 258 $ 322 $ 170
====== ====== ====== ====== =====
Cost of carrying foreclosed properties ............... $ 16 $ 26 $ 35 $ 51 $ 60
====== ====== ====== ====== =====
</TABLE>
On December 31, 1998, there were no material commitments to lend additional
funds with respect to nonperforming loans.
Loans Past Due 90 Days or More - Table Fourteen presents total loans past
due 90 days or more and still accruing interest. On December 31, 1998, loans
past due 90 days or more and still accruing interest were $611 million, or .17
percent of loans and leases, compared to $613 million, or .18 percent, on
December 31, 1997.
38
<PAGE>
Table Fourteen
Loans Past Due 90 Days or More and Still Accruing Interest
(Dollars in Millions)
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
---------------------- ---------------------
Amount Percent (1) Amount Percent (1)
-------- ------------- -------- ------------
<S> <C> <C> <C> <C>
Commercial - domestic ..................... $135 .10% $ 52 .04%
Commercial - foreign ...................... 23 .07 3 .01
Commercial real estate - domestic ......... 12 .04 17 .06
---- ---- ---- ----
Total commercial ......................... 170 .09 72 .04
---- ---- ---- ----
Residential mortgage ...................... 31 .04 87 .12
Home equity lines ......................... -- -- 3 .02
Direct/Indirect consumer .................. 174 .43 116 .29
Consumer finance .......................... 16 .10 34 .23
Bankcard .................................. 214 1.72 301 2.01
Foreign consumer .......................... 6 .17 -- --
---- ---- ---- ----
Total consumer ........................... 441 .27 541 .34
---- ---- ---- ----
Total .................................. $611 .17% $613 .18%
==== ==== ==== ====
</TABLE>
(1) Represents amounts past due 90 days or more and still accruing interest as
a percentage of net loans and leases for each respective category.
Concentrations of Credit Risk - 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 as outlined in Tables Seventeen and
Eighteen. Table Fifteen presents the distribution of loans and leases by
category.
Table Fifteen
Distribution of Loans and Leases
December 31
(Dollars in Millions)
<TABLE>
<CAPTION>
1998 1997
--------------------- ---------------------
Amount Percent Amount Percent
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Commercial - domestic ............. $137,422 38.5% $122,463 35.8%
Commercial - foreign .............. 31,495 8.8 30,080 8.8
Commercial R/E - domestic ......... 26,912 7.5 28,567 8.3
Commercial R/E - foreign .......... 301 .1 324 .1
-------- ----- -------- -----
Total commercial ................. 196,130 54.9 181,434 53.0
-------- ----- -------- -----
Residential mortgage .............. 73,608 20.6 71,540 20.9
Home equity lines ................. 15,653 4.4 16,536 4.8
Direct/Indirect consumer .......... 40,510 11.3 40,058 11.7
Consumer finance .................. 15,400 4.3 14,566 4.3
Bankcard .......................... 12,425 3.5 14,908 4.4
Foreign consumer .................. 3,602 1.0 3,098 .9
-------- ----- -------- -----
Total consumer ................... 161,198 45.1 160,706 47.0
-------- ----- -------- -----
Total loans and leases .......... $357,328 100.0% $342,140 100.0%
======== ===== ======== =====
<CAPTION>
1996 1995 1994
--------------------- -------------------- ---------------------
Amount Percent Amount Percent Amount Percent
----------- --------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Commercial - domestic ............. $105,737 33.3% $ 99,922 33.1% $ 91,740 33.5%
Commercial - foreign .............. 26,781 8.4 23,395 7.7 20,180 7.4
Commercial R/E - domestic ......... 25,881 8.1 26,381 8.7 27,530 10.1
Commercial R/E - foreign .......... 239 .1 361 .1 394 .1
-------- ----- -------- ----- -------- -----
Total commercial ................. 158,638 49.9 150,059 49.6 139,844 51.1
-------- ----- -------- ----- -------- -----
Residential mortgage .............. 80,400 25.3 77,078 25.5 68,474 25.0
Home equity lines ................. 12,541 3.9 11,143 3.7 9,958 3.6
Direct/Indirect consumer .......... 33,352 10.6 34,071 11.1 31,924 11.8
Consumer finance .................. 13,081 4.1 10,375 3.4 6,948 2.5
Bankcard .......................... 16,561 5.2 17,455 5.8 14,148 5.2
Foreign consumer .................. 3,136 1.0 2,623 .9 2,319 .8
-------- ----- -------- ----- -------- -----
Total consumer ................... 159,071 50.1 152,745 50.4 133,771 48.9
-------- ----- -------- ----- -------- -----
Total loans and leases .......... $317,709 100.0% $302,804 100.0% $273,615 100.0%
======== ===== ======== ===== ======== =====
</TABLE>
The following section discusses credit risk in the loan portfolio,
including net charge-offs by loan categories as presented in Table Sixteen.
39
<PAGE>
Table Sixteen
Net Charge-offs in Dollars and as a Percentage of Average Loans Outstanding
(Dollars in Millions)
<TABLE>
<CAPTION>
1998 1997
------------------- -------------------
<S> <C> <C> <C> <C>
Commercial - domestic ................ $ 617 .47% $ 102 .09%
Commercial - foreign ................. 242 .78 29 .10
Commercial real estate - domestic..... -- -- -- --
Commercial real estate - foreign ..... -- -- -- --
------ ---- ------ ----
Total commercial .................... 859 .45 131 .07
------ ---- ------ ----
Residential mortgage ................. 29 .04 45 .06
Home equity lines .................... 17 .11 27 .18
Direct/Indirect consumer ............. 405 1.01 436 1.11
Consumer finance ..................... 383 2.67 271 1.96
Bankcard ............................. 764 6.03 919 5.90
Other consumer - domestic ............ -- -- 12 --
Foreign consumer ..................... 10 .31 11 .32
------ ---- ------ ----
Total consumer ...................... 1,608 1.02 1,721 1.03
------ ---- ------ ----
Total net charge-offs ............... $2,467 .71 $1,852 .54
====== ==== ====== ====
Managed credit cards net
charge-offs and ratios(1) ........... $1,284 6.27% $1,254 6.19%
<CAPTION>
1996 1995 1994
---------------------- ---------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial - domestic ................ $ 182 .18% $ 32 .03% $ (16) n/m%
Commercial - foreign ................. (11) n/m (53) n/m (82) n/m
Commercial real estate - domestic..... 81 .31 52 .19 51 .20
Commercial real estate - foreign ..... (5) n/m (5) n/m 6 .40
-------- ---- -------- ---- ----- -----
Total commercial .................... 247 .16 26 .02 (41) n/m
------- ---- ------- ---- ----- -----
Residential mortgage ................. 57 .07 57 .08 54 .10
Home equity lines .................... 40 .34 40 .39 36 .26
Direct/Indirect consumer ............. 349 1.01 263 .79 210 .78
Consumer finance ..................... 237 1.98 172 1.98 150 1.23
Bankcard ............................. 730 4.47 572 3.88 470 3.79
Other consumer - domestic ............ 5 -- -- -- -- --
Foreign consumer ..................... 2 .10 1 .04 -- --
------- ---- ------- ---- ----- -----
Total consumer ...................... 1,420 .89 1,105 .77 920 .75
------- ---- ------- ---- ----- -----
Total net charge-offs ............... $1,667 .53 $1,131 .39 $ 879 .35
======= ==== ======= ==== ===== =====
Managed credit cards net
charge-offs and ratios(1) ........... $ 888 4.67% $ 651 4.10% $ 549 4.05%
</TABLE>
n/m =not meaningful
(1) Includes both on-balance sheet and securitized loans.
Net charge-offs for each loan type are calculated as a percentage of
average outstanding or managed loans for each loan category. Total net
charge-offs are calculated based on total average outstanding loans and
leases.
Commercial Real Estate - Total commercial real estate - domestic loans,
the portion of such loans which are nonperforming, and other real estate credit
exposures are presented in Table Seventeen. 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 commercial real estate - domestic loans totaled $26.9 billion, or 8
percent of loans and leases, on December 31, 1998 compared to $28.6 billion, or
8 percent, at the end of 1997 with the decrease due to the Corporation's
efforts to lower its exposure to this line of business. Commercial real estate
- - domestic loans past due 90 days or more and still accruing interest were $12
million, or .04 percent of total domestic real estate loans, on December 31,
1998 compared to $17 million, or .06 percent, on December 31, 1997.
The exposures included in Table Seventeen do not include credit extensions
which were made on the general creditworthiness of the borrower for which real
estate was obtained as security 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, 1998, the Corporation had approximately $15.1 billion of
commercial loans which were not real estate dependent but for which the
Corporation had obtained real estate as secondary repayment security.
Commercial - Commercial - domestic loan outstandings totaled $137.4
billion and $122.4 billion on December 31, 1998 and 1997, respectively, or 39
percent and 36 percent of loans and leases, respectively. This increase was due
primarily to core loan growth. The Corporation had commercial - domestic loan
net charge-offs in 1998 of $617 million, or .47 percent of average commercial -
domestic loans, compared to $102 million, or .09 percent of average commercial
- - domestic loans, in 1997. Excluding a $372 million charge-off for a credit to
DE Shaw, a trading and investment firm, commercial - domestic loan net
charge-offs were $245 million, or .19 percent of average commercial - domestic
loans, in 1998. Commercial - domestic loans past due 90 days or more and still
accruing interest were $135 million, or .10 percent of commercial - domestic
loans, on December 31, 1998 compared to $52 million, or .04 percent, on
December 31, 1997. Nonperforming commercial - domestic loans were $812 million,
or .59 percent of commercial - domestic loans, on December 31, 1998, compared
to $563 million, or .46 percent, on December 31, 1997. Table Eighteen presents
significant industry commercial loans and lease financings.
40
<PAGE>
Table Seventeen
Real Estate Commercial Loans, Foreclosed Properties and Other Real Estate
Credit Exposures
December 31, 1998
(Dollars in Millions)
<TABLE>
<CAPTION>
Loans Other
----------------------------- Foreclosed Credit
Outstanding Nonperforming Properties (1) Exposures (2)
------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
By Geographic Region (3):
California ........................ $ 6,714 $ 28 $ 59 $1,747
Southwest ......................... 3,795 25 12 627
Northwest ......................... 2,849 47 -- 611
Midwest ........................... 2,784 33 6 299
Midatlantic ....................... 2,620 39 9 397
Florida ........................... 1,740 64 13 437
Midsouth .......................... 1,307 14 3 277
Carolinas ......................... 1,185 23 8 1,395
Other states ...................... 3,918 26 31 472
Non-US ............................ 301 4 -- --
------- ---- ---- ------
$27,213 $303 $141 $6,262
======= ==== ==== ======
By Property Type:
Apartments ........................ $ 5,063 $ 18 $ 2 $1,136
Office buildings .................. 4,890 29 11 478
Shopping centers/retail ........... 3,521 62 16 903
Industrial/warehouse .............. 2,640 28 5 335
Residential ....................... 2,596 22 5 355
Hotels/motels ..................... 1,542 19 8 311
Land and land development ......... 1,236 33 67 281
Multiple use ...................... 843 4 1 159
Unsecured ......................... 690 3 -- 62
Miscellaneous commercial .......... 649 14 12 111
Non-US ............................ 301 4 -- --
Resorts/golf courses .............. 134 2 -- 9
Other ............................. 3,108 65 14 2,122
------- ---- ---- ------
$27,213 $303 $141 $6,262
======= ==== ==== ======
</TABLE>
(1) Foreclosed properties include commercial real estate loans only.
(2) Other credit exposures include primarily letters of credit and loans held
for sale.
(3) Distribution based on geographic location of collateral.
Commercial-foreign loan outstandings totaled $31.5 billion and $30.1 billion on
December 31, 1998 and 1997, respectively, or 9 percent of loans and leases for
each year. The Corporation had commercial-foreign loan net charge-offs in 1998
of $242 million, or .78 percent of average commercial-foreign loans, compared
to $29 million, or .10 percent of the average commercial-foreign loans in 1997.
The increase in commercial-foreign loan net charge-offs is attributed to
charge-offs in Asia, Latin America, and Eastern Europe. Commercial-foreign
loans past due 90 days or more and still accruing interest were $23 million, or
.07 percent of commercial-foreign loans, on December 31, 1998 compared to $3
million, or .01 percent, on December 31, 1997. Nonperforming commercial-foreign
loans were $314 million, or 1.00 percent of commercial-foreign loans, on
December 31, 1998, compared to $155 million, or .52 percent, on December 31,
1997. For additional information see Recent International Developments on page
42.
41
<PAGE>
Table Eighteen
Significant Industry Loans and Leases(1)
December 31, 1998
(Dollars in Millions)
<TABLE>
<CAPTION>
Outstanding
------------
<S> <C>
Oil and gas ........................ $10,203
Transportation ..................... 9,903
Media .............................. 8,484
Agribusiness ....................... 8,321
Equipment and general manufacturing 8,052
Health care ........................ 7,795
Retail ............................. 7,396
Business services .................. 6,967
Autos .............................. 6,943
Metals and mining .................. 5,260
</TABLE>
(1) Includes only non-real estate commercial loans and leases.
Consumer - On December 31, 1998 and 1997, total domestic consumer loan
outstandings totaled $157.6 billion, or 44 percent of loans and leases and
$157.6 billion or 46 percent of loans and leases, respectively. Total domestic
consumer net charge-offs during 1998 decreased $112 million due mainly to lower
bankcard net charge-offs, partially offset by higher consumer finance net
charge-offs.
Average residential mortgage loans decreased to $70.8 billion compared to
$80.6 billion in 1997, reflecting loan sales and the impact of approximately
$5.1 billion of mortgage loan securitizations in 1998 and $9.6 billion of
mortgage loan securitizations in 1997.
Average managed bankcard receivables (excluding private label bankcards)
increased to $20.5 billion on December 31, 1998 compared to $20.2 billion at
the end of 1997. This increase was partially offset by $2.0 billion of
securitizations in 1998.
Average other consumer loans increased to $70.7 billion in 1998 compared
to $67.9 billion in 1997. The increase was net of the impact of approximately
$3.4 billion of securitizations that occurred throughout 1997 and $4.5 billion
of securitizations in 1998. Average managed other consumer loans increased to
$80.5 billion on December 31, 1998 compared to $73.4 billion at the end of
1997.
Total consumer loans past due 90 days or more and still accruing interest
were $441 million, or .27 percent of total consumer loans, on December 31, 1998
compared to $541 million, or .34 percent, at the end of 1997. Total consumer
nonperforming loans were $1.1 billion, or .65 percent of total consumer loans,
on December 31, 1998 compared to $1.0 billion, or .65 percent, on December 31,
1997.
Recent International Developments - During 1998, and continuing into 1999,
a number of countries in Asia, Latin America and Eastern Europe experienced
economic difficulties due to a combination of structural problems and negative
market reaction that resulted from increased awareness of these problems. While
each country's situation is unique, many share common factors: (1) government
actions which restrain normal functioning of free markets in physical goods,
capital and/or currencies; (2) perceived weaknesses of the banking systems; and
(3) perceived overvaluation of local currencies. In addition, since these
factors have resulted in capital movement out of the countries or in reduced
capital inflows, many of these countries are experiencing liquidity problems in
addition to the structural problems.
Where appropriate, the Corporation has adjusted its activities (including
its borrower selection) in light of the risks and opportunities discussed
above, and has increased its foreign credit reserves related to those risks.
The Corporation also has reduced its exposures in Asia, Latin America and
Central and Eastern Europe during 1998. The Corporation will continue to
monitor and adjust its foreign activities on a country by country basis
depending on management's judgment of the likely developments in each country
and will take action as deemed appropriate. For a more comprehensive discussion
of the Corporation's risk management processes, refer to pages 29 to 35.
42
<PAGE>
Exposure Exceeding One Percent of Total Assets(1,2)
<TABLE>
<CAPTION>
Exposure
Public Private Total as a Percentage
(Dollars in Millions) December 31 Sector(2) Banks(2) Sector(2) Exposure of Total Assets
- ----------------------- ------------- ----------- ---------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Japan 1998 $2,452 $1,519 $1,090 $5,061 .82%
1997 2,485 1,555 2,930 6,970 1.13
1996 1,240 2,030 2,846 6,116 .99
</TABLE>
(1) Exposure includes the following assets, primarily in U.S. dollars, with
borrowers or customers in a foreign country: loans, accrued interest,
acceptances, interest-bearing deposits in banks, trading account assets,
securities available for sale and held for investment, other
interest-earning investments, and other monetary assets. Amounts also
include unrealized gains on off-balance-sheet instruments, unused
commitments, standby letters of credit, commercial letters of credit,
formal guarantees, and securities avilable for sale and held for
investment.
(2) Sector definitions are based on Federal Financial Institutions Examination
Council instructions for preparing the Country Exposure Report.
Regional Foreign Exposure - Through its credit and market risk management
activities, the Corporation has been devoting special attention to those
countries that have been negatively impacted by increasing global economic
pressure. This includes special attention to those Asian countries that are
currently experiencing currency and other economic problems, as well as Latin
America and Eastern Europe which are also experiencing similar problems.
In connection with its efforts to maintain a diversified portfolio, the
Corporation limits its exposure to any one geographic region or country and
monitors this exposure on a continuous basis. Table Nineteen sets forth
selected regional exposure as of December 31, 1998. Exposure represents loans,
securities, including restructured debt, and other monetary assets, and also
includes local currency monetary assets that have been funded through local
currency borrowings.
43
<PAGE>
The following table is based on the Federal Financial Institutions
Examination Council's instructions for periodic reporting of foreign exposures.
The table has been expanded to include "Gross Local Currency Claims" as defined
per the footnotes. As a result of this addition, the table may not be
consistent with disclosures by others.
Table Nineteen
Regional Foreign Exposure
(Dollars in Millions)
<TABLE>
<CAPTION>
Increase
Total Gross Other Total Total (Decrease)
Cross- Local Cross- Exposure Exposure from
Border Country Border December 31, December 31, December 31,
Loans Claims (1) Claims (2) 1998 1997 1997
Region/Country -------- ------------ ------------ -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Asia
China ........................ $ 117 $ 142 $ 190 $ 449 $ 765 $ (316)
Hong Kong .................... 54 4,776 358 5,188 5,631 (443)
India ........................ 453 1,937 128 2,518 2,499 19
Indonesia .................... 352 185 186 723 1,510 (787)
Japan ........................ 198 1,826 3,037 5,061 6,970 (1,909)
Korea (South) ................ 561 308 1,010 1,879 3,804 (1,925)
Malaysia ..................... 4 670 54 728 1,254 (526)
Pakistan ..................... 8 335 9 352 550 (198)
Philippines .................. 257 155 171 583 763 (180)
Singapore .................... 171 1,554 281 2,006 2,412 (406)
Taiwan ....................... 370 1,787 133 2,290 2,438 (148)
Thailand ..................... 96 735 119 950 1,957 (1,007)
Other ........................ 7 130 16 153 106 47
------ ------- ------- ------- ------- ---------
2,648 14,540 5,692 22,880 30,659 (7,779)
------ ------- ------- ------- ------- ---------
Central and Eastern Europe
Russian Federation ........... 43 -- 17 60 447 (387)
Other ........................ 338 72 294 704 698 6
------ ------- ------- ------- ------- ---------
381 72 311 764 1,145 (381)
------ ------- ------- ------- ------- ---------
Latin America
Argentina .................... 574 461 232 1,267 1,643 (376)
Brazil ....................... 1,501 586 1,331 3,418 3,630 (212)
Chile ........................ 741 770 140 1,651 1,680 (29)
Colombia ..................... 510 90 198 798 785 13
Mexico ....................... 2,469 391 2,078 4,938 6,112 (1,174)
Venezuela .................... 137 39 381 557 623 (66)
Other ........................ 269 -- 161 430 443 (13)
------ ------- ------- ------- ------- ---------
6,201 2,337 4,521 13,059 14,916 (1,857)
------ ------- ------- ------- ------- ---------
Total ....................... $9,230 $16,949 $10,524 $36,703 $46,720 $ (10,017)
====== ======= ======= ======= ======= =========
</TABLE>
(1) Includes the following claims by the Corporation's foreign offices: trading
account securities, derivative products, unused commitments, standby
letters of credit, commercial letters of credit, formal guarantees, and
securities available for sale and held for investment regardless of the
currency.
(2) Includes: accrued interest receivable, acceptances, interest-bearing
deposits in banks, trading account securities, securities under agreement
to resell, other interest-earning investments, other short-term monetary
assets, unrealized gains on off-balance-sheet instruments, unused
commitments, standby letters of credit, commercial letters of credit,
formal guarantees, and securities available for sale and held for
investment, including securities that are collateralized by U.S. Treasury
securities as follows: Mexico - $1,037, Venezuela - $253, Philippines -
$18, and Latin America Other - $85. Held for investment securities
amounted to $960 with a fair value of $921.
Prior period has been restated for comparison.
44
<PAGE>
Table Twenty
Selected Quarterly Operating Results
(Dollars in Millions, Except Per-Share Information)
<TABLE>
<CAPTION>
1998 Quarters
---------------------------------------------------
Fourth Third Second First
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Interest income ...................................... $ 9,638 $ 9,608 $ 9,637 $ 9,705
Interest expense ..................................... 5,029 5,164 5,011 5,086
Net interest income (taxable-equivalent) ............. 4,650 4,484 4,668 4,659
Net interest income .................................. 4,609 4,444 4,626 4,619
Provision for credit losses .......................... 510 1,405 495 510
Gains on sales of securities ......................... 404 280 120 213
Noninterest income ................................... 2,655 2,405 3,636 3,493
Merger-related charges, net .......................... 600 725 (430) 900
Other noninterest expense ............................ 4,687 4,583 4,767 4,704
Income before taxes .................................. 1,871 416 3,550 2,211
Income tax expense ................................... 709 42 1,252 880
Net income ........................................... 1,162 374 2,298 1,331
Net income (excluding merger-related charges) ........ 1,603 893 2,021 1,973
Earnings per common share ............................ .67 .21 1.32 .77
Earnings per common share (excluding
merger-related charges) ............................. .92 .51 1.16 1.14
Diluted earnings per common share .................... .66 .21 1.28 .75
Diluted earnings per common share (excluding
merger-related charges) ............................. .91 .50 1.13 1.11
Dividends per common share ........................... .45 .38 .38 .38
Yield on average earning assets ...................... 7.44% 7.73% 7.89% 7.98%
Rate on average interest-bearing liabilities ......... 4.60 4.94 4.90 4.93
Net interest spread .................................. 2.84 2.79 2.99 3.05
Net interest yield ................................... 3.58 3.60 3.80 3.83
Average total assets ................................. $606,541 $578,353 $ 573,975 $ 578,841
Average total deposits ............................... 351,766 347,783 342,369 339,867
Average total shareholders' equity ................... 45,051 45,756 44,857 43,628
Return on average assets ............................. .76 .26 1.61 .93
Return on average assets (excluding
merger-related charges) ............................. 1.05 .61 1.41 1.38
Return on average common shareholders'
equity (1) .......................................... 10.23 3.23 20.76 12.46
Return on average common shareholders' equity
(excluding merger-related charges) (1) .............. 14.12 7.73 18.24 18.52
Cash basis financial data (2)
Earnings per common share ........................... $ .80 $ .34 $ 1.45 $ .90
Earnings per common share (excluding
merger-related charges) ............................ 1.05 .64 1.29 1.27
Diluted earnings per common share ................... .79 .34 1.41 .87
Diluted earnings per common share (excluding
merger-related charges) ............................ 1.04 .63 1.25 1.24
Return on average tangible assets ................... .93% .42% 1.81% 1.12%
Return on average tangible assets (excluding
merger-related charges) ............................ 1.22 .79 1.61 1.59
Return on average tangible common
shareholders' equity (1) ........................... 18.18 7.76 35.10 23.02
Return on average tangible common
shareholders' equity (excluding
merger-related charges) (1) ........................ 23.97 14.51 31.23 32.57
Tier 1 capital ratio (3) ............................. 7.06% 7.29% 7.32% 6.80%
Total capital ratio (3) .............................. 10.94 11.25 11.77 11.19
Market price per share of common stock
High for the period ................................. $ 66 5/8 $88 7/16 $ 85 $ 75 1/8
Low for the period .................................. 44 47 7/8 72 1/16 56 1/4
Closing price ....................................... 60 1/8 53 1/2 76 11/16 72 15/16
<CAPTION>
1997 Quarters
--------------------------------------------------
Fourth Third Second First
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Interest income ...................................... $ 9,534 $ 9,443 $ 9,298 $ 9,058
Interest expense ..................................... 4,976 4,808 4,648 4,469
Net interest income (taxable-equivalent) ............. 4,598 4,676 4,689 4,626
Net interest income .................................. 4,558 4,635 4,650 4,589
Provision for credit losses .......................... 498 489 476 441
Gains on sales of securities ......................... 111 54 42 64
Noninterest income ................................... 3,225 3,078 2,796 2,657
Merger-related charges, net .......................... 302 72 -- --
Other noninterest expense ............................ 4,736 4,419 4,240 4,230
Income before taxes .................................. 2,358 2,787 2,772 2,639
Income tax expense ................................... 899 1,057 1,055 1,003
Net income ........................................... 1,459 1,730 1,718 1,635
Net income (excluding merger-related charges) ........ 1,679 1,774 1,718 1,635
Earnings per common share ............................ .84 .99 .97 .91
Earnings per common share (excluding
merger-related charges) ............................. .96 1.02 .97 .91
Diluted earnings per common share .................... .81 .96 .94 .89
Diluted earnings per common share (excluding
merger-related charges) ............................. .94 .99 .94 .89
Dividends per common share ........................... .38 .33 .33 .33
Yield on average earning assets ...................... 8.02% 8.11% 8.10% 8.02%
Rate on average interest-bearing liabilities ......... 4.97 4.90 4.79 4.69
Net interest spread .................................. 3.05 3.21 3.31 3.33
Net interest yield ................................... 3.85 4.00 4.07 4.09
Average total assets ................................. $ 556,595 $ 543,030 $539,433 $535,905
Average total deposits ............................... 338,331 336,418 337,384 335,370
Average total shareholders' equity ................... 43,807 43,241 43,585 43,810
Return on average assets ............................. 1.04 1.26 1.28 1.24
Return on average assets (excluding
merger-related charges) ............................. 1.20 1.30 1.28 1.24
Return on average common shareholders'
equity (1) .......................................... 13.33 16.13 16.14 15.48
Return on average common shareholders' equity
(excluding merger-related charges) (1) .............. 15.36 16.55 16.14 15.48
Cash basis financial data (2)
Earnings per common share ........................... $ .97 $ 1.11 $ 1.09 $ 1.03
Earnings per common share (excluding
merger-related charges) ............................ 1.09 1.14 1.09 1.03
Diluted earnings per common share ................... .94 1.08 1.06 1.00
Diluted earnings per common share (excluding
merger-related charges) ............................ 1.06 1.11 1.06 1.00
Return on average tangible assets ................... 1.23% 1.46% 1.48% 1.43%
Return on average tangible assets (excluding
merger-related charges) ............................ 1.40 1.49 1.48 1.43
Return on average tangible common
shareholders' equity (1) ........................... 24.38 28.08 28.40 26.38
Return on average tangible common
shareholders' equity (excluding
merger-related charges) (1) ........................ 27.59 28.73 28.40 26.38
Tier 1 capital ratio (3) ............................. 6.50% 7.00% 6.83% 7.06%
Total capital ratio (3) .............................. 10.89 11.56 11.32 11.58
Market price per share of common stock
High for the period ................................. $ 66 3/8 $71 11/16 $ 70 $ 65
Low for the period .................................. 55 56 5/8 54 48
Closing price ....................................... 60 13/16 61 7/8 64 9/16 55 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.
(2) Cash basis calculations exclude intangible assets and the related
amortization expense.
(3) Ratios for the first and second quarters of 1998 are NationsBank ratios,
and have not been restated to reflect the impact of the BankAmerica
merger. Ratios for 1997 are NationsBank ratios, and have not been restated
to reflect the BankAmerica and Barnett mergers.
45
<PAGE>
Table Twenty-One
Quarterly Taxable-Equivalent Data
(Dollars in Millions)
<TABLE>
<CAPTION>
Fourth Quarter 1998
-------------------------------
Average
Balance Income
Sheet or Yields/
Amounts Expense Rates
----------- --------- ---------
<S> <C> <C> <C>
Earning assets
Loans and leases (1)
Commercial - domestic .................................................... $136,629 $2,542 7.39%
Commercial - foreign ..................................................... 32,893 569 6.86
Commercial real estate - domestic ........................................ 28,427 601 8.38
Commercial real estate - foreign ......................................... 319 8 9.39
-------- ------ -----
Total commercial ........................................................ 198,268 3,720 7.45
-------- ------ -----
Residential mortgage ..................................................... 73,033 1,336 7.30
Home equity lines ........................................................ 15,781 326 8.17
Direct/Indirect consumer ................................................. 40,557 876 8.57
Consumer finance ......................................................... 14,368 338 9.33
Bankcard ................................................................. 12,078 366 12.01
Foreign consumer ......................................................... 3,551 94 10.47
-------- ------ -----
Total consumer .......................................................... 159,368 3,336 8.32
-------- ------ -----
Total loans and leases ................................................. 357,636 7,056 7.84
-------- ------ -----
Securities
Held for investment ...................................................... 2,948 44 6.09
Available for sale (2) ................................................... 69,354 1,162 6.68
-------- ------ -----
Total securities ........................................................ 72,302 1,206 6.66
-------- ------ -----
Federal funds sold and securities purchased under agreements to resell..... 29,564 486 6.53
Time deposits placed and other short-term investments ..................... 6,702 111 6.56
Trading account securities ................................................ 39,391 613 6.19
Other earning assets ...................................................... 11,471 207 7.19
-------- ------ -----
Total earning assets (3) ................................................ 517,066 9,679 7.44
-------- ------ -----
Cash and cash equivalents .................................................. 25,834
Other assets, less allowance for credit losses ............................. 63,641
--------
Total assets ............................................................ $606,541
========
Interest-bearing liabilities
Domestic interest-bearing deposits
Savings .................................................................. $ 21,702 91 1.67
NOW and money market deposit accounts .................................... 97,589 622 2.53
Consumer CDs and IRAs .................................................... 74,923 956 5.06
Negotiated CDs, public funds and other time deposits ..................... 7,388 96 5.16
-------- ------ -----
Total domestic interest-bearing deposits ................................ 201,602 1,765 3.47
-------- ------ -----
Foreign interest-bearing deposits (4)
Banks located in foreign countries ....................................... 24,938 325 5.17
Governments and official institutions .................................... 10,278 143 5.54
Time, savings, and other ................................................. 26,868 365 5.39
-------- ------ -----
Total foreign interest-bearing deposits ................................. 62,084 833 5.32
-------- ------ -----
Total interest-bearing deposits ......................................... 263,686 2,598 3.91
-------- ------ -----
Federal funds purchased, securities sold under agreements to
repurchase and other short-term borrowings ............................... 104,416 1,422 5.40
Trading account liabilities ............................................... 14,194 165 4.62
Long-term debt (5) ........................................................ 51,779 844 6.52
-------- ------ -----
Total interest-bearing liabilities (6) .................................. 434,075 5,029 4.60
-------- ------ -----
Noninterest-bearing sources
Noninterest-bearing deposits .............................................. 88,080
Other liabilities ......................................................... 39,335
Shareholders' equity ...................................................... 45,051
--------
Total liabilities and shareholders' equity .............................. $606,541
========
Net interest spread ........................................................ 2.84
Impact of noninterest-bearing sources ...................................... .74
-----
Net interest income/yield on earning assets ................................ $4,650 3.58%
====== =====
<CAPTION>
Third Quarter 1998
--------------------------------
Average
Balance Income
Sheet or Yields/
Amounts Expense Rates
----------- --------- ----------
<S> <C> <C> <C>
Earning assets
Loans and leases (1)
Commercial - domestic .................................................... $132,537 $2,538 7.59%
Commercial - foreign ..................................................... 31,245 578 7.35
Commercial real estate - domestic ........................................ 28,027 610 8.64
Commercial real estate - foreign ......................................... 338 8 10.51
-------- ------ -----
Total commercial ........................................................ 192,147 3,734 7.71
-------- ------ -----
Residential mortgage ..................................................... 70,619 1,155 6.53
Home equity lines ........................................................ 16,024 485 12.03
Direct/Indirect consumer ................................................. 39,582 854 8.56
Consumer finance ......................................................... 14,197 385 10.76
Bankcard ................................................................. 12,751 399 12.43
Foreign consumer ......................................................... 3,465 93 10.57
-------- ------ -----
Total consumer .......................................................... 156,638 3,371 8.56
-------- ------ -----
Total loans and leases ................................................. 348,785 7,105 8.09
-------- ------ -----
Securities
Held for investment ...................................................... 4,286 76 6.99
Available for sale (2) ................................................... 61,250 1,046 6.82
-------- ------ -----
Total securities ........................................................ 65,536 1,122 6.83
-------- ------ -----
Federal funds sold and securities purchased under agreements to resell..... 27,646 492 7.06
Time deposits placed and other short-term investments ..................... 7,483 138 7.31
Trading account securities ................................................ 35,487 587 6.59
Other earning assets ...................................................... 10,974 204 7.42
-------- ------ -----
Total earning assets (3) ................................................ 495,911 9,648 7.73
-------- ------ -----
Cash and cash equivalents .................................................. 24,160
Other assets, less allowance for credit losses ............................. 58,282
--------
Total assets ............................................................ $578,353
========
Interest-bearing liabilities
Domestic interest-bearing deposits
Savings .................................................................. $ 22,775 107 1.87
NOW and money market deposit accounts .................................... 95,276 634 2.64
Consumer CDs and IRAs .................................................... 74,313 984 5.25
Negotiated CDs, public funds and other time deposits ..................... 8,696 120 5.45
-------- ------ -----
Total domestic interest-bearing deposits ................................ 201,060 1,845 3.64
-------- ------ -----
Foreign interest-bearing deposits (4)
Banks located in foreign countries ....................................... 27,892 418 5.95
Governments and official institutions .................................... 11,084 156 5.59
Time, savings, and other ................................................. 24,086 411 6.77
-------- ------ -----
Total foreign interest-bearing deposits ................................. 63,062 985 6.20
-------- ------ -----
Total interest-bearing deposits ......................................... 264,122 2,830 4.25
-------- ------ -----
Federal funds purchased, securities sold under agreements to
repurchase and other short-term borrowings ............................... 84,283 1,278 6.02
Trading account liabilities ............................................... 15,454 194 4.97
Long-term debt (5) ........................................................ 51,365 862 6.71
-------- ------ -----
Total interest-bearing liabilities (6) .................................. 415,224 5,164 4.94
-------- ------ -----
Noninterest-bearing sources
Noninterest-bearing deposits .............................................. 83,661
Other liabilities ......................................................... 33,712
Shareholders' equity ...................................................... 45,756
--------
Total liabilities and shareholders' equity .............................. $578,353
========
Net interest spread ........................................................ 2.79
Impact of noninterest-bearing sources ...................................... .81
-----
Net interest income/yield on earning assets ................................ $4,484 3.60%
====== =====
</TABLE>
(1) Nonperforming loans are included in the respective average loan balances.
Income on such nonperforming loans is recognized on a cash basis.
(2) The average balance sheet amounts and yields on securities available for
sale are based on the average of historical amortized cost balances.
(3) Interest income includes taxable-equivalent adjustments of $41, $40, $42
and $40 in the fourth, third, second and first quarters of 1998 and $40 in
the fourth quarter of 1997, respectively. Interest income also includes
the impact of risk management interest rate contracts, which increased
interest income on the underlying linked assets $70, $46, $29 and $29 in
the fourth, third, second and first quarters of 1998 and $51 in the fourth
quarter of 1997, respectively.
(4) Primarily consists of time deposits in denominations of $100,000 or more.
(5) Long-term debt includes trust preferred securities.
(6) Interest expense includes the impact of risk management interest rate
contracts, which decreased interest expense on the underlying linked
liabilities of $27, $9, $4 and $5 in the fourth, third, second and first
quarters of 1998 and $22 in the fourth quarter of 1997, respectively.
46
<PAGE>
<TABLE>
<CAPTION>
Second Quarter 1998 First Quarter 1998 Fourth Quarter 1997
- ----------------------------------- ----------------------------------- ------------------------------------
Average Average Average
Balance Income Balance Income Balance Income
Sheet or Yields/ Sheet or Yields/ Sheet or Yields/
Amounts Expense Rates Amount Expense Rates Amounts Expense Rates
- ----------- --------- --------- ----------- --------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$127,788 $2,496 7.84% $123,586 $2,413 7.91% $118,234 $2,370 7.95%
30,046 556 7.41 29,840 543 7.37 29,291 519 7.04
28,228 644 9.15 29,000 648 9.06 29,020 666 9.11
334 9 9.82 327 8 10.48 0 0 0.00
-------- ------ ----- -------- ------ ----- -------- ------ -----
186,396 3,705 7.97 182,753 3,612 8.01 176,545 3,555 8.01
-------- ------ ----- -------- ------ ----- -------- ------ -----
69,337 1,171 6.76 70,350 1,218 6.95 73,138 1,290 7.05
16,271 473 11.64 16,448 457 11.28 16,308 479 11.65
40,404 895 8.90 40,280 880 8.85 39,562 874 8.78
14,249 387 10.88 14,662 419 11.60 14,163 408 11.42
12,780 409 12.83 14,259 464 13.19 14,762 491 13.17
3,350 87 10.53 3,218 83 10.46 3,403 83 9.68
-------- ------ ----- -------- ------ ----- -------- ------ -----
156,391 3,422 8.77 159,217 3,521 8.94 161,336 3,625 8.91
-------- ------ ----- -------- ------ ----- -------- ------ -----
342,787 7,127 8.34 341,970 7,133 8.44 337,881 7,180 8.44
-------- ------ ----- -------- ------ ----- -------- ------ -----
4,525 79 7.03 4,713 83 7.09 4,853 86 7.00
58,527 1,017 6.95 61,074 1,061 6.98 55,871 962 6.87
-------- ------ ----- -------- ------ ----- -------- ------ -----
63,052 1,096 6.96 65,787 1,144 6.99 60,724 1,048 6.88
-------- ------ ----- -------- ------ ----- -------- ------ -----
25,275 433 6.86 26,632 417 6.35 24,884 414 6.59
7,916 129 6.54 8,517 136 6.48 8,037 142 7.02
42,421 693 6.56 41,868 740 7.14 38,253 691 7.18
10,494 201 7.68 9,047 175 7.76 4,542 99 8.68
-------- ------ ----- -------- ------ ----- -------- ------ -----
491,945 9,679 7.89 493,821 9,745 7.98 474,321 9,574 8.02
-------- ------ ----- -------- ------ ----- -------- ------ -----
25,071 24,558 24,203
56,959 60,462 58,071
-------- -------- --------
$573,975 $578,841 $556,595
======== ======== ========
$ 23,208 112 1.93 $ 23,096 111 1.95 $ 23,596 118 1.98
96,605 638 2.65 96,696 642 2.70 95,570 648 2.69
74,002 983 5.29 75,393 992 5.33 76,939 1,036 5.35
8,388 117 5.63 5,917 81 5.53 6,285 89 5.65
-------- ------ ----- -------- ------ ----- -------- ------ -----
202,203 1,850 3.66 201,102 1,826 3.68 202,390 1,891 3.71
-------- ------ ----- -------- ------ ----- -------- ------ -----
22,393 326 5.84 23,067 336 5.91 22,523 347 6.11
10,629 150 5.64 10,067 141 5.69 9,759 140 5.70
22,592 364 6.49 23,467 390 6.70 22,706 351 6.11
-------- ------ ----- -------- ------ ----- -------- ------ -----
55,614 840 6.07 56,601 867 6.20 54,988 838 6.04
-------- ------ ----- -------- ------ ----- -------- ------ -----
257,817 2,690 4.18 257,703 2,693 4.24 257,378 2,729 4.21
-------- ------ ----- -------- ------ ----- -------- ------ -----
82,385 1,229 5.98 91,358 1,310 5.82 76,245 1,164 6.06
19,817 262 5.30 20,516 274 5.43 17,128 278 6.44
49,254 830 6.74 47,416 809 6.83 46,908 805 6.86
-------- ------ ----- -------- ------ ----- -------- ------ -----
409,273 5,011 4.90 416,993 5,086 4.93 397,659 4,976 4.97
-------- ------ ----- -------- ------ ----- -------- ------ -----
84,552 82,164 80,953
35,293 36,056 34,176
44,857 43,628 43,807
-------- -------- --------
$573,975 $578,841 $556,595
======== ======== ========
2.99 3.05 3.05
.81 .78 .80
------ ----- ------ ----- ------ -----
$4,668 3.80% $4,659 3.83% $4,598 3.85%
====== ===== ====== ===== ====== =====
</TABLE>
47
<PAGE>
1997 Compared to 1996
The following discussion and analysis provides a comparison of the
Corporation's results of operations for the years ended December 31, 1997 and
1996. This discussion should be read in conjunction with the consolidated
financial statements and related notes on pages 50 through 96.
Overview
The Corporation's continued earnings momentum was demonstrated through a
12-percent increase in operating net income to $6.81 billion in 1997 compared
to $6.06 billion in 1996. Operating earnings per common share for 1997
increased 8 percent to $3.86 from $3.57 in 1996. Including merger-related
charges of $374 million ($264 million, net of tax), net income increased 13
percent to $6.54 billion while earnings per common share rose 8 percent to
$3.71 and diluted earnings per common share increased 7 percent to $3.61,
respectively.
Business Segment Operations
Consumer Banking's 1997 earnings increased 21 percent to $3.5 billion.
Return on risk-adjusted average equity remained constant at 17 percent in 1997.
Revenue growth and expense control led to a 50-basis point improvement in the
efficiency ratio in 1997 to 60.9 percent.
Commercial Banking's 1997 earnings increased 18 percent to $861 million.
Return on risk-adjusted average equity decreased to 21 percent in 1997. Revenue
growth and expense control led to a 20-basis point improvement in the
efficiency ratio in 1997 to 45.9 percent.
Global Corporate and Investment Banking's earnings rose to $1.6 billion in
1997. Return on risk-adjusted average equity decreased to 15 percent in 1997.
The efficiency ratio improved 270 basis points to 54.8 percent.
Principal Investing and Wealth Management's earnings rose 8 percent to
$560 million in 1997. Return on risk-adjusted average equity decreased to 28
percent in 1997. The efficiency ratio was 61.4 percent in 1997 compared to 58.6
percent in 1996.
Net Interest Income
Taxable-equivalent net interest income increased 9 percent to $18.6
billion in 1997 compared to $17.1 billion in 1996 due to acquisitions, higher
spreads in the securities portfolio, core loan growth and increased
noninterest-bearing deposits. The increase was partially offset by the impact
of securitizations and a shift in funding to long-term debt.
The net interest yield decreased 8 basis points to 4.00 percent in 1997
compared to 4.08 percent in 1996 caused by lower yields received on average
earning assets, as well as a decrease in the spreads between loans and
deposits.
Provision for Credit Losses
The provision for credit losses covered net charge-offs and was $1.9
billion in 1997 compared to $1.6 billion in the prior year, reflecting the
continuation of a return to more normalized levels of credit losses following
periods of unusually low credit losses. Net charge-offs increased $185 million
to $1.9 billion in 1997 over 1996 primarily due to increases in consumer
finance and bankcard net charge-offs.
The allowance for credit losses was $6.8 billion, or 1.98 percent of loans
and leases, on December 31, 1997 compared to $6.3 billion, or 1.99 percent, at
the end of 1996. The allowance for credit losses was 321 percent of
nonperforming loans on December 31, 1997 compared to 287 percent on December
31, 1996.
Noninterest Income
Noninterest income increased 22 percent to $11.8 billion in 1997, driven
primarily by higher deposit account service charges and asset management and
fiduciary service fees, as well as higher investment banking and credit card
income.
48
<PAGE>
Other Noninterest Expense
Other noninterest expense increased 15 percent to $17.6 billion. The
increase in other noninterest expense was primarily caused by 1997 acquisitions
including Boatmen's, NationsBanc Auto Leasing, Inc., Robertson Stephens and
NationsBanc Montgomery Securities.
Income Taxes
The Corporation's income tax expense for 1997 was $4.0 billion, for an
effective tax rate of 38.0 percent of pre-tax income. Income tax expense for
1996 was $3.5 billion, for an effective tax rate of 37.6 percent of pre-tax
income.
49
<PAGE>
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See "Management's Discussion and Analysis of Results of Operations and
Financial Condition - Market Risk Management" for Quantitative and Qualitative
Disclosures about Market Risk.
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Management
The management of BankAmerica 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 consolidated
financial statements. The financial statements and other financial information
in this report include amounts that are based on management's best estimates
and judgments giving due consideration to materiality.
The Corporation maintains a system of internal accounting controls to
provide reasonable assurance that assets are safe-guarded and that transactions
are executed in accordance with management's authorization and recorded
properly to permit the preparation of consolidated 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 consolidated financial statements are prevented or would be
detected on a timely basis and corrected through the normal course of business.
As of December 31, 1998, 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 on page 51.
The Board of Directors discharges its responsibility for the Corporation's
consolidated financial statements through its Audit Committee. The Audit
Committee meets periodically with the independent accountants, internal
auditors and management. Both the independent accountants and internal auditors
have direct access to the Audit Committee to discuss the scope and results of
their work, the adequacy of internal accounting controls and the quality of
financial reporting.
/s/ Hugh L. McColl Jr.
HUGH L. MCCOLL JR.
Chief Executive Officer
/s/ James H. Hance Jr.
JAMES H. HANCE JR.
Vice Chairman and
Chief Financial Officer
50
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Shareholders of BankAmerica 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
BankAmerica Corporation and its subsidiaries at December 31, 1998 and 1997, and
the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1998, 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.
PricewaterhouseCoopers LLP
/s/ PricewaterhouseCoopers LLP
Charlotte, North Carolina
January 15, 1999
51
<PAGE>
BankAmerica Corporation and Subsidiaries
Consolidated Statement of Income
(Dollars in Millions, Except Per-Share Information)
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Interest income
Interest and fees on loans and leases ...................................... $ 28,331 $ 29,085 $ 26,439
Interest and dividends on securities ....................................... 4,502 3,283 2,797
Federal funds sold and securities purchased under agreements to resell ..... 1,828 1,516 1,371
Trading account securities ................................................. 2,626 2,582 2,229
Other interest income ...................................................... 1,301 867 800
---------- ---------- ----------
Total interest income ..................................................... 38,588 37,333 33,636
---------- ---------- ----------
Interest expense
Deposits ................................................................... 10,811 10,684 9,600
Borrowed funds ............................................................. 5,239 4,105 3,699
Trading account liabilities ................................................ 895 975 880
Long-term debt ............................................................. 3,345 3,137 2,503
---------- ---------- ----------
Total interest expense .................................................... 20,290 18,901 16,682
---------- ---------- ----------
Net interest income ......................................................... 18,298 18,432 16,954
Provision for credit losses ................................................. 2,920 1,904 1,645
---------- ---------- ----------
Net credit income ........................................................... 15,378 16,528 15,309
Gains on sales of securities ................................................ 1,017 271 147
Noninterest income
Service charges on deposit accounts ........................................ 3,396 3,373 2,822
Mortgage servicing and other mortgage-related income ....................... 115 401 340
Investment banking income .................................................. 2,009 1,476 1,028
Trading account profits and fees ........................................... 171 976 885
Brokerage income ........................................................... 728 355 259
Other nondeposit-related service fees ...................................... 652 680 520
Asset management and fiduciary service fees ................................ 973 990 744
Credit card income ......................................................... 1,448 1,231 899
Other income ............................................................... 2,697 2,274 2,107
---------- ---------- ----------
Total noninterest income .................................................. 12,189 11,756 9,604
---------- ---------- ----------
Merger-related charges, net ................................................. 1,795 374 398
Other noninterest expense
Personnel .................................................................. 9,412 8,703 7,501
Occupancy, net ............................................................. 1,643 1,576 1,476
Equipment .................................................................. 1,404 1,408 1,229
Marketing .................................................................. 581 655 589
Professional fees .......................................................... 843 763 634
Amortization of intangibles ................................................ 902 855 544
Data processing ............................................................ 765 626 551
Telecommunications ......................................................... 563 491 413
Other general operating .................................................... 2,044 2,059 1,998
General administrative and miscellaneous ................................... 584 489 416
---------- ---------- ----------
Total other noninterest expense ........................................... 18,741 17,625 15,351
---------- ---------- ----------
Income before income taxes .................................................. 8,048 10,556 9,311
Income tax expense .......................................................... 2,883 4,014 3,498
---------- ---------- ----------
Net income .................................................................. $ 5,165 $ 6,542 $ 5,813
========== ========== ==========
Net income available to common shareholders ................................. $ 5,140 $ 6,431 $ 5,611
========== ========== ==========
Per-share information (1)
Earnings per common share .................................................. $ 2.97 $ 3.71 $ 3.42
========== ========== ==========
Diluted earnings per common share .......................................... $ 2.90 $ 3.61 $ 3.36
========== ========== ==========
Dividends per common share ................................................. $ 1.59 $ 1.37 $ 1.20
========== ========== ==========
Average common shares issued and outstanding (in thousands) (1) ............. 1,732,057 1,733,194 1,638,382
========== ========== ==========
</TABLE>
(1) Share and per-share data reflect a 2-for-1 stock split on February 27,
1997.
See accompanying notes to consolidated financial statements.
52
<PAGE>
BankAmerica Corporation and Subsidiaries
Consolidated Balance Sheet
(Dollars in Millions)
<TABLE>
<CAPTION>
December 31
-------------------------
1998 1997
------------ ------------
<S> <C> <C>
Assets
Cash and cash equivalents ............................................................... $ 28,277 $ 28,466
Time deposits placed and other short-term investments ................................... 6,750 8,363
Securities
Held for investment, at cost (market value - $1,853 and $4,905)......................... 1,997 4,822
Available for sale ..................................................................... 78,590 62,209
-------- --------
Total securities ..................................................................... 80,587 67,031
-------- --------
Federal funds sold and securities purchased under agreements to resell .................. 27,146 20,200
Trading account assets .................................................................. 39,602 35,937
Derivative-dealer assets ................................................................ 16,400 14,824
Loans and leases ........................................................................ 357,328 342,140
Allowance for credit losses ............................................................. (7,122) (6,778)
-------- --------
Loans and leases, net of allowance for credit losses ................................... 350,206 335,362
-------- --------
Premises and equipment, net ............................................................. 7,289 8,123
Customers' acceptance liability ......................................................... 2,671 4,891
Interest receivable ..................................................................... 3,734 3,584
Mortgage servicing rights ............................................................... 2,376 2,040
Goodwill ................................................................................ 12,695 13,551
Core deposits and other intangibles ..................................................... 2,013 2,203
Other assets ............................................................................ 37,933 26,408
-------- --------
Total assets ........................................................................... $617,679 $570,983
======== ========
Liabilities
Deposits in domestic offices
Interest-bearing ....................................................................... $203,644 $202,082
Noninterest-bearing .................................................................... 92,623 85,815
Deposits in foreign offices
Interest-bearing ....................................................................... 59,280 56,719
Noninterest-bearing .................................................................... 1,713 1,681
-------- --------
Total deposits ....................................................................... 357,260 346,297
-------- --------
Federal funds purchased and securities sold under agreements to repurchase .............. 67,543 61,414
Trading account liabilities ............................................................. 14,170 17,300
Derivative-dealer liabilities ........................................................... 16,835 13,639
Commercial paper ........................................................................ 6,749 5,925
Other short-term borrowings ............................................................. 24,742 12,120
Acceptances outstanding ................................................................. 2,671 4,893
Accrued expenses and other liabilities .................................................. 30,929 17,346
Trust preferred securities .............................................................. 4,954 4,578
Long-term debt .......................................................................... 45,888 42,887
-------- --------
Total liabilities ...................................................................... 571,741 526,399
-------- --------
Contingent liabilities and other financial commitments (Notes Eleven and Thirteen)
Shareholders' Equity
Preferred stock: authorized - 100,000,000 shares; issued and outstanding - 1,952,039 and
10,933,884 shares ...................................................................... 83 708
Common stock: authorized - 5,000,000,000 shares; issued and outstanding - 1,724,484,305
and 1,722,537,672 shares ............................................................... 14,837 15,140
Retained earnings ....................................................................... 30,998 28,438
Accumulated other comprehensive income .................................................. 152 407
Other ................................................................................... (132) (109)
-------- --------
Total shareholders' equity ............................................................. 45,938 44,584
-------- --------
Total liabilities and shareholders' equity .......................................... $617,679 $570,983
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
53
<PAGE>
BankAmerica Corporation and Subsidiaries
Consolidated Statement of Cash Flows
(Dollars in Millions)
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Operating Activities
Net income ........................................................................... $ 5,165 $ 6,542 $ 5,813
Reconciliation of net income to net cash provided by operating activities
Provision for credit losses ........................................................ 2,920 1,904 1,645
Gains on sales of securities ....................................................... (1,017) (271) (147)
Merger-related charges, net ........................................................ 1,795 374 398
Depreciation and premises improvements amortization ................................ 1,096 1,108 983
Amortization of intangibles ........................................................ 902 855 544
Deferred income tax (benefit) expense .............................................. (100) 971 965
Net increase in trading instruments ................................................ (2,998) (3,271) (3,506)
Net (increase) decrease in interest receivable ..................................... (157) (542) 604
Net increase (decrease) in interest payable ........................................ 94 179 (515)
Other operating activities ......................................................... 3,191 (6,424) (2,904)
--------- --------- ---------
Net cash provided by operating activities ......................................... 10,891 1,425 3,880
--------- --------- ---------
Investing Activities
Proceeds from maturities of securities held for investment ........................... 1,162 1,898 3,440
Purchases of securities held for investment .......................................... (249) (570) (646)
Proceeds from sales and maturities of securities available for sale .................. 81,254 44,268 40,767
Purchases of securities available for sale ........................................... (93,136) (56,825) (24,150)
Net increase in federal funds sold and securities purchased under agreements to
resell ............................................................................. (7,028) (3,531) (2,078)
Net decrease (increase) in time deposits placed and other short-term investments ..... 1,612 (857) (512)
Purchases and net originations of loans and leases ................................... (89,055) (39,394) (30,883)
Proceeds from sales and securitizations of loans and leases .......................... 59,297 30,936 17,947
Purchases and originations of mortgage servicing rights .............................. (853) (419) (654)
Net purchases of premises and equipment .............................................. (437) (888) (1,183)
Proceeds from sales of foreclosed properties ......................................... 525 610 694
Sales and acquisitions of business activities, net of cash ........................... (335) 1,289 795
--------- --------- ---------
Net cash (used in) provided by investing activities ............................... (47,243) (23,483) 3,537
--------- --------- ---------
Financing Activities
Net increase in deposits ............................................................. 16,476 4,774 267
Net increase (decrease) in federal funds purchased and securities sold under
agreements to repurchase ........................................................... 6,137 26,680 (11,959)
Net increase (decrease) in other short-term borrowings and commercial paper .......... 13,672 (1,440) 3,442
Proceeds from issuance of trust preferred securities ................................. 340 1,613 2,965
Proceeds from issuance of long-term debt ............................................. 12,166 7,823 11,199
Retirement of long-term debt ......................................................... (8,809) (6,740) (6,272)
Proceeds from issuance of common stock ............................................... 1,367 1,892 573
Cash dividends paid .................................................................. (2,604) (2,175) (1,888)
Common stock repurchased ............................................................. (1,751) (8,540) (3,193)
Other financing activities ........................................................... (863) (2,036) (63)
--------- --------- ---------
Net cash provided by (used in) financing activities ............................... 36,131 21,851 (4,929)
Effect of exchange rate changes on cash and cash equivalents ......................... 32 102 22
--------- --------- ---------
Net (decrease) increase in cash and cash equivalents .................................. (189) (105) 2,510
Cash and cash equivalents on January 1 ................................................ 28,466 28,571 26,061
--------- --------- ---------
Cash and cash equivalents on December 31 ............................................. $ 28,277 $ 28,466 $ 28,571
========= ========= =========
Supplemental cash flow disclosures:
Cash paid for interest ............................................................... $ 20,198 $ 18,585 $ 17,113
Cash paid for income taxes ........................................................... 2,695 1,760 2,456
</TABLE>
Loans transferred to foreclosed properties amounted to $353, $431 and $569 in
1998, 1997 and 1996, respectively.
Loans securitized and retained in the trading and available for sale
securities portfolios amounted to $6,083, $7,842 and $4,558 in 1998, 1997 and
1996, respectively.
The fair value of noncash assets acquired in acquisitions during 1998 was
approximately $109, net of cash acquired. The fair values of noncash assets
acquired and liabilities assumed in acquisitions during 1997 were approximately
$52,226 and $43,024, respectively, net of cash acquired.
See accompanying notes to consolidated financial statements.
54
<PAGE>
BankAmerica Corporation and Subsidiaries
Consolidated Statement of Changes in Shareholders' Equity
(Dollars in Millions, Shares in Thousands)
<TABLE>
<CAPTION>
Common Stock
Preferred
Stock Shares Amount
------------- ------------- ----------
<S> <C> <C> <C>
Balance on December 31, 1995 ........... $ 2,826 1,605,450 $ 13,418
Net income ............................
Other comprehensive income, net
of tax ..............................
Comprehensive income ..................
Cash dividends
Common ..............................
Preferred ...........................
Common stock issued under
dividend reinvestment and
employee plans ...................... 18,463 536
Stock issued in acquisitions .......... 73 55,436 586
Common stock repurchased .............. (85,036) (3,193)
Redemption of preferred stock ......... (381)
Conversion of preferred stock ......... (98) 8,703 98
Other ................................. (7) (252) (26)
----------- --------- --------
Balance on December 31, 1996 ........... 2,413 1,602,764 11,419
========== ========= ========
Net income ............................
Other comprehensive income, net
of tax ..............................
Comprehensive income ..................
Cash dividends
Common ..............................
Preferred ...........................
Common stock issued under
dividend reinvestment and
employee plans ...................... 47,431 1,888
Stock issued in acquisitions .......... 82 219,024 10,320
Common stock repurchased .............. (150,016) (8,540)
Redemption of preferred stock ......... (1,701)
Conversion of preferred stock ......... (86) 3,859 86
Other ................................. (524) (33)
----------- --------- --------
Balance on December 31, 1997 ........... 708 1,722,538 15,140
========== ========= ========
Net income ............................
Other comprehensive income, net
of tax ..............................
Comprehensive income ..................
Cash dividends
Common ..............................
Preferred ...........................
Common stock issued under
dividend reinvestment and
employee plans ...................... 30,489 1,417
Stock issued in acquisitions .......... 385 15
Common stock repurchased .............. (29,349) (1,751)
Redemption of preferred stock ......... (614)
Conversion of preferred stock ......... (11) 444 11
Other ................................. (23) 5
----------- --------- --------
Balance on December 31, 1998 ........... $ 83 1,724,484 $ 14,837
========== ========= ========
<CAPTION>
Accumulated Total
Other Share-
Retained Comprehensive holders' Comprehensive
Earnings Income(1) Other Equity Income
------------- --------------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
Balance on December 31, 1995 ........... $19,953 $282 $ (184) $ 36,295
Net income ............................ 5,813 5,813 $5,813
Other comprehensive income, net
of tax .............................. (262) (262) (262)
------
Comprehensive income .................. $5,551
======
Cash dividends
Common .............................. (1,686) (1,686)
Preferred ........................... (202) (202)
Common stock issued under
dividend reinvestment and
employee plans ...................... 37 573
Stock issued in acquisitions .......... 192 2 853
Common stock repurchased .............. (3,193)
Redemption of preferred stock ......... (381)
Conversion of preferred stock .........
Other ................................. 1 15 (17)
------- ---- ------ --------
Balance on December 31, 1996 ........... 24,071 20 (130) 37,793
======= ==== ====== ========
Net income ............................ 6,542 6,542 $6,542
Other comprehensive income, net
of tax .............................. 387 387 387
-------
Comprehensive income .................. $6,929
=======
Cash dividends
Common .............................. (2,064) (2,064)
Preferred ........................... (111) (111)
Common stock issued under
dividend reinvestment and
employee plans ...................... 4 1,892
Stock issued in acquisitions .......... 10,402
Common stock repurchased .............. (8,540)
Redemption of preferred stock ......... (1,701)
Conversion of preferred stock .........
Other ................................. 17 (16)
------- ---- ------ --------
Balance on December 31, 1997 ........... 28,438 407 (109) 44,584
======= ==== ====== ========
Net income ............................ 5,165 5,165 $5,165
Other comprehensive income, net
of tax .............................. (255) (255) (255)
-------
Comprehensive income .................. $4,910
=======
Cash dividends
Common .............................. (2,579) (2,579)
Preferred ........................... (25) (25)
Common stock issued under
dividend reinvestment and
employee plans ...................... (50) 1,367
Stock issued in acquisitions .......... 15
Common stock repurchased .............. (1,751)
Redemption of preferred stock ......... (614)
Conversion of preferred stock .........
Other ................................. (1) 27 31
---------- ---- ------ --------
Balance on December 31, 1998 ........... $30,998 $152 $ (132) $ 45,938
========= ==== ====== ========
</TABLE>
(1) Changes in Accumulated Other Comprehensive Income includes after tax net
unrealized gains (losses) on securities of $(242), $419 and $(239) in
1998, 1997 and 1996 respectively. Changes in Accumulated Other
Comprehensive Income also includes after tax net unrealized losses on
foreign currency translation adjustments of $13, $32 and $23 in 1998, 1997
and 1996 respectively.
See accompanying notes to consolidated financial statements.
55
<PAGE>
BankAmerica Corporation and Subsidiaries
Notes to Consolidated Financial Statements
On September 30, 1998, BankAmerica Corporation (BankAmerica) merged with
and into NationsBank Corporation (the Merger). The combined company was renamed
BankAmerica Corporation (the Corporation). The transaction was accounted for as
a pooling of interests. The consolidated financial statements have been
restated to present the combined results of the Corporation as if the Merger
had been in effect for all periods presented.
On January 9, 1998, the Corporation completed its merger with Barnett
Banks, Inc. (Barnett). The transaction was accounted for as a pooling of
interests. The consolidated financial statements have been restated to present
the combined results of the Corporation and Barnett as if the merger had been
in effect for all periods presented.
The Corporation is a Delaware corporation and a multi-bank holding company
registered under the Bank Holding Company Act of 1956, as amended, with its
principal assets being the stock of its subsidiaries. Through its banking
subsidiaries and its nonbanking subsidiaries, the Corporation provides a
diverse range of banking and nonbanking financial services and products
throughout the U.S. and in selected international markets.
Note One - Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of the
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. Certain prior
period amounts have been reclassified to conform to current year
classifications. Assets held in an agency or fiduciary capacity are not
included in the consolidated financial statements.
The preparation of the consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect reported amounts and disclosures. Actual
results could differ from those estimates. Significant estimates made by
management are discussed in these footnotes as applicable.
On February 27, 1997, the Corporation completed a two-for-one split of its
common stock. Accordingly, the consolidated financial statements for all years
presented reflect the impact of the stock split.
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
Debt securities are classified based on management's intention on the date
of purchase. Debt securities which management has the intent and ability to
hold to maturity are classified as held for investment and reported at
amortized cost. Securities that are bought and held principally for the purpose
of resale in the near term are classified as trading instruments and are stated
at fair value. All other debt 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.
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.
Marketable equity securities, which are included in other assets, are
carried at fair value with net unrealized gains and losses included in
shareholders' equity, net of tax. Income on marketable equity securities is
included in noninterest income.
56
<PAGE>
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.
Loans originated with the intent to sell are included in other assets.
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. The Corporation's policy is to obtain the use of
securities purchased under agreements to resell. The market value of the
underlying securities, which collateralize the related receivable on agreements
to resell, is monitored, including accrued interest, and additional collateral
is requested when deemed appropriate.
Trading Instruments
Instruments utilized in trading activities include securities stated at
fair value. Fair value is generally based on quoted market prices. If quoted
market prices are not available, fair values are estimated based on dealer
quotes, pricing models or quoted prices for instruments with similar
characteristics. Realized and unrealized gains and losses are recognized as
trading account profits and fees.
Derivative-Dealer Positions
Derivative-dealer assets and liabilities represent unrealized gains and
losses, respectively, on interest rate, foreign exchange, commodity and other
derivative contract positions included in the Corporation's trading portfolio.
Derivative-dealer positions are reflected at fair value with changes in fair
value reflected in trading account profits and fees. Fair values are estimated
based on dealer quotes, pricing models or quoted prices for instruments with
similar characteristics.
Loans and Leases
Loans are reported at their outstanding principal balances net of any
unearned income, 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. Unearned income, discounts and
premiums are amortized to income using methods that approximate the interest
method.
The Corporation provides equipment financing to its customers through a
variety of lease arrangements. Direct financing leases are carried at the
aggregate of lease payments receivable plus estimated residual value of the
leased property, less unearned income. Leveraged leases, which are a form of
financing lease, are carried net of nonrecourse debt. Unearned income on
leveraged and direct financing leases is amortized over the lease terms by
methods that approximate the interest method.
Allowance for Credit Losses
The allowance for credit losses is primarily available to absorb losses
inherent in the loan and lease portfolios. 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, observable market prices, or for
loans that are solely dependent on the collateral for repayment, the estimated
fair value of the collateral. If the recorded investment in the impaired loan
exceeds the measure of estimated fair value, a valuation allowance is
established as a component of the allowance for credit losses.
The Corporation's process for determining appropriate allowance for credit
losses includes management's judgment and use of estimates. The adequacy of the
allowance for credit losses is reviewed regularly by management. This
assessment is made in the context of historical losses as well as existing
economic conditions and performance trends within specific portfolio segments
and individual concentrations of credit. Additions to the allowance for credit
losses are made by charges to the provision for credit losses.
57
<PAGE>
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 are considered impaired when it is probable that
all amounts, including principal and interest, will not be collected in
accordance with contractual terms of the loan agreement. Loans whose
contractual terms have been restructured in a manner which grants a concession
to a borrower experiencing financial difficulties are classified as
nonperforming until the loan is performing for an adequate period of time under
the restructured agreement. Impaired loans are included in nonperforming loans.
Generally, all other loans which are past due 90 days or more as to principal
or interest are classified as nonperforming regardless of collateral or
collection status. Interest accrued but not collected is reversed when a loan
or lease is classified as nonperforming.
Interest collections on nonperforming loans and leases for which the
ultimate collectibility of principal is uncertain are applied as principal
reductions. Otherwise, such collections are credited to income when received.
Credit card loans that are 180 days past due are charged off and not
classified as nonperforming. All other consumer loans and residential mortgages
are generally charged off at 120 days past due or placed on nonperforming
status upon repossession or the inception of foreclosure proceedings. Interest
accrued but not collected is generally charged off along with the principal.
Foreclosed Properties
Assets are classified as foreclosed properties and included in other
assets upon actual foreclosure or when physical possession of the collateral is
taken regardless of whether foreclosure proceedings have taken place.
Foreclosed properties are carried at the lower of the recorded amount of
the loan or lease for which the property previously served as collateral, or
the fair value of the property less estimated costs to sell. Prior to
foreclosure, any write-downs, if necessary, are charged to the allowance for
credit losses.
Subsequent to foreclosure, gains or losses on the sale of and losses on
the periodic revaluation of foreclosed properties 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
The total cost of mortgage loans originated for sale or purchased is
allocated between the cost of the loans and the mortgage servicing rights (MSR)
based on the relative fair values of the loans and the MSR. MSR acquired
separately are capitalized at cost. During 1998, the Corporation capitalized
$853 million of MSR. The cost of the MSR is amortized in proportion to and over
the estimated period of net servicing revenues. During 1998, amortization was
$476 million.
The fair value on December 31, 1998 of capitalized MSR was approximately
$2.4 billion. Total loans serviced approximated $234.9 billion on December 31,
1998, including loans serviced on behalf of the Corporation's banking
subsidiaries. The predominant characteristics used as the basis for stratifying
MSR are loan type and interest rate. The MSR strata are evaluated for
impairment by estimating their fair value based on anticipated future net cash
flows, taking into consideration prepayment predictions. If the carrying value
of the MSR, including the results of risk management activities, 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 increased $170 million to $180 million
on December 31, 1998. The valuation allowance on December 31, 1997 and 1996 and
changes in the valuation allowance during 1997 and 1996 were insignificant. To
manage risk associated with changes in prepayment rates, the Corporation uses
various financial instruments including purchased options and swaps. The
notional amounts of such contracts on December 31, 1998 was $22.4 billion and
the related unrealized gains were $190 million.
58
<PAGE>
Securitizations
The Corporation securitizes, sells and services interests in home equity,
installment, commercial and bankcard loans. When the Corporation sells assets
in securitizations, it may retain interest only strips, one or more
subordinated tranches and, in some cases, a cash reserve account, all of which
are considered retained interests in the securitized assets. Gains upon sale of
the assets depend, in part, on the Corporation's allocation of the previous
carrying amount of the assets to the retained interests. Previous carrying
amounts are allocated in proportion to the relative fair values of the assets
sold and interests retained.
To obtain fair values, quoted market prices are used, if available.
Generally, quoted market prices for retained interests are not available,
therefore the Corporation estimates fair values based upon the present value of
the associated expected future cash flows. This may require management to
estimate credit losses, prepayment speeds, forward yield curves, discount rates
and other factors that impact the value of retained interests.
After the securitization, any of these retained interests that can be
contractually settled in such a way that the Corporation could not recover
substantially all of its recorded investment are adjusted to fair value with
the adjustment reflected as an unrealized gain or loss in shareholders' equity.
If a decline in the fair value is determined to be unrecoverable, it is
expensed.
Goodwill and Other Intangibles
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 a period not to exceed 25 years. The
recoverability of goodwill and other intangibles is evaluated if events or
circumstances indicate a possible impairment. Such evaluation is based on
various analyses, including undiscounted cash flow projections.
Income Taxes
There are two components of income tax provision: current and deferred.
Current income tax expense approximates 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 assets 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 charged to current operations and consists 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 unfunded
postretirement medical benefit plans.
Risk Management Instruments
Risk management instruments are utilized to modify the interest rate
characteristics of related assets or liabilities or hedge against fluctuations
in interest rates, currency exchange rates 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. To
qualify as hedges, risk management instruments must be
59
<PAGE>
linked to specific assets or liabilities or pools of similar assets or
liabilities. For risk management instruments that fail to qualify as hedges,
the instruments are recorded at market value with changes in market value
reflected in trading account profits and fees.
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.
Gains and losses associated with interest rate 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, net of tax.
To manage interest rate risk, the Corporation also uses interest rate
option products, primarily purchased caps and floors. Interest rate caps and
floors are agreements where, for a fee, the purchaser obtains the right to
receive interest payments when a variable interest rate moves above or below a
specified cap or floor rate, respectively. Such instruments are primarily
linked to long-term debt, short-term borrowings and pools of similar
residential mortgages. The Corporation also purchases options to protect the
value of certain assets, principally MSR, 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 or losses are recorded as
adjustments to the carrying value of the MSR, which are then subjected to
impairment valuations.
The Corporation also utilizes forward delivery contracts and options 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 lower of cost
or market valuation of its mortgage loans held for sale.
The Corporation has made investments in a number of operations in foreign
countries. Certain assets and liabilities of these operations are often
denominated in foreign currencies, which exposes the Corporation to foreign
currency risks. To qualify for hedge accounting, a foreign exchange contract
must reduce risk at the level of the specific transaction. Realized and
unrealized gains and losses on instruments that hedge firm commitments are
deferred and included in the measurement of the subsequent transaction;
however, losses are deferred only to the extent of expected gains on the future
commitment. Realized and unrealized gains and losses on instruments that hedge
net foreign capital exposure are recorded in shareholders' equity as foreign
currency translation adjustments and included in accumulated other
comprehensive income.
Risk management instruments 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 either 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. If a
forecasted transaction to which a risk management instrument is linked fails to
occur, any deferred gain or loss on the instrument is recognized immediately in
income.
Earnings Per Common Share
Earnings per common share for all periods presented is computed by
dividing net income, reduced by dividends on preferred stock, by the weighted
average number of common shares issued and outstanding. Diluted earnings per
common share is computed by dividing net income available to common
shareholders, adjusted for the effect of assumed conversions, by the weighted
average number of common shares issued and outstanding and dilutive potential
common shares, which include convertible preferred stock and stock options.
Dilutive potential common shares are calculated using the treasury stock
method.
Foreign Currency Translation
Assets, liabilities and operations of foreign branches and subsidiaries
are recorded based on the functional currency of each entity. For the majority
of the foreign operations, the functional currency is the local currency,
60
<PAGE>
in which case the assets, liabilities and operations are translated, for
consolidation purposes, at current exchange rates from the local currency to
the reporting currency, the U.S. dollar. The resulting gains or losses are
reported as a component of accumulated other comprehensive income within
shareholders' equity on a net-of-tax basis. When the foreign entity is not a
free-standing operation or is in a hyperinflationary economy, the functional
currency used to measure the financial statements of a foreign entity is the
U.S. dollar. In these instances, the resulting gains and losses are included in
income.
Recently Issued Accounting Pronouncements
In 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS 133). This standard requires the Corporation to
recognize all derivatives as either assets or liabilities in its financial
statements and measure such instruments at their fair values. Hedging
activities must be redesignated and documented pursuant to the provisions of
the statement. This statement becomes effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. At this time, the Corporation is
still assessing the impact of SFAS 133 on its financial condition and results
of operations.
In 1998, Statement of Financial Accounting Standards No. 134, "Accounting
for Mortgage-Backed Securities Retained after the Securitization of Mortgage
Loans Held for Sale by a Mortgage Banking Enterprise" (SFAS 134), was issued.
SFAS 134 provides guidance for mortgage banking entities on how to account for
interests retained after securitizing mortgage loans previously held for sale.
SFAS 134 is effective for fiscal quarters beginning after December 15, 1998 and
was adopted by the Corporation on January 1, 1999.
Note Two - Merger-Related Activity
On September 30, 1998, the Corporation completed the Merger with
BankAmerica, a multi-bank holding company headquartered in San Francisco,
California. BankAmerica provided banking and various other financial services
throughout the U.S. and in selected international markets to consumers and
business customers, including corporations, governments and other institutions.
As a result of the Merger, each outstanding share of BankAmerica common stock
was converted into 1.1316 shares of the Corporation's common stock, resulting
in the net issuance of approximately 779 million shares of the Corporation's
common stock to the former BankAmerica shareholders. Each share of NationsBank
common stock continued as one share in the Corporation's common stock. In
addition, approximately 88 million options to purchase the Corporation's common
stock were issued to convert stock options granted to certain BankAmerica
employees. This transaction was accounted for as a pooling of interests. Under
this method of accounting, the recorded assets, liabilities, shareholders'
equity, income and expenses of NationsBank and BankAmerica have been combined
and reflected at their historical amounts. NationsBank's total assets, total
deposits and total shareholders' equity on the date of the Merger were
approximately $331.9 billion, $166.8 billion and $27.7 billion, respectively.
BankAmerica's total assets, total deposits and total shareholders' equity on
the date of the Merger amounted to approximately $263.4 billion, $179.0 billion
and $19.6 billion, respectively.
In compliance with certain requirements of the Federal Reserve Board
(FRB), the Department of Justice and certain New Mexico authorities in
connection with the Merger, the Corporation entered into an agreement to divest
certain branches of Bank of America National Trust and Savings Association
(Bank of America NT&SA) with loans and deposits aggregating approximately $167
million and $500 million, respectively, in various markets in New Mexico. These
transactions were completed in the fourth quarter of 1998.
In connection with the Merger, the Corporation recorded $1,325 million of
pre-tax, merger-related charges in 1998. Approximately $600 million ($441
million after-tax) and $725 million ($519 million after-tax) were recorded in
the fourth and third quarters of 1998, respectively. The total pre-tax charge
for 1998 consisted of approximately $740 million primarily in severance and
change in control and other employee-related items, $150 million in conversion
and related costs including occupancy and equipment expenses and customer
communication, $300 million in exit and related costs and $135 million in other
merger costs (including legal, investment banking and filing fees). The
Corporation anticipates recording an additional pre-tax merger-related charge
of approximately $400 million ($252 million after-tax) in 1999.
61
<PAGE>
On January 9, 1998, the Corporation completed its merger with Barnett, a
multi-bank holding company headquartered in Jacksonville, Florida (the Barnett
merger). Barnett's total assets, total deposits and total shareholders' equity
on the date of the merger were approximately $46.0 billion, $35.4 billion and
$3.4 billion, respectively. As a result of the Barnett merger, each outstanding
share of Barnett common stock was converted into 1.1875 shares of the
Corporation's common stock, resulting in the net issuance of approximately 233
million common shares to the former Barnett shareholders. In addition,
approximately 11 million options to purchase the Corporation's common stock
were issued to convert stock options granted to certain Barnett employees. This
transaction was also accounted for as a pooling of interests.
In connection with the Barnett merger, the Corporation incurred a pre-tax
merger-related charge during the first quarter of 1998 of approximately $900
million ($642 million after-tax), which consisted of approximately $375 million
primarily in severance and change in control payments, $300 million of
conversion and related costs and occupancy and equipment expenses (primarily
lease exit costs and the elimination of duplicate facilities and other
capitalized assets), $125 million in exit costs related to contract
terminations and $100 million in other merger costs (including legal,
investment banking and filing fees). In the second quarter of 1998, the
Corporation recognized a $430 million gain resulting from the regulatory
required divestitures of certain Barnett branches.
The Corporation recorded a pre-tax charge of $280 million in 1996 as a
result of decisions to close and/or sell certain of its business activities.
The charge covered approximately $196 million for severance payments, $72
million for occupancy expense, primarily reflecting the planned closure of 120
branches, and $12 million for other costs.
On October 1, 1997, the Corporation completed the acquisition of
Montgomery Securities, Inc., an investment banking and institutional brokerage
firm. The purchase price consisted of $840 million in cash and approximately
5.3 million unregistered shares of the Corporation's common stock for an
aggregate amount of approximately $1.1 billion. The Corporation accounted for
this acquisition as a purchase.
On October 1, 1997, the Corporation also acquired Robertson, Stephens &
Company Group, L.L.C. (Robertson Stephens), an investment banking and
investment management firm. The acquisition was accounted for by the purchase
method of accounting. The Corporation sold the investment banking operations of
Robertson Stephens on August 31, 1998 and sold the investment management
operations in 1999.
As previously disclosed, NationsBank, BankAmerica and Barnett merged in
separate transactions accounted for as pooling of interests. The following
table summarizes the impact of the BankAmerica and Barnett mergers on the
Corporation's net interest income, noninterest income and net income for
periods prior to the respective mergers.
<TABLE>
<CAPTION>
Net Interest Noninterest Net
(Dollars in Millions) Income Income Income
- ----------------------- -------------- ------------- ---------
<S> <C> <C> <C>
1997
NationsBank ........... $ 7,898 $ 5,002 $3,077
BankAmerica ........... 8,669 6,012 3,210
Barnett ............... 1,840 971 255
------- ------- ------
Total ................ $18,407 $11,985 $6,542
======= ======= ======
1996
NationsBank ........... $ 6,329 $ 3,646 $2,375
BankAmerica ........... 8,587 5,351 2,874
Barnett ............... 1,869 791 564
------- ------- ------
Total ................ $16,785 $ 9,788 $5,813
======= ======= ======
</TABLE>
The amounts presented above represent results of operations of the
previously separate companies and do not reflect reclassifications of certain
revenue and expense items which were made to conform to the reporting policies
of the Corporation.
On January 7, 1997, the Corporation completed the acquisition of Boatmen's
Bancshares, Inc. (Boatmen's), headquartered in St. Louis, Missouri, resulting
in the issuance of approximately 195 million shares of the Corporation's common
stock valued at $9.4 billion on the date of the acquisition and aggregate cash
payments of
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<PAGE>
$371 million to Boatmen's shareholders. On the date of the acquisition,
Boatmen's total assets and total deposits were approximately $41.2 billion and
$32.0 billion, respectively. The Corporation accounted for this acquisition as
a purchase.
In 1996, the Corporation completed the initial public offering (IPO) of
16.1 million shares of Class A Common Stock of BA Merchant Services, Inc.
(BAMS) (ticker symbol "BPI" on the New York Stock Exchange), a subsidiary of
the Corporation. On December 22, 1998, the Corporation and BAMS announced the
signing of a definitive merger agreement on which the Corporation agreed to buy
BAMS outstanding shares of Class A common stock. At closing, each outstanding
share of BAMS common stock other than the shares owned by the Corporation will
be converted into the right to receive a cash payment equal to $20.50 per share
without interest, or approximately $330 million. BAMS will then become a wholly
owned subsidiary of Bank of America NT&SA. The transaction is expected to be
completed during the second quarter of 1999.
The following tables summarize the activity in the merger-related reserves
recorded in connection with the BankAmerica and Barnett mergers during 1998:
BankAmerica Merger
Merger-Related Reserves
<TABLE>
<CAPTION>
Non-Cash
Balance on Amount Cash Payments Reductions Balance on
January 1, Included in Applied to Applied to December 31,
(Dollars in Millions) 1998 Expense Reserve Reserve 1998
- ---------------------------------------- ------------ ------------- --------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Severance, change in control
and other employee-related costs ..... $-- $ 740 $(155) $ (98) $487
Conversion and related costs ........... -- 150 (3) (4) 143
Exit and related costs ................. -- 300 (62) (44) 194
Other merger costs ..................... -- 135 (117) -- 18
--- ------ ------- ------- ----
$-- $1,325 $(337) $(146) $842
=== ====== ======= ======= ====
</TABLE>
Barnett Merger
Merger-Related Reserves
<TABLE>
<CAPTION>
Non-Cash
Balance on Amount Cash Payments Reductions Balance on
January 1, Included in Applied to Applied to December 31,
(Dollars in Millions) 1998 Expense Reserve Reserve 1998
- ---------------------------------------- ------------ ------------- --------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Severance, change in control
and other employee-related costs ..... $-- $375 $ (318) $ (55) $ 2
Conversion and related costs ........... -- 300 (8) (192) 100
Exit and related costs ................. -- 125 (101) -- 24
Other merger costs ..................... -- 100 (99) -- 1
--- ---- ------ ------ ----
$-- $900 $ (526) $ (247) $127
=== ==== ====== ====== ====
</TABLE>
Total severance, change in control and other employee-related costs for
both mergers included amounts related to job eliminations, primarily in areas
of overlapping operations and duplicate functions. Through December 31, 1998,
approximately 1,700 employees have entered the severance process as result of
the Barnett merger. For the BankAmerica merger, 5,000 to 8,000 positions after
attrition, are estimated to be eliminated and through December 31, 1998,
approximately 1,800 associates have entered the severance process.
The only significant portion of the Barnett merger-related charge
remaining at December 31, 1998 relates to conversion and related costs,
primarily abandoned owned and leased facilities and branch closure costs.
Exit costs primarily relate to contract termination payments, business
realignment and other related costs. Remaining exit and related costs balances
included in the Barnett merger reserve on December 31, 1998 are expected to be
used during the first half of 1999.
Primarily all reserves established in 1996 associated with the Bank South
acquisition and restructuring activities were fully utilized as of December 31,
1998. There were no additional provisions during 1998.
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<PAGE>
Note Three - Securities
The amortized cost, gross unrealized gains and losses, and fair value of
securities held for investment and securities available for sale on December 31
were (dollars in millions):
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Securities Held for Investment Cost Gains Losses Value
- ----------------------------------------------- ------------ ------------- ------------- -----------
<S> <C> <C> <C> <C>
1998
U.S. Treasury securities and agency debentures $ 478 $ 1 $ -- $ 479
Foreign sovereign securities .................. 914 1 168 747
Mortgage-backed securities..................... 203 -- -- 203
Other taxable securities ...................... 29 2 -- 31
---------- ----------- ----------- --------
Total taxable ................................ 1,624 4 168 1,460
Tax-exempt securities ......................... 373 20 -- 393
---------- ----------- ----------- --------
Total ........................................ $ 1,997 $ 24 $ 168 $ 1,853
========== =========== =========== ========
1997
U.S. Treasury securities and agency debentures $ 516 $ 1 $ 1 $ 516
Foreign sovereign securities .................. 1,448 61 39 1,470
Mortgage-backed securities .................... 2,408 43 3 2,448
Other taxable securities ...................... 56 9 4 61
---------- ----------- ----------- --------
Total taxable ................................ 4,428 114 47 4,495
Tax-exempt securities ......................... 394 17 1 410
---------- ----------- ----------- --------
Total ........................................ $ 4,822 $ 131 $ 48 $ 4,905
========== =========== =========== ========
1996
U.S. Treasury securities and agency debentures $ 880 $ -- $ 3 $ 877
Foreign sovereign securities .................. 1,525 15 285 1,255
Mortgage-backed securities..................... 3,264 34 19 3,279
Other taxable securities ...................... 64 25 -- 89
---------- ----------- ----------- --------
Total taxable ................................ 5,733 74 307 5,500
Tax-exempt securities ......................... 516 18 4 530
---------- ----------- ----------- --------
Total ........................................ $ 6,249 $ 92 $ 311 $ 6,030
========== =========== =========== ========
Gross Gross
Amortized Unrealized Unrealized Fair
Securities Available for Sale Cost Gains Losses Value
- ----------------------------------------------- ---------- ----------- ----------- --------
1998
U.S. Treasury securities and agency debentures $ 17,355 $ 52 $ 157 $ 17,250
Foreign sovereign securities .................. 5,693 25 138 5,580
Mortgage-backed securities .................... 51,259 567 36 51,790
Other taxable securities ...................... 2,293 76 32 2,337
---------- ----------- ----------- --------
Total taxable ................................ 76,600 720 363 76,957
Tax-exempt securities ......................... 1,636 68 71 1,633
---------- ----------- ----------- --------
Total ........................................ $ 78,236 $ 788 $ 434 $ 78,590
========== =========== =========== ========
1997
U.S. Treasury securities and agency debentures $ 10,614 $ 268 $ 6 $ 10,876
Foreign sovereign securities .................. 10,797 43 96 10,744
Mortgage-backed securities .................... 36,256 363 30 36,589
Other taxable securities ...................... 2,271 13 3 2,281
---------- ----------- ----------- --------
Total taxable ................................ 59,938 687 135 60,490
Tax-exempt securities ......................... 1,661 58 -- 1,719
---------- ----------- ----------- --------
Total ........................................ $ 61,599 $ 745 $ 135 $ 62,209
========== =========== =========== ========
1996
U.S. Treasury securities and agency debentures $ 5,298 $ 61 $ 46 $ 5,313
Foreign sovereign securities .................. 4,129 52 153 4,028
Mortgage-backed securities .................... 17,256 95 88 17,263
Other taxable securities ...................... 2,150 8 10 2,148
---------- ----------- ----------- --------
Total taxable ................................ 28,833 216 297 28,752
Tax-exempt securities ......................... 746 21 2 765
---------- ----------- ----------- --------
Total ........................................ $ 29,579 $ 237 $ 299 $ 29,517
========== =========== =========== ========
</TABLE>
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<PAGE>
The expected maturity distribution and yields (computed on a
taxable-equivalent basis) of the Corporation's securities portfolio on December
31, 1998 are summarized below. 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
or less years years
(Dollars in Millions) ------------------- -------------------- ---------------------
Amount Yield Amount Yield Amount Yield
-------- ---------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Amortized cost of securities held
for investment
U.S. Treasury securities
and agency debentures ................ $ 477 5.92% $ -- --% $ 1 4.53%
Foreign sovereign securities ........... 205 6.88 334 6.96 313 6.89
Mortgage-backed securities ............. 149 6.08 51 6.77 3 6.82
Other taxable securities ............... 2 9.52 -- -- -- --
----- ----- -------- ----- -------- ----
Total taxable ........................ 833 6.19 385 6.93 317 6.88
Tax-exempt securities .................. 55 7.95 123 7.75 100 6.80
----- ----- -------- ----- -------- ----
Total ................................ $ 888 6.30% $ 508 7.13% $ 417 6.86%
===== ===== ======== ===== ======== ====
Fair value of securities
held for investment ..................... $ 868 $ 445 $ 356
===== ======== ========
Fair value of securities available for
sale
U.S. Treasury securities and
agency debentures .................... $ 478 6.32% $ 7,193 4.87% $ 8,952 4.88%
Foreign sovereign securities ........... 12 7.66 1,188 3.88 2,199 4.52
Mortgage-backed securities ............. 357 6.79 15,224 6.85 21,579 6.29
Other taxable securities ............... 43 9.55 675 11.38 902 6.24
----- ----- -------- ----- -------- ----
Total taxable ........................ 890 6.68 24,280 6.25 33,632 5.80
Tax-exempt securities .................. 41 6.52 216 6.79 534 7.34
----- ----- -------- ----- -------- ----
Total ................................ $ 931 6.68% $ 24,496 6.25% $ 34,166 5.82%
===== ===== ======== ===== ======== ====
Amortized cost of securities
available for sale ...................... $ 921 $ 24,149 $ 34,458
===== ======== ========
<CAPTION>
Due after
10 years Total
(Dollars in Millions) --------------------- ---------------------
Amount Yield Amount Yield
----------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Amortized cost of securities held
for investment
U.S. Treasury securities
and agency debentures ................ $ -- --% $ 478 5.91%
Foreign sovereign securities ........... 62 6.93 914 6.91
Mortgage-backed securities ............. -- -- 203 6.27
Other taxable securities ............... 27 6.63 29 6.85
-------- ---- -------- ----
Total taxable ........................ 89 6.84 1,624 6.54
Tax-exempt securities .................. 95 5.71 373 7.00
-------- ---- -------- ----
Total ................................ $ 184 6.26% $ 1,997 6.62%
======== ==== ======== ====
Fair value of securities
held for investment ..................... $ 184 $ 1,853
======== ========
Fair value of securities available for
sale
U.S. Treasury securities and
agency debentures .................... $ 627 6.37% $ 17,250 4.96%
Foreign sovereign securities ........... 2,181 6.59 5,580 5.20
Mortgage-backed securities ............. 14,630 6.21 51,790 6.44
Other taxable securities ............... 717 5.77 2,337 7.65
-------- ---- -------- ----
Total taxable ........................ 18,155 6.24 76,957 6.05
Tax-exempt securities .................. 842 7.80 1,633 7.37
-------- ---- -------- ----
Total ................................ $ 18,997 6.32% $ 78,590 6.08%
======== ==== ======== ====
Amortized cost of securities
available for sale ...................... $ 18,708 $ 78,236
======== ========
</TABLE>
The components of gains and losses on sales of securities for the years
ended December 31 were (dollars in millions):
<TABLE>
<CAPTION>
1998 1997 1996
---------- ------ --------
<S> <C> <C> <C>
Gross gains on sales of securities .......... $ 1,039 $289 $ 310
Gross losses on sales of securities ......... 22 18 163
------- ---- -----
Net gains on sales of securities ............ $ 1,017 $271 $ 147
======= ==== =====
</TABLE>
During 1998, the Corporation sold $19.5 million of securities held for
investment, resulting in net gains of approximately $2.0 million included
above. The sale resulted from a realignment of the securities portfolio in
connection with the Barnett merger. There were no sales of securities held for
investment in 1997 or 1996.
Excluding securities issued by the U.S. government and its agencies and
corporations, there were no investments in securities from one issuer that
exceeded 10 percent of consolidated shareholders' equity on December 31, 1998
or 1997.
The income tax expense attributable to realized net gains on securities
sales was $363 million, $101 million and $54 million in 1998, 1997 and 1996,
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 $65.6 billion and $57.3 billion on December 31, 1998 and 1997,
respectively.
On December 31, 1998, the valuation allowance for securities available for
sale and marketable equity securities included in shareholders' equity was $292
million, primarily reflecting $354 million of pre-tax appreciation on
securities available for sale and $165 million of pre-tax appreciation on
marketable equity securities.
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<PAGE>
Note Four - Trading Account Assets and Liabilities
The fair values of the components of trading account assets and
liabilities on December 31 and the average fair values for the years ended
December 31 were (dollars in millions):
<TABLE>
<CAPTION>
Ending Balance Average Balance
---------------------- ----------------------
1998 1997 1998 1997
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Securities owned
U.S. Treasury securities ......................................... $ 7,854 $ 10,537 $ 9,802 $ 12,625
Securities of other U.S. Government agencies and corporations .... 524 2,392 841 2,473
Certificates of deposit, bankers' acceptances and commercial
paper .......................................................... 2,723 1,867 2,746 2,240
Corporate debt ................................................... 1,666 3,439 2,428 2,703
Foreign sovereign debt ........................................... 11,774 12,650 13,241 14,102
Mortgage-backed securities ....................................... 7,489 3,277 4,802 2,324
Other securities ................................................. 7,572 1,775 5,914 1,817
-------- -------- -------- --------
Total trading account assets ................................... $ 39,602 $ 35,937 $ 39,774 $ 38,284
======== ======== ======== ========
Short sales
U.S. Treasury securities ......................................... $ 8,534 $ 13,087 $ 8,538 $ 12,034
Corporate debt ................................................... 82 217 833 276
Foreign sovereign debt ........................................... 3,166 2,983 3,192 2,148
Other securities ................................................. 2,388 1,013 4,909 827
-------- -------- -------- --------
Total trading account liabilities .............................. $ 14,170 $ 17,300 $ 17,472 $ 15,285
======== ======== ======== ========
</TABLE>
The net change in the unrealized gain or loss on trading securities held
on December 31, 1998 and 1997 was included in trading account profits and fees
and amounted to a gain of $1,692 million for 1998 and a loss of $143 million
for 1997.
Foreign exchange contract and securities trading activities generated most
of the Corporation's trading account profits and fees.
See Note Eleven of the consolidated financial statements on page 74 for
additional information on derivatives-dealer positions, including credit risk.
The average fair values of derivative-dealer assets on December 31, 1998 and
1997 was $14.3 billion and $12.6 billion, respectively. The average fair values
of derivative-dealer liabilities on December 31, 1998 and 1997 were $13.3
billion and $11.5 billion, respectively.
The fair value of derivative-dealer assets at December 31, 1998 and 1997,
was $16.4 billion and $14.8 billion, respectively. The fair value of
derivative-dealer liabilities at December 31, 1998 and 1997 was $16.8 billion
and $13.6 billion, respectively.
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<PAGE>
Note Five - Loans and Leases
Loans and leases on December 31 were (dollars in millions):
<TABLE>
<CAPTION>
1998 1997
--------------------- -----------------------
Amount Percent Amount Percent
----------- --------- ------------ ----------
<S> <C> <C> <C> <C>
Commercial - domestic ..................... $ 137,422 38.5 % $ 122,463 35.8%
Commercial - foreign ...................... 31,495 8.8 30,080 8.8
Commercial real estate - domestic ......... 26,912 7.5 28,567 8.3
Commercial real estate - foreign .......... 301 .1 324 .1
--------- ---- --------- -----
Total commercial ......................... 196,130 54.9 181,434 53.0
--------- ---- --------- -----
Residential mortgage ...................... 73,608 20.6 71,540 20.9
Home equity lines ......................... 15,653 4.4 16,536 4.8
Direct/Indirect consumer .................. 40,510 11.3 40,058 11.7
Consumer finance .......................... 15,400 4.3 14,566 4.3
Bankcard .................................. 12,425 3.5 14,908 4.4
Foreign consumer .......................... 3,602 1.0 3,098 .9
--------- ---- --------- -----
Total consumer ........................... 161,198 45.1 160,706 47.0
--------- ---- --------- -----
Total loans and leases .................. $ 357,328 100.0 % $ 342,140 100.0%
========= ======= ========= =====
</TABLE>
The following table presents the recorded investment in loans that were
considered to be impaired on December 31 (1) (dollars in millions):
<TABLE>
<CAPTION>
1998 1997
-------- ----------
<S> <C> <C>
Commercial - domestic .............. $ 796 $ 538
Commercial - foreign ............... 314 158
Commercial real estate-domestic .... 554 327
Commercial real estate-foreign ..... -- 1
------ -------
Total commercial ................... $1,664 $ 1,024
====== =======
</TABLE>
(1) The Corporation's consumer loan portfolio generally consists of large
groups of relatively smaller balance homogeneous loans that are
collectively evaluated for impairment and, therefore, are not included in
this table.
The average recorded investment in certain impaired loans for the years
ended December 31, 1998, 1997 and 1996 was approximately $1.6 billion, $1.4
billion and $1.8 billion, respectively. As of December 31, 1998 and 1997, the
recorded investment on impaired loans requiring an allowance for credit losses
was $876 million and $885 million, and the related allowance for credit losses
was $326 million and $145 million, respectively. For the years ended December
31, 1998, 1997 and 1996, interest income recognized on impaired loans totaled
$50 million, $80 million and $83 million, respectively, all of which was
recognized on a cash basis.
On December 31, 1998, 1997 and 1996, nonperforming loans, including
certain loans which are considered impaired, totaled $2.5 billion, $2.1 billion
and $2.2 billion, respectively. The net amount of interest recorded during each
year on loans that were classified as nonperforming or restructured on December
31, 1998, 1997 and 1996 was $130 million in each of the three years. If these
loans had been accruing interest at their originally contracted rates, related
income would have been $367 million, $349 million and $388 million in 1998,
1997 and 1996, respectively.
Foreclosed properties amounted to $282 million, $309 million and $511
million on December 31, 1998, 1997 and 1996, respectively. The cost of carrying
foreclosed properties amounted to $16 million, $26 million and $35 million in
1998, 1997 and 1996, respectively.
67
<PAGE>
Note Six - Allowance for Credit Losses
The table below summarizes the changes in the allowance for credit losses
on loans and leases (dollars in millions):
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Balance on January 1 ............................... $ 6,778 $ 6,316 $ 6,222
------- ------- -------
Loans and leases charged off ....................... (3,050) (2,603) (2,369)
Recoveries of loans and leases previously charged off 583 751 702
------- ------- -------
Net charge-offs .................................. (2,467) (1,852) (1,667)
Provision for credit losses ........................ 2,920 1,904 1,645
Other, net ......................................... (109) 410 116
---------- ------- -------
Balance on December 31 ........................... $ 7,122 $ 6,778 $ 6,316
======= ======= =======
</TABLE>
Note Seven - Deposits
On December 31, 1998, the Corporation had domestic certificates of deposit
of $100 thousand or greater totaling $27.3 billion, with $14.0 billion maturing
within three months, $5.9 billion maturing within three to six months, $4.9
billion maturing within six to twelve months and $2.5 billion maturing after
twelve months. Additionally, on December 31, 1998, the Corporation had other
domestic time deposits of $100 thousand or greater totaling $887 million, with
$208 million maturing within three months, $96 million maturing within three to
six months, $164 million maturing within six to twelve months and $419 million
maturing after twelve months. Foreign office certificates of deposit and other
time deposits of $100 thousand or greater totaled $40.8 billion and $48.7
billion on December 31, 1998 and 1997, respectively.
At December 31, 1998, the scheduled maturities for time deposits were as
follows (dollars in millons):
<TABLE>
<S> <C>
Due in 1999 ............... $ 126,193
Due in 2000 ............... 7,972
Due in 2001 ............... 2,124
Due in 2002 ............... 1,423
Due in 2003 ............... 750
Thereafter ................ 952
---------
Total ..................... $ 139,414
=========
</TABLE>
68
<PAGE>
Note Eight - Short-Term Borrowings and Long-Term Debt
The contractual maturities of long-term debt on December 31 were:
<TABLE>
<CAPTION>
1998
-------------------------------------------------
Various Various
Fixed-Rate Floating-Rate 1997
Debt Debt Amount Amount
(Dollars in Millions) Obligations (1) Obligations (1) Outstanding Outstanding
- ------------------------------------------------ ----------------- ----------------- ------------- ------------
<S> <C> <C> <C> <C>
Parent company
Senior debt
Due in 1998 ................................. $ -- $ -- $ -- $ 2,792
Due in 1999 ................................. 341 2,287 2,628 2,381
Due in 2000 ................................. 488 1,725 2,213 3,186
Due in 2001 ................................. 671 3,330 4,001 3,252
Due in 2002 ................................. 130 2,155 2,285 2,290
Due in 2003 ................................. 499 2,079 2,578 1,245
Thereafter .................................. 357 3,708 4,065 1,715
-------- -------- ------- --------
2,486 15,284 17,770 16,861
-------- -------- ------- --------
Subordinated debt
Due in 1998 ................................. -- -- -- 52
Due in 1999 ................................. 361 319 680 683
Due in 2000 ................................. 411 -- 411 417
Due in 2001 ................................. 1,312 30 1,342 1,355
Due in 2002 ................................. 2,199 26 2,225 2,213
Due in 2003 ................................. 1,711 323 2,034 1,974
Thereafter .................................. 5,984 3,265 9,249 7,776
-------- -------- ------- --------
11,978 3,963 15,941 14,470
-------- -------- ------- --------
Total parent company long-term debt ......... 14,464 19,247 33,711 31,331
-------- -------- ------- --------
Banking and nonbanking subsidiaries
Senior debt
Due in 1998 ................................. -- -- -- 3,902
Due in 1999 ................................. 221 3,790 4,011 1,512
Due in 2000 ................................. 3 4,555 4,558 3,365
Due in 2001 ................................. 34 1,263 1,297 455
Due in 2002 ................................. 109 284 393 443
Due in 2003 ................................. 441 261 702 252
Thereafter .................................. 87 90 177 120
-------- -------- ------- --------
895 10,243 11,138 10,049
-------- -------- ------- --------
Subordinated debt
Due in 1998 ................................. -- -- -- 10
Due in 1999 ................................. -- -- -- 11
Due in 2000 ................................. -- -- -- 12
Due in 2001 ................................. 227 -- 227 308
Due in 2002 ................................. -- -- -- --
Due in 2003 ................................. 104 -- 104 100
Thereafter .................................. 300 8 308 308
-------- -------- ------- --------
631 8 639 749
-------- -------- ------- --------
Total banking and nonbanking
subsidiaries long-term debt ................ 1,526 10,251 11,777 10,798
-------- -------- ------- --------
Total parent, banking and nonbanking
subsidiaries long-term-debt ................ $ 15,990 $ 29,498 45,488 42,129
Notes payable to finance the purchase of leased
vehicles ...................................... 279 625
Obligations under capital leases ............... 121 133
------- --------
Total long-term debt ........................ $45,888 $ 42,887
======= ========
</TABLE>
(1) Fixed rate and floating rate classifications of long-term debt include the
effect of interest rate swap contracts.
69
<PAGE>
The majority of the floating rates are based on three- and six-month
London InterBank Offer Rates (LIBOR). At December 31, 1998, the interest rates
on floating-rate long-term debt, as classified in the table on the preceding
page, ranged from 4.75 percent to 7.07 percent. These obligations were
denominated primarily in U.S. dollars. The interest rate on fixed-rate
long-term debt, as classified in the table on the preceding page, ranged from
4.50 percent to 12.50 percent at December 31, 1998.
At December 31, 1998, the Corporation had commercial paper back-up lines
of credit totaling $1.1 billion, of which $669 million expires in October 1999
and $479 million expires in October 2002. In addition, the Corporation had a
$1.6 billion line of credit which expires in May 2001. At December 31, 1998,
there were no amounts outstanding under these credit facilities. These lines
were supported by fees paid to unaffiliated banks.
As of December 31, 1998, the Corporation has the authority to issue
approximately $9.4 billion of corporate debt and other securities under its
existing shelf registration statements.
Under a joint Euro medium-term note program, the Corporation and
NationsBank, N.A. may offer an aggregate of $8.5 billion of senior or, in the
case of the Corporation, subordinated notes exclusively to non-United States
residents. The notes bear interest at fixed or floating rates and may be
denominated in U.S. dollars or foreign currencies. The Corporation uses foreign
currency contracts to convert certain foreign-denominated debt into U.S.
dollars. On December 31, 1998, $3.7 billion of notes were outstanding under
this program. BankAmerica's Euro medium-term note program was cancelled in
September 1998. As of December 31, 1998, the Corporation and NationsBank, N.A.
had the authority to issue approximately $2.8 billion and $2.0 billion,
respectively, of debt securities under this program. On December 31, 1998, $3.5
billion of notes were outstanding under the former BankAmerica program.
NationsBank, N.A. maintains a program to offer up to $25 billion of bank
notes from time to time with fixed or floating rates and maturities ranging
from 7 days or more from date of issue. Prior to the Merger, Bank of America
NT&SA maintained a program to offer up to $12 billion of bank notes from time
to time with fixed or floating rates and maturities ranging from 30 days to 15
years. On December 31, 1998 and 1997, there were short-term bank notes
outstanding under these programs of $14.7 billion and $4.6 billion,
respectively. On December 31, 1998 and 1997 the Corporation's long-term debt
included $7.9 billion and $5.1 billion, respectively, of these notes.
Through a limited purpose subsidiary, the Corporation had $2.5 billion of
mortgage-backed bonds outstanding on December 31, 1998. These bonds are
collateralized by $3.7 billion of mortgage loans.
As part of its interest rate risk management activities, the Corporation
enters into interest rate contracts for certain long-term debt issuances.
Through the use of interest rate swaps, $8.8 billion of fixed-rate debt with
rates ranging from 5.30 percent to 8.57 percent have been effectively converted
to floating rates primarily at spreads to LIBOR.
Through the use of interest rate options, the Corporation has the right to
purchase interest rate caps and floors to hedge its risk on floating-rate debt
against a rise in interest rates. At December 31, 1998, the interest rate
options had a notional amount of approximately $3.4 billion. In addition, the
Corporation has entered into other interest rate contracts, primarily futures,
with notional amounts of approximately $802 million at December 31, 1998 to
reduce its interest rate risk by shortening the repricing profile on
floating-rate debt that reprices within one year.
On December 31, 1998, including the effects of interest rate contracts for
certain long-term debt 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, 1998) were 6.11 percent, 7.73
percent and 5.24 percent, respectively. These obligations were denominated
primarily in U.S. dollars.
70
<PAGE>
As described below, certain debt obligations outstanding on December 31,
1998 may be redeemed prior to maturity at the option of the Corporation:
<TABLE>
<CAPTION>
Amount
Outstanding
Year Redeemable Year of Maturities (in millions)
- ------------------------ -------------------- --------------
<S> <C> <C>
Currently redeemable 2002 $ 21
1999 2001 -- 2010 919
2000 -- 2001 2001 -- 2028 2,542
2002 -- 2008 2005 -- 2028 853
</TABLE>
Note Nine - Trust Preferred Securities
Trust preferred securities are Corporation obligated mandatorily
redeemable preferred securities of subsidiary trusts holding solely junior
subordinated deferrable interest notes of the Corporation.
Since October 1996, the Corporation formed thirteen wholly owned grantor
trusts to issue trust preferred securities and to invest the proceeds of such
trust preferred securities into notes of the Corporation. Certain of the trust
preferred securities were issued at a discount. Such trust preferred securities
may be redeemed prior to maturity at the option of the Corporation. The sole
assets of each of the grantor trusts are the Junior Subordinated Deferrable
Interest Notes of the Corporation (the Notes) held by such grantor trusts. Each
issue of the Notes has an interest rate equal to the corresponding trust
preferred securities distribution rate. The Corporation has the right to defer
payment of interest on the Notes at any time or from time to time for a period
not exceeding five years provided that no extension period may extend beyond
the stated maturity of the relevant Notes. During any such extension period,
distributions on the trust preferred securities will also be deferred and the
Corporation's ability to pay dividends on its common and preferred stock will
be restricted.
The trust preferred securities are subject to mandatory redemption upon
repayment of the related Notes at their stated maturity dates or their earlier
redemption at a redemption price equal to their liquidation amount plus accrued
distributions to the date fixed for redemption and the premium if any, paid by
the Corporation upon concurrent repayment of the related Notes.
Payment of periodic cash distributions and payment upon liquidation or
redemption with respect to trust preferred securities are guaranteed by the
Corporation to the extent of funds held by the grantor trusts (the Preferred
Securities Guarantee). The Preferred Securities Guarantee, when taken together
with the Corporation's other obligations including its obligations under the
Notes, will constitute a full and unconditional guarantee, on a subordinated
basis, by the Corporation of payments due on the trust preferred securities.
The Corporation is required by the FRB to maintain certain levels of
capital for bank regulatory purposes. The FRB has determined that certain
cumulative preferred securities having the characteristics of trust preferred
securities qualify as minority interest, which is included in Tier 1 capital
for bank holding companies. Such Tier 1 capital treatment provides the
Corporation with a more cost-effective means of obtaining capital for bank
regulatory purposes than if the Corporation were to issue preferred stock.
The table on the next page is a summary of the outstanding trust preferred
securities and the Notes at December 31:
71
<PAGE>
<TABLE>
<CAPTION>
Aggregate
Principal
Amount of
Trust Preferred
Securities Aggregate
--------------------- Principal
Amount of
(Dollars in Millions) Issued 1998 1997 the Notes
- ----------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
NationsBank
Capital Trust I ............ Dec. 1996 $ 600 $ 600 $ 619
Capital Trust II ........... Dec. 1996 365 365 376
Capital Trust III .......... Feb. 1997 500 500 516
Capital Trust IV ........... Apr. 1997 500 500 516
BankAmerica
Institutional Capital A .... Nov. 1996 450 450 464
Institutional Capital B .... Nov. 1996 300 300 309
Capital I .................. Dec. 1996 300 300 309
Capital II ................. Dec. 1996 450 450 464
Capital III ................ Jan. 1997 400 400 412
Capital IV ................. Feb. 1998 350 -- 361
Barnett
Capital I .................. Nov. 1996 300 300 309
Capital II ................. Dec. 1996 200 200 206
Capital III ................ Jan. 1997 250 250 258
-------
Total ...................... $4,965m $4,615m $ 5,119
======= ======= =======
<CAPTION>
Per
Annum
Stated Interest Interest
Maturity of Rate of Payment Redemption
(Dollars in Millions) the Notes the Notes Dates Period
- ----------------------------- ------------- ------------- -------------- ------------
<S> <C> <C> <C> <C>
NationsBank
Capital Trust I ............ Dec. 2026 7.84% 3/31, 6/30, On or after
9/30, 12/31 12/31/01 a
Capital Trust II ........... Dec. 2026 7.83 6/15, 12/15 On or after
12/15/06 bd
Capital Trust III .......... Jan. 2027 3-mo. LIBOR 1/15, 4/15, On or after
+55 bps 7/15, 10/15 1/15/07 b
Capital Trust IV ........... Apr. 2027 8.25 4/15, 10/15 On or after
4/15/07 bf
BankAmerica
Institutional Capital A..... Dec. 2026 8.07 6/30, 12/31 On or after
12/31/06cg
Institutional Capital B..... Dec. 2026 7.70 6/30, 12/31 On or after
12/31/06 ch
Capital I .................. Dec. 2026 i 7.75 3/31, 6/30, On or after
9/30, 12/31 12/20/01 e
Capital II ................. Dec. 2026 8.00 6/15, 12/15 On or after
12/15/06 cj
Capital III ................ Jan. 2027 3-mo. LIBOR 1/15, 4/15, On or after
+57 bps 7/15, 10/15 1/15/02 c
Capital IV ................. Mar. 2028 7.00 3/31, 6/30, On or after
9/30, 12/31 2/24/03 c
Barnett
Capital I .................. Dec. 2026 8.06 6/1, 12/1 On or after
12/1/06 bk
Capital II ................. Dec. 2026 7.95 6/1, 12/1 On or after
12/1/06 bl
Capital III ................ Feb. 2027 3-mo. LIBOR 2/1, 5/1, On or after
+62.5 bps 8/1, 11/1 2/1/07 b
Total ......................
</TABLE>
a The Corporation may redeem the Notes prior to the indicated redemption
period upon the occurrence of certain events relating to tax treatment of
the related trust or the Notes, at a redemption price at least equal to the
principal amount of the Notes.
b The Corporation may redeem the Notes prior to the indicated redemption
period upon the occurrence of certain events relating to tax treatment of
the related trust or the Notes or relating to capital treatment of the trust
preferred securities or relating to a change in the treatment of the related
trust under the Investment Company Act of 1940, as amended, at a redemption
price at least equal to the principal amount of the Notes.
c The Corporation may redeem the Notes prior to the indicated redemption
period upon the occurrence of certain events relating to tax treatment of
the related trust or the Notes or relating to capital treatment of the trust
preferred securities at a redemption price at least equal to the principal
amount of the Notes.
d The Notes may be redeemed on or after December 15, 2006 and prior to
December 15, 2007 at 103.915% of the principal amount, and thereafter at
prices declining to 100% on December 15, 2016 and thereafter.
e The Corporation may redeem the Notes (i) during the indicated redemption
period or (ii) upon the occurrence of certain events relating to tax
treatment of the trust or the Notes or relating to capital treatment of the
trust preferred securities, prior to the indicated redemption period, in
each case, at a redemption price of 100% of the principal amount.
f The Notes may be redeemed on or after April 15, 2007 and prior to April 14,
2008 at 103.85% of the principal amount, and thereafter at prices declining
to 100% on April 15, 2017 and thereafter.
g The Notes may be redeemed on or after December 31, 2006 and prior to
December 31, 2007 at 104.0350% of the principal amount, and thereafter at
prices declining to 100% on December 31, 2016 and thereafter.
h The Notes may be redeemed on or after December 31, 2006 and prior to
December 31, 2007 at 103.7785% of the principal amount, and thereafter at
prices declining to 100% on December 31, 2016 and thereafter.
i At the option of the Corporation, the stated maturity may be shortened to a
date not earlier than December 20, 2001 or extended to a date not later than
December 31, 2045, in each case if certain conditions are met.
j The Notes may be redeemed on or after December 15, 2006 and prior to
December 15, 2007 at 103.9690% of the principal amount, and thereafter at
prices declining to 100% on December 15, 2016 and thereafter.
k The Notes may be redeemed on or after December 1, 2006 and prior to December
1, 2007 at 104.030% of the principal amount, and thereafter at prices
declining to 100% on December 1, 2016 and thereafter.
l The Notes may be redeemed on or after December 1, 2006 and prior to December
1, 2007 at 103.975% of the principal amount, and thereafter at prices
declining to 100% on December 1, 2016 and thereafter.
m Excludes $11 and $37 of deferred issuance costs and unamortized discount
at December 31, 1998 and 1997, respectively.
72
<PAGE>
Note Ten - Shareholders' Equity and Earnings Per Common Share
On June 29, 1998, the Corporation redeemed all of BankAmerica's remaining
outstanding nonconvertible preferred shares. The Corporation's Preferred Stock
on December 31, 1997, included BankAmerica's outstanding preferred stock of
$614 million. These preferred shares were nonvoting except in certain limited
circumstances. The shares were redeemable at the option of BankAmerica during
the redemption period and at the redemption price per share plus accrued and
unpaid dividends to the redemption date. During 1997 and 1996, BankAmerica
redeemed a portion of its preferred shares for an aggregate of $1,628 million
and $381 million, respectively.
In April 1988, BankAmerica declared a dividend of one preferred share
purchase right (a Right) for each outstanding share of BankAmerica's common
stock pursuant to the Rights Agreement dated April 11, 1988 between BankAmerica
and Manufacturers Hanover Trust Company of California, as rights agent (the
Rights Agreement). Each Right entitled the holder, upon the occurrence of
certain events, to buy from BankAmerica, until the earlier of April 22, 1998 or
the redemption of the Rights, one two-hundredth of a share of Cumulative
Participating Preferred Stock, Series E, at an exercise price of $25.00 per
Right (subject to adjustment). On April 22, 1998, the Rights Agreement expired
in accordance with its terms.
As of December 31, 1998, the Corporation had issued 1.9 million shares of
employee stock ownership plan (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 each share is convertible into 1.68 shares of the Corporation's
common stock. ESOP Preferred Stock in the amounts of $11 million, $86 million
and $98 million was converted into the Corporation's common stock in 1998, 1997
and 1996, respectively.
In November 1989, Barnett incorporated ESOP provisions into its existing
401(k) employee benefit plan (Barnett ESOP). The Barnett ESOP acquired $141
million of common stock using the proceeds of a loan from the Corporation. The
terms of the loan include equal monthly payments of principal and interest
through September 2015. Interest is at 9.75 percent and prepayments of
principal are allowed. The loan is generally being repaid from contributions to
the plan by the Corporation and dividends on unallocated shares held by the
Barnett ESOP. Shares held by the Barnett ESOP are allocated to plan
participants as the loan is repaid. As of December 31, 1998, 3.5 million shares
of unallocated common stock remained in the Barnett ESOP. During 1998, 1997 and
1996, the Barnett ESOP released and allocated common stock amounting to $6
million, $8 million and $13 million, respectively.
As consideration in the merger of NationsBank, N.A. (South) and
NationsBank, N.A. during 1997, NationsBank, N.A. exchanged approximately $73
million for preferred stock issued by NationsBank, N.A. (South) in the 1996
acquisition of Citizens Federal Bank, a federal savings bank. Such preferred
stock consisted of approximately 0.5 million shares of NationsBank, N.A.
(South) 8.50% Series H Noncumulative Preferred Stock and approximately 2.4
million shares of NationsBank, N.A. (South) 8.75% Series 1993A Noncumulative
Preferred Stock.
During 1998 and 1997, the Corporation repurchased approximately 29 million
and approximately 150 million shares of common stock, respectively, under
various stock repurchase programs authorized by the Board of Directors. On
September 24, 1998, the Board of Directors of the Corporation approved the
purchase of up to 20 million shares of the Corporation's common stock in the
open market or through private transactions. During the fourth quarter of 1998
all shares authorized under this resolution were repurchased.
Other shareholders' equity consisted of restricted stock award plan
deferred compensation of $74 million and $23 million, as well as a loan to the
ESOP trust of $58 million and $86 million at December 31, 1998 and 1997,
respectively.
73
<PAGE>
The calculation of earnings per common share and diluted earnings per
common share is presented below (dollars in millions, except per-share data,
shares in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
Earnings per common share computation
Net income ...................................................... $ 5,165 $ 6,542 $ 5,813
Total preferred stock dividends ................................. (25) (111) (202)
---------- ---------- ----------
Income available to common shareholders ......................... $ 5,140 $ 6,431 $ 5,611
---------- ---------- ----------
Average common shares issued and outstanding .................... 1,732,057 1,733,194 1,638,382
---------- ---------- ----------
Earnings per common share ....................................... $ 2.97 $ 3.71 $ 3.42
========== ========== ==========
Diluted earnings per common share computation
Income available to common shareholders ......................... $ 5,140 $ 6,431 $ 5,611
Total preferred stock dividends ................................. 25 111 202
Preferred stock dividends on nonconvertible stock ............... (19) (104) (193)
---------- ---------- ----------
Effect of assumed conversions ................................... 6 7 9
---------- ---------- ----------
Income available to common shareholders and assumed
conversions ................................................... $ 5,146 $ 6,438 $ 5,620
---------- ---------- ----------
Average common shares issued and outstanding .................... 1,732,057 1,733,194 1,638,382
Incremental shares from assumed conversions:
Convertible preferred stock ................................... 3,290 3,736 6,158
Stock options ................................................. 40,413 45,242 26,086
---------- ---------- ----------
Dilutive potential common shares ................................ 43,703 48,978 32,244
---------- ---------- ----------
Total dilutive average common shares issued and outstanding ..... 1,775,760 1,782,172 1,670,626
---------- ---------- ----------
Diluted earnings per common share ............................... $ 2.90 $ 3.61 $ 3.36
========== ========== ==========
</TABLE>
Note Eleven - Commitments, Contingencies and Off-Balance Sheet Financial
Instruments
In the normal course of business, the Corporation enters into a number of
off-balance sheet commitments. These commitments 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.
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 amounts participated to other financial
institutions. The following summarizes outstanding commitments to extend credit
on December 31 (dollars in millions):
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Credit card commitments ................................... $ 67,018 $ 69,297
Other loan commitments .................................... 234,453 226,773
Standby letters of credit and financial guarantees ........ 33,311 31,315
Commercial letters of credit .............................. 3,035 3,748
</TABLE>
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' ability to pay through adverse-change clauses which require
borrowers to maintain various credit and liquidity measures. As of December 31,
1998 and 1997, there were no unfunded commitments to any industry or country
greater than 10 percent of total unfunded commitments to lend. 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 terminate or change the terms of the credit card lines. Of the
December 31, 1998 other loan commitments, $107.4 billion is scheduled to expire
in less than one year, $105.8 billion in one to five years and $21.3 billion
after five years.
74
<PAGE>
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, 1998 SBLCs and financial
guarantees, $20.9 billion is scheduled to expire in less than one year, $10.8
billion in one to five years and $1.6 billion 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
Derivatives utilized by the Corporation include interest rate swaps,
financial futures and forward settlement contracts and option contracts. A swap
agreement is a contract between two parties to exchange cash flows based on
specified underlying notional amounts and indices. Financial futures and
forward settlement contracts are agreements to buy or sell a quantity of a
financial instrument, currency 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, currency or commodity at a predetermined rate or price at a
time or during a period in the future. These option agreements can be
transacted on organized exchanges or directly between parties.
Asset and Liability Management Activities
Risk management interest rate contracts are used in the asset and
liability management process. Such contracts, which are generally non-leveraged
generic interest rate and basis swaps, options and futures, allow the
Corporation to effectively manage its interest rate risk position. Generic
interest rate swaps involve the exchange of fixed-rate and variable-rate
interest payments based on the contractual underlying notional amount. Basis
swaps involve the exchange of interest payments based on the contractual
underlying notional amounts, where both the pay rate and the receive rate are
floating rates based on different indices. Interest rate caps and floors are
agreements where, for a fee, the purchaser obtains the right to receive
interest payments when a variable interest rate moves above or below a
specified cap or floor rate, respectively.
The following table outlines the notional and fair values of the
Corporation's ALM contracts on December 31 (dollars in millions):
<TABLE>
<CAPTION>
1998 1997
---------------------- ----------------------
Notional Fair Notional Fair
Amount Value Amount Value
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Interest Rate Contracts
Receive fixed swaps ...................... $60,450 $ 1,958 $56,127 $ 877
Pay fixed swaps .......................... 25,770 (1,006) 25,041 (888)
------- -------- ------- -----
Net receive fixed ...................... 34,680 952 31,086 (11)
Basis swaps .............................. 7,736 (10) 2,583 (7)
------- -------- ------- --------
Total net swap position ................ 42,416 942 33,669 (18)
Futures and forward rate contracts ....... 6,348 2 89,650 (16)
Option products .......................... 26,836 (46) 24,113 (60)
------- -------- ------- -------
Total interest rate contracts (1) ...... $ 898 $ (94)
======== =======
</TABLE>
(1) Not meaningful to sum notional amounts of different off-balance sheet
products.
75
<PAGE>
In addition to the contracts in the preceding table, the Corporation uses
foreign currency contracts to manage the foreign exchange risk associated with
certain foreign-denominated liabilities. Foreign exchange contracts, which
include spot, forward and futures contracts, represent agreements to exchange
the currency of one country for the currency of another country at an
agreed-upon price, on an agreed-upon settlement date. Foreign exchange option
contracts are similar to interest rate option contracts except that they are
based on currencies rather than interest rates. Exposure to loss on these
contracts will increase or decrease over their respective lives as currency
exchange and interest rates fluctuate. The Corporation's credit risk exposure
for exchange-traded instruments is minimal as these instruments conform to
standard terms and are subject to policies set by the exchange involved,
including counterparty approval, margin requirements and security deposit
requirements.
Credit Risk Associated with Derivative Activities
Credit risk associated with derivatives is measured as the net replacement
cost should the counterparties with contracts in a gain position to the
Corporation completely fail to perform under the terms of those contracts and
any collateral underlying the contracts proves to be of no value. In managing
derivatives credit risk, 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 are
considered. In managing credit risk associated with its derivatives activities,
the Corporation deals primarily with U.S. and foreign commercial banks,
broker-dealers and corporates.
During 1998, there were $40 million in credit losses associated with
derivative contracts. On December 31, 1998, there were no nonperforming
derivatives positions that were material to the Corporation. To minimize credit
risk, the Corporation enters into legally enforceable master netting
agreements, which reduce risk by permitting the close out and netting of
transactions with the same counterparty upon the occurrence of certain events.
A portion of the derivative-dealer activity involves exchange-traded
instruments. Because exchange-traded instruments conform to standard terms and
are subject to policies set by the exchange involved, including counterparty
approval, margin requirements and security deposit requirements, the credit
risk is minimal.
The following table presents the notional or contract amounts on December
31, 1998 and 1997 and the current credit risk amounts (the net replacement cost
of contracts in a gain position on December 31, 1998 and 1997) of the
Corporation's derivative-dealer positions which are primarily executed in the
over-the-counter market for trading purposes. 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 the following table do not consider the
value of any collateral, but generally take into consideration the effects of
legally enforceable master netting agreements.
76
<PAGE>
Derivative - Dealer Positions
(Dollars in Millions)
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
------------------------ ---------------------
Contract/ Credit Contract/ Credit
Notional Risk (1) Notional Risk (1)
------------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Interest Rate Contracts
Swaps ...................................... $1,539,862 $ 5,470 $868,708 $ 3,759
Futures and forwards ....................... 808,284 290 470,640 120
Written options ............................ 494,608 -- 476,152 --
Purchased options .......................... 615,492 2,125 449,383 1,078
Foreign Exchange Contracts
Swaps ...................................... 37,357 1,403 31,028 1,577
Spot, futures and forwards ................. 623,977 5,136 628,265 7,214
Written options ............................ 56,287 -- 80,438 --
Purchased options .......................... 53,426 703 75,998 970
Commodity and Other Contracts
Swaps ...................................... 5,685 370 2,713 80
Futures and forwards ....................... 5,292 -- 3,147 --
Written options ............................ 22,382 -- 14,159 --
Purchased options .......................... 22,134 989 13,954 403
------- -------
Total before cross product netting ....... 16,486 15,201
------- -------
Cross product netting .................... 1,274 749
------- -------
Net replacement cost ..................... $15,212 $14,452
======= =======
</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.
The table above includes both long and short derivative-dealer positions.
The fair value of dealer positions on December 31, 1998 and 1997, as well as
their average fair values for 1998 and 1997 are disclosed in Note Four of the
consolidated financial statements on page 66.
The Corporation uses credit derivatives to diversify credit risk and lower
its risk portfolio by transferring the exposure of an underlying asset to
another counterparty. Credit default swaps are a type of credit derivatives
which provide protection against credit losses associated with specific events
on an underlying asset. As of December 31, 1998, the Corporation had a notional
value of $16.9 billion in credit derivatives, primarily credit default swaps.
When Issued Securities
When issued securities are commitments to purchase or sell securities
during the time period between the announcement of a securities offering and
the issuance of those securities. On December 31, 1998, the Corporation had
commitments to purchase and sell when issued securities of $1.3 billion and
$2.4 billion, respectively. On December 31, 1997, the Corporation had
commitments to purchase and sell when issued securities of $8.8 billion and
$8.2 billion, respectively.
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 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, environmental, banking and other laws.
The Corporation's predecessor, BankAmerica, and certain of its
subsidiaries, including Bank of America NT&SA, were named in one such suit by
the City of San Francisco and several related public entities, and by the State
of California, in an action entitled State of California, etc ex rel Stull v.
Bank of America NT&SA, et al. (No. 968-484). The case was instituted on April
1, 1995 in the Superior Court for the City and County of San Francisco. The
City of San Francisco and related public entities intervened in the case on May
1, 1997, and the
77
<PAGE>
State of California took over prosecution of the case on May 5, 1997. The chief
allegation of this suit is that Bank of America NT&SA and its predecessors
retained unclaimed funds related to bonds and coupons that were not presented
by bondholders rather than returning them to certain bond issuers or escheating
such funds to the State. The suit also alleges False Claims Act exposure for
alleged fee overcharges and claims that Bank of America NT&SA and its
predecessors improperly invested bond program funds. On November 12, 1998, the
plaintiffs and the Corporation and its named subsidiaries settled this suit
whereby the Corporation and its named subsidiaries agreed to pay $187.5 million
to the plaintiffs. The settlement is subject to court approval.
The Corporation and certain present and former officers have been named as
defendants in approximately 24 uncertified class actions filed in federal court
alleging, among other things, that the defendants failed to disclose material
facts about BankAmerica's losses relating to D.E. Shaw & Co., L. P. until
mid-October 1998, in violation of various provisions of the federal securities
laws. The uncertified classes consist generally of persons who were entitled to
vote on the merger of NationsBank and BankAmerica, or who purchased or acquired
securities of the Corporation or its predecessors between August 4, 1998 and
October 13, 1998. Similar actions are pending in California state court,
alleging violations of the California Corporations Code and involving factual
allegations essentially the same as the federal actions. In addition, certain
cases filed in California state court have alleged that the proxy
statement-prospectus of August 4, 1998, falsely stated that the Merger would be
one of equals and allege a conspiracy on the part of certain executives to gain
control over the newly merged entity. At least one such complaint seeks recovery
under various state common law theories. The Corporation believes the actions
lack merit and will defend them vigorously. The amount of any ultimate exposure
cannot be determined with certainty at this time.
Management believes that the actions and proceedings and the 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 Twelve - Regulatory Requirements and Restrictions
The Corporation's banking subsidiaries are required to maintain average
reserve balances with the FRB based on a percentage of certain deposits.
Average reserve balances held with the FRB to meet these requirements amounted
to $288 million and $403 million for 1998 and 1997, respectively.
The primary source of funds for cash distributions by the Corporation to
its shareholders is dividends received from its banking subsidiaries. The
subsidiary national banks can initiate aggregate dividend payments in 1999,
without prior regulatory approval, of $2.2 billion plus an additional amount
equal to their net profits for 1999, as defined by statute, 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 Office of the
Comptroller of the Currency (OCC) is the bank's net profits for that year
combined with its net retained profits, as defined, for the preceding two
years.
One of the Corporation's subsidiaries, Bank of America, FSB, is subject to
regulatory restrictions by the Office of Thrift Supervision (OTS) on its
payment of dividends. Under these restrictions, Bank of America, FSB, can
initiate dividend payments in 1999 without prior regulatory approval of $675
million.
Regulations also restrict banking subsidiaries in lending funds to
affiliates. On December 31, 1998, the total amount which could be loaned to the
Corporation by its banking subsidiaries was approximately $5.6 billion. On
December 31, 1998, no loans to the Corporation from its banking subsidiaries
were outstanding.
The FRB, the OCC, the Federal Deposit Insurance Corporation and the OTS
(collectively, the Agencies) have issued regulatory capital guidelines for U.S.
banking organizations. Failure to meet the capital requirements can initiate
certain mandatory and discretionary actions by regulators that could have a
material effect on the Corporation's financial statements. As of December 31,
1998 and 1997, the Corporation and each of its banking subsidiaries were well
capitalized under this regulatory framework. There have been no conditions or
events since December 31, 1998 that management believes have changed either the
Corporation's or its banking subsidiaries' capital classifications.
The regulatory capital guidelines measure capital in relation to the
credit risk of both on- and off-balance sheet items using various risk weights.
Under the regulatory capital guidelines, Total Capital consists of three
78
<PAGE>
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 Capital, 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. Tier 3 capital includes subordinated debt that is unsecured, fully
paid, has an original maturity of at least two years, is not redeemable before
maturity without prior approval by the Federal Reserve and includes a lock-in
clause precluding payment of either interest or principal if the payment would
cause the issuing bank's risk-based capital ratio to fall or remain below the
required minimum. At December 31, 1998, the Corporation had no subordinated
debt that qualified as Tier 3 capital.
In accordance with the FRB's amendment to its capital adequacy guidelines
effective for periods beginning after December 31, 1997, the Corporation is now
required to include its broker/dealer subsidiaries, NationsBanc Montgomery
Securities and Robertson Stephens, when calculating regulatory capital ratios.
Previously, the Corporation had been required to exclude the equity, assets and
off-balance sheet exposures of its broker/dealer subsidiary.
To meet minimum adequately capitalized regulatory requirements, an
institution must maintain a Tier 1 Capital ratio of four percent and a Total
Capital ratio of eight percent. A well-capitalized institution must maintain a
Tier 1 Capital ratio of six percent and a Total Capital ratio of ten percent.
The risk-based capital rules have been further supplemented by a leverage
ratio, defined as Tier 1 capital divided by average total assets, after certain
adjustments. The leverage ratio guidelines establish a minimum of 100 to 200
basis points above three percent. Banking organizations must maintain a
leverage capital ratio of at least five percent to be classified as well
capitalized.
On September 12, 1996, the Agencies amended their regulatory capital
guidelines to incorporate a measure for market risk. In accordance with the
amended guidelines, the Corporation and any of its banking subsidiaries with
significant trading activity, as defined in the amendment, must incorporate a
measure for market risk in their regulatory capital calculations effective for
reporting periods after January 1, 1998. The revised guidelines have not had a
material impact on the Corporation or its subsidiaries' regulatory capital
ratios or their well-capitalized status.
The following table presents the actual capital ratios and amounts and
minimum required capital amounts for the Corporation, NationsBank, N.A. and
Bank of America NT&SA on December 31:
<TABLE>
<CAPTION>
1998 1997
----------------------------------- -----------------------------------
Actual Actual
--------------------- Minimum --------------------- Minimum
Ratio Amount Required (1) Ratio Amount Required (1)
---------- ---------- ------------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
(Dollars in Millions)
Tier 1 Capital
BankAmerica Corporation ......... 7.06% $36,849 $20,866 6.50% $13,593 $ 8,371
NationsBank, N.A. ............... 7.72 19,317 10,007 7.58 10,537 5,557
Bank of America NT&SA ........... 7.03 15,511 8,832 7.49 15,660 8,361
Total Capital
BankAmerica Corporation ......... 10.94 57,055 41,733 10.89 22,787 16,742
NationsBank, N.A. ............... 10.27 25,691 20,014 10.98 15,256 11,113
Bank of America NT&SA ........... 10.80 23,837 17,664 11.28 23,576 16,722
Leverage Capital
BankAmerica Corporation ......... 6.22 36,849 17,773 5.57 13,593 7,321
NationsBank, N.A. ............... 6.55 19,317 8,854 5.68 10,537 5,568
Bank of America NT&SA ........... 6.15 15,511 7,568 6.93 15,660 6,779
</TABLE>
(1) Dollar amount required to meet the Agencies guidelines for adequately
capitalized institutions.
79
<PAGE>
During 1998, several subsidiaries including NationsBank of Texas, N.A.,
NationsBank of Tennessee, N.A. and Barnett Banks, N.A., as well as various
other subsidiaries were merged with and into NationsBank, N.A. During 1997,
several subsidiaries including NationsBank, N.A. (South) and various
subsidiaries acquired in the purchase of Boatmen's were merged with and into
NationsBank, N.A.
The Corporation's and NationsBank, N.A.'s ratios and amounts for 1997 have
not been restated to reflect the impact of mergers. BankAmerica, Barnett and
their significant banking subsidiaries were considered "well capitalized" on
December 31, 1997 under the regulatory framework.
Note Thirteen - Employee Benefit Plans
Pension and Postretirement 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 and years of service. It is the policy
of the Corporation to fund not less than the minimum funding amount required by
ERISA. Individually, BankAmerica, Barnett Banks and NationsBank each sponsored
defined benefit pension plans prior to each of the respective mergers of these
banks. The BankAmerica plan was a cash balance design plan, providing
participants with an age, service and wage based crediting rate applied at each
pay period and a defined earnings rate on all participant account balances in
the plan. The NationsBank plan was amended to a cash balance plan effective
July 1, 1998 and provides a similar crediting rate for all participants. The
NationsBank plan allows participants to select from various earnings measures,
which are based on the returns of certain funds managed by subsidiaries of the
Corporation. The participant selected earnings measures determine the earnings
rate on the individual participant account balances in the plan. In addition, a
one time opportunity to transfer certain assets from the company's savings plan
to the cash balance plan was extended to NationsBank plan participants. Assets
with an approximate fair value of $1,423 million were transferred by plan
participants. The Barnett plan will be amended to merge into the NationsBank
plan in 1999, providing the cash balance plan design feature to those
participants. The opportunity to transfer certain savings plan assets to the
cash balance plan will be extended to Barnett participants in 1999. The
BankAmerica and NationsBank plans were merged effective December 31, 1998.
However, the participants in each plan will retain the cash balance plan design
followed by their predecessor plans until the plan is amended in 2000.
In addition to retirement pension benefits, substantially all employees
may become eligible for postretirement health care and life insurance benefits.
80
<PAGE>
The following tables summarize the balances and changes in fair value of
plan assets and benefit obligations as of and for the years ended December 31,
1998 and 1997:
<TABLE>
<CAPTION>
Postretirement
Pension Plan Health & Life Plan
----------------------- -------------------------
1998 1997 1998 1997
------------ ---------- ------------ ------------
(Dollars in Millions)
<S> <C> <C> <C> <C>
Change in Fair Value of Plan Assets (Primarily Listed Stocks,
Fixed Income and Real Estate)
Fair value on January 1 ......................................... $5,725 $4,927 $ 164 $ 137
Actual return on plan assets .................................... 890 770 24 23
Company contributions ........................................... -- -- 65 68
Plan participant contributions .................................. -- -- 28 17
Acquisition/transfer ............................................ 1,429 364 -- --
Benefits paid ................................................... (384) (336) (94) (81)
------ ------ ----- -----
Fair value on December 31 .................................... $7,660 $5,725 $ 187 $ 164
====== ====== ===== =====
(Dollars in Millions)
Change in Benefit Obligation
Benefit obligation on January 1 ................................. $4,692 $4,092 $ 930 $ 800
Service cost .................................................... 144 122 10 9
Interest cost ................................................... 371 320 61 62
Plan participant contributions .................................. -- -- 28 17
Plan amendments ................................................. 95 (125) 16 17
Actuarial loss (gain) ........................................... (66) 354 (67) 48
Acquisition/transfer ............................................ 1,539 265 -- 58
Effect of curtailments .......................................... (14) -- (2) --
Benefits paid ................................................... (384) (336) (94) (81)
------ ------ ------- -----
Benefit obligation on December 31 ............................ $6,377 $4,692 $ 882 $ 930
====== ====== ======= =====
(Dollars in Millions)
Funded Status
Overfunded (unfunded) status on December 31 ..................... $1,283 $1,033 $(695) $(766)
Unrecognized net actuarial loss (gain) .......................... (132) 303 (96) (29)
Unrecognized prior service cost (benefit) ....................... 108 (101) 13 (3)
Unrecognized transition obligation (asset) ...................... (9) (12) 473 507
-------- ------ ------- -------
Prepaid (accrued) benefit cost ............................... $1,250 $1,223 $(305) $(291)
======= ====== ======= =======
</TABLE>
The following are the weighted average discount rate, expected return on
plan assets and rate of increase in future compensation assumptions used in
determining the actuarial present value of the benefit obligation.
<TABLE>
<CAPTION>
Pension Plan Retiree Health & Life Plan
--------------------------- -----------------------------
1998 1997 1998 1997
---------- ---------------- ---------- ------------------
<S> <C> <C> <C> <C>
Weighted Average Assumptions on December 31
Discount rate ................................. 7.00% 6.50 to 7.50% 7.00% 6.50 to 7.50%
Expected return on plan assets ................ 10.00% 8.25 to 10.00% 10.00% 8.25 to 10.00%
Rate of compensation increase ................. 4.00% 4.00 to 6.50% 4.00% 4.00%
</TABLE>
81
<PAGE>
Net periodic pension benefit cost (income) for the years ended December 31,
included the following components:
<TABLE>
<CAPTION>
1998 1997 1996
(Dollars in Millions) ----------- ----------- -----------
<S> <C> <C> <C>
Components of Net Periodic Pension Benefit Cost (Income)
Service cost .............................................. $ 144 $ 122 $ 119
Interest cost ............................................. 371 320 278
Expected return on plan assets ............................ (552) (434) (372)
Amortization of transition asset .......................... (3) (3) (3)
Amortization of prior service cost ........................ (2) (10) (2)
Recognized net actuarial loss ............................. 16 16 25
Recognized gain due to settlements and curtailments ....... (2) -- --
-------- ------- -------
Net periodic pension benefit cost (income) .............. $ (28) $ 11 $ 45
======= ======= =======
</TABLE>
In addition to the trusteed pension plan, the Corporation sponsors a
number of unfunded executive pension plans. The total benefit obligation for
these plans as of December 31, 1998 and 1997 was $386 million and $342 million
respectively. The net periodic pension expense for these plans in 1998 and 1997
totaled $49 million and $46 million, respectively.
For the years ended December 31, net periodic postretirement benefit
expense included the following components:
<TABLE>
<CAPTION>
1998 1997 1996
(Dollars in Millions) ----------- ---------- ----------
<S> <C> <C> <C>
Components of Net Periodic Postretirement Benefit Cost
Service cost ............................................. $ 10 $ 9 $ 10
Interest cost ............................................ 61 62 57
Expected return on plan assets ........................... (14) (12) (13)
Amortization of transition obligation .................... 34 34 34
Amortization of prior service cost ....................... (1) (2) (2)
Recognized net actuarial loss (gain) ..................... (10) (4) 2
Recognized gain due to settlements and curtailments ...... (2) -- --
------- ------ ------
Net periodic postretirement benefit cost ................ $ 78 $ 87 $ 88
====== ====== ======
</TABLE>
Net periodic postretirement health and life expense was determined using
the "projected unit credit" actuarial method. Gains and losses for all benefits
except postretirement health care are recognized in accordance with the minimum
amortization provisions of the applicable accounting standards. For the
postretirement health care plans, 50 percent of the unrecognized gain or loss
at the beginning of the fiscal year (or at subsequent remeasurement) is
recognized on a level basis during the year.
Assumed health care cost trend rates affect the postretirement benefit
obligation and benefit cost reported for the health care plan. The assumed
health care cost trend rates for the next year used to measure the expected
cost of benefits covered for the postretirement health and life plans was 6
percent for pre-65 benefits and 4.5 percent for post 65 benefits. A one
percentage point increase in assumed health care cost trend rates would have
increased the service and interest costs and the benefit obligation by $6
million and $57 million, respectively. A one-percentage point decrease in
assumed health care cost trends would have lowered the service and interest
costs and the benefit obligation by $5 million and $49 million, respectively.
Defined Contribution Plans
The Corporation maintains several defined contribution savings and profit
sharing plans, two of which feature leveraged ESOP provisions. See Note Ten of
the consolidated financial statements on page 73 for additional information on
the two ESOP provisions.
ESOP Plans
The Corporation contributed approximately $47 million, $45 million and $39
million for 1998, 1997 and 1996, respectively, in cash which was utilized
primarily to purchase the Corporation's common stock under the terms of these
plans. The Corporation also contributed approximately $16 million, $23 million
and $25 million
82
<PAGE>
in common stock for 1998, 1997 and 1996, respectively, under the terms of the
Barnett ESOP. On December 31, 1998, an aggregate of 22,997,096 shares of the
Corporation's common stock and 1,937,730 shares of ESOP preferred stock were
held by the Corporation's various savings and profit sharing plans.
During 1998, the Corporation offered the plan participants a one-time
opportunity to transfer certain assets from the savings and profit sharing plan
to the cash balance retirement plan. Assets with an approximate fair value of
$1,423 million were transferred.
Under the terms of the ESOP Preferred Stock provision, payments to the
plan for dividends on the ESOP Preferred Stock were $6 million, $7 million and
$7 million for 1998, 1997 and 1996, respectively. Interest incurred to service
the debt of the ESOP Preferred Stock amounted to $1 million, $2 million and $3
million for 1998, 1997 and 1996, respectively.
The Corporation and the Barnett ESOP were combined effective January 1,
1999.
BankAmerica Plans
The Corporation maintains certain nonqualified defined contribution
retirement plans for certain employees of the former BankAmerica Corporation.
In addition, certain non-U.S. employees within the Corporation are covered
under defined contribution pension plans that are separately administered in
accordance with local laws.
Aggregate contributions for all former BankAmerica related defined
contribution plans were $175 million, $169 million and $175 million in 1998,
1997 and 1996, respectively. Certain employer and employee contributions to the
plans are used to purchase the Corporation's common stock at prices that
approximate market values. Contributions, including dividends, to the plans
were used to purchase 697,741 shares for $44 million in 1998, 598,958 shares
for $34 million in 1997 and 861,254 shares for $30 million in 1996. Sales by
the plans of the Corporation's common stock were 571,058 for $46 million in
1998, 528,829 shares for $32 million in 1997 and 657,625 shares for $26 million
in 1996. The plans held 33,186,515 shares, 34,252,005 shares and 35,460,291
shares of the Corporation's common stock at December 31, 1998, 1997 and 1996,
respectively.
Stock Option and Award Plans
At December 31, 1998, the Corporation had certain stock-based compensation
plans (the Plans) which are described below. The Corporation applies the
provisions of Accounting Principles Board Opinion No. 25 in accounting for its
stock option and award plans and has elected to provide SFAS 123 disclosures as
if the Corporation had adopted the fair-value based method of measuring
outstanding employee stock options in 1998, 1997 and 1996 as indicated below:
<TABLE>
<CAPTION>
As Reported Pro Forma
----------------------------------- -----------------------------------
1998 1997 1996 1998 1997 1996
(Dollars in Millions, Except Per-Share Data) ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net income .................................... $ 5,165 $ 6,542 $ 5,813 $ 4,838 $ 6,254 $ 5,688
Net income available to common shareholders ... 5,140 6,431 5,611 4,819 6,143 5,487
Earnings per share ............................ 2.97 3.71 3.42 2.78 3.54 3.35
Diluted earnings per share .................... 2.90 3.61 3.36 2.71 3.46 3.29
</TABLE>
In determining the pro forma disclosures above, the fair value of options
granted was estimated on the date of grant using the Black-Scholes
option-pricing model. The Black-Scholes model was developed to estimate the
fair value of traded options, which have different characteristics than
employee stock options, and changes to the subjective assumptions used in the
model can result in materially different fair value estimates. The weighted
average grant-date fair values of the options granted during 1998, 1997 and
1996 were based on the following assumptions:
83
<PAGE>
<TABLE>
<CAPTION>
Risk-Free Dividend
Interest Rates Yield
-------------------------------- --------------------------------
1998 1997 1996 1998 1997 1996
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1996 Associates Stock Option
Award Plan ......................... N/A 6.31% 6.44% N/A 3.50% 3.55%
Long-Term Incentive Plan ........... N/A 6.33 5.37 N/A 3.50 3.29
Key Employee Stock Option Plan ..... 5.64% 6.29 5.52 3.50% 3.50 3.55
BankAmerica Management Stock
Plan .............................. 5.48 6.23 5.95 2.62 2.96 3.23
BankAmerica PEP Plan ............... N/A 6.23 N/A N/A 2.96 N/A
BankAmerica Take Ownership!
Plan .............................. 5.58 6.23 5.95 1.83 2.96 3.23
Barnett 1997 Associates Stock
Option Award Plan ................. N/A 5.60 N/A N/A 3.50 N/A
<CAPTION>
Expected
Lives (Years) Volatility
-------------------- ---------------------------------
1998 1997 1996 1998 1997 1996
------ ------ ------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1996 Associates Stock Option
Award Plan ......................... N/A 3 4 N/A 21.4% 20.8%
Long-Term Incentive Plan ........... N/A 6 5 N/A 34.3 36.3
Key Employee Stock Option Plan ..... 7 7 7 22.94% 27.8 24.6
BankAmerica Management Stock
Plan .............................. 4 4 5 28.40 24.5 N/A
BankAmerica PEP Plan ............... N/A 7 N/A N/A 24.5 N/A
BankAmerica Take Ownership!
Plan .............................. 1 3 3 28.80 24.5 20.8
Barnett 1997 Associates Stock
Option Award Plan ................. N/A 1 N/A N/A 24.7 N/A
</TABLE>
Compensation expense under the fair-value based method is recognized over
the vesting period of the related stock options. Accordingly, the pro forma
results of applying SFAS 123 in 1998, 1997 and 1996 may not be indicative of
future amounts.
1996 Associates Stock Option Award Plan:
Under the 1996 Associates Stock Option Award Plan (ASOP), as amended, the
Corporation has granted to certain full- and part-time employees options to
purchase an aggregate of approximately 47 million shares of the Corporation's
common stock. All options granted under the ASOP are vested and expire on June
29, 2001. No further awards may be granted under this plan.
Key Employee Stock Plan:
The Key Employee Stock Plan (KEYSOP), as amended and restated, provides
for different types of awards including stock options, restricted stock and
performance shares. Under the KEYSOP, ten-year options to purchase
approximately 27.2 million shares of common stock have been granted through
December 31, 1998 to certain employees at the closing market price on the
respective grant dates. Options granted under the KEYSOP generally vest in
three or four equal annual installments. Additionally, 2.2 million shares of
restricted stock were granted during 1998. These shares generally vest in two
or three equal annual installments beginning one year from the grant date.
On January 4, 1999, ten-year options to purchase approximately 8.5 million
shares of common stock at $60.50 per share were granted to certain employees.
On February 1, 1999, ten-year options to purchase approximately 2 million
shares of common stock at $65.25 per share were granted to certain employees.
For both grants, options vest in three equal annual installments beginning one
year from the grant date. Additionally, on January 4, 1999, approximately 5.6
million shares of restricted stock were granted to certain former BankAmerica
executives in connection with their employment with the Corporation and
approximately 3.9 million shares of restricted stock were granted to certain
former NationsBank executives. These shares of restricted stock generally vest
in two or three equal annual installments beginning one year from the grant
date.
Take Ownership!:
On September 23, 1998, the Board of Directors of the Corporation approved
the Take Ownership! The BankAmerica Global Associate Stock Option Program (Take
Ownership!) which covers all employees below a specified executive grade level.
Under the plan, eligible employees will be eligible to receive an award of a
predetermined number of stock options entitling them to purchase shares of the
Corporation's common stock at the fair market value on the grant date. Options
will be granted on the first business day of 1999, 2000 and 2001 and will vest
25% on the first anniversary date of grant, 25% on the second anniversary date
of grant and 50% on the third anniversary date of grant. These options have a
term of five years after the grant date. On January 4, 1999, options to
purchase approximately 53.1 million shares of common stock at $60.50 per share
were granted under the plan.
BankAmerica Stock Plans:
In connection with the Merger, outstanding BankAmerica stock options were
converted into options to purchase the Corporation's common stock based on the
exchange ratio. BankAmerica offered stock awards under
84
<PAGE>
three plans: 1992 Management Stock Plan (the management stock plan),
Performance Equity Program (PEP) and Take Ownership!.
BankAmerica offered stock awards to certain key employees through options
or restricted stock under the management stock plan. Options awarded under the
management stock plan generally vest in three equal annual installments
beginning one year from the grant date and have a term of ten years after the
date of grant. On August 3, 1998, ten-year options to purchase approximately
5.6 million shares of common stock at $79.31 per share were granted to certain
employees. Additionally, on August 3, 1998, BankAmerica granted approximately
1.5 million shares of restricted stock to certain employees. These shares of
restricted stock generally vest in four equal annual installments beginning the
second year from the grant date.
Options awarded before August 5, 1991 to principal officers of BankAmerica
are subject to certain restrictions and also constitute stock appreciation
rights (SARs) equal to the number of shares covered by the options. These SARs
are exercisable for the difference between the option price and the current
market price of the stock at the time of exercise. The difference can be
received in cash or in shares. SARs, which are included in options for purposes
of this disclosure, are exercisable under the same terms as the related stock
options.
Effective May 22, 1997, BankAmerica adopted PEP under which BankAmerica
offers shares of the Corporation's common stock to certain key employees. Two
types of awards can be made under PEP: market price options and premium price
options. The market price options vest in three equal annual installments
beginning one year from the grant date and generally have a term of ten years
after the date the options are granted. The premium price options generally
vest and become exercisable not earlier than three years and not later than ten
years after the date the options are granted. Furthermore, the premium price
options only become exercisable when the Corporation's common stock price
increases significantly to specified threshold levels within given time frames.
Limited SARs may be awarded in conjunction with premium price options and
become exercisable upon a change in control. In connection with the BankAmerica
Merger, all options and SARs issued under PEP to persons who were employees as
of the Merger date vested.
Effective October 1, 1996, BankAmerica adopted The BankAmerica Global
Stock Option Program which covered substantially all of its employees. Options
awarded under this plan vest in three equal annual installments beginning one
year from the grant date and have a term of five years after the date of grant.
On May 19, 1998 options to purchase approximately 12.0 million shares of common
stock at $73.29 per share were granted under this plan.
On September 30, 1998, as a result of the Merger, substantially all of
BankAmerica's stock options and restricted stock granted prior to March 27,
1998 vested. Options and restricted stock granted subsequent to March 27, 1998
retain their original vesting terms. No further awards may be granted under the
BankAmerica stock plans.
Other Plans:
In connection with the Barnett merger on January 9, 1998, outstanding
Barnett stock options were converted into options to purchase the Corporation's
common stock based on the exchange ratio. Barnett has long-term incentive plans
that provide stock based awards, including stock options and time-based and
performance- based restricted stock to certain officers. All options are
granted at current market value for a term of ten years and, subject to limited
exceptions, are not exercisable before the third anniversary of the date of
grant. Time-based awards provide that restrictions lapse beginning on the third
anniversary of the date of the grant. Performance-based awards require that
specific performance criteria be met in order for restrictions to lapse. On
December 19, 1997, as a result of the shareholder approval of the Barnett
merger, all outstanding stock options and restricted stock vested in accordance
with change-in-control provisions.
Additional stock options assumed in connection with various acquisitions
remain outstanding and are included in the tables below. No further awards may
be granted under these plans.
85
<PAGE>
The following tables present the status of all plans on December 31, 1998,
1997 and 1996, and changes during the years then ended:
<TABLE>
<CAPTION>
1998 1997 1996
--------------------------- --------------------------- --------------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
(Option) (Option) (Option)
Employee Stock Options Shares Price Shares Price Shares Price
- -------------------------------- --------------- ----------- --------------- ----------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding on January 1 ....... 136,409,218 $ 44.08 106,432,319 $ 30.79 64,125,702 $ 21.84
Shares due to acquisitions ..... -- -- 6,688,329 21.99 1,098,580 17.26
Granted ........................ 25,744,102 72.10 76,963,367 58.42 62,227,398 39.92
Exercised ...................... (28,295,737) 33.62 (44,990,054) 33.34 (15,643,484) 17.12
Forfeited ...................... (7,392,082) 63.04 (8,684,743) 45.23 (5,375,877) 36.83
------------ -------------- --------------
Outstanding on December 31 ..... 126,465,501 51.01 136,409,218 44.18 106,432,319 32.30
============ =========== ============
Options exercisable on
December 31 ................... 99,530,313 46.02 63,927,295 30.90 31,983,859 19.14
============ =========== ============
Weighted-average fair value of
options granted during the
year .......................... $ 15.52 $ 9.35 $ 7.41
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996
--------------------------- -------------------------- -------------------------
Weighted- Weighted- Weighted-
Average Average Average
Restricted Stock Awards Grant Grant Grant
(include KEYSOP) Shares Price Shares Price Shares Price
- -------------------------------- --------------- ----------- -------------- ----------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding unvested grants
on January 1 ................. 5,180,012 $ 38.94 6,459,158 $ 24.68 8,087,399 $ 21.45
Granted ....................... 3,852,739 65.79 2,120,681 57.76 1,302,525 36.55
Vested ........................ (4,896,614) 41.07 (3,112,871) 22.76 (2,570,226) 20.84
Canceled ...................... (354,983) 56.94 (286,956) 32.43 (360,540) 22.51
---------- ------------- --------
Outstanding unvested grants
on December 31 ............... 3,781,154 $ 61.85 5,180,012 $ 38.94 6,459,158 $ 24.68
========== ======== ========== ======== ========== ========
</TABLE>
The following table summarizes information about stock options outstanding
on December 31, 1998:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------------------ ----------------------------------
Number Weighted-Average Number
Range of Outstanding Remaining Weighted-Average Exercisable Weighted-Average
Exercise Prices at December 31 Contractual Life Exercise Price at December 31 Exercise Price
- ----------------- ---------------- ------------------ ------------------ ---------------- -----------------
<S> <C> <C> <C> <C> <C>
$0.00 - $30.00 26,148,328 4.9 years $ 21.35 26,144,828 $ 21.35
$30.01 - $46.50 29,064,517 4.6 years 39.43 27,929,365 39.62
$46.51 - $65.50 44,844,862 5.7 years 59.38 36,907,316 59.24
$65.51 - $99.00 26,407,794 7.1 years 78.87 8,548,804 85.25
---------- -------- ---------- --------
Total 126,465,501 5.6 years $ 51.01 99,530,313 $ 46.02
=========== ======== ========== ========
</TABLE>
86
<PAGE>
Note Fourteen - Income Taxes
The components of income tax expense for the years ended December 31 were
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
(Dollars in Millions) ------------ ------------ ---------
<S> <C> <C> <C>
Current portion - expense
Federal ........................... $2,464 $2,267 $2,015
State ............................. 177 239 239
Foreign ........................... 342 537 279
------ ------ ------
2,983 3,043 2,533
------ ------ ------
Deferred portion - (benefit) expense
Federal ........................... (133) 840 834
State ............................. 40 132 127
Foreign ........................... (7) (1) 4
------ ------ ------
(100) 971 965
------ ------ ------
Total income tax expense ......... $2,883 $4,014 $3,498
====== ====== ======
</TABLE>
The preceding table does not reflect the tax effects of unrealized gains
and losses on securities available for sale and marketable securities that are
included in shareholders' equity and certain tax benefits associated with the
Corporation's employee stock plans. As a result of these tax effects,
shareholders' equity increased by $400 million, $161 million and $273 million
in 1998, 1997 and 1996, respectively. The Corporation's current income tax
expense approximates the amounts payable for those years. Deferred income tax
expense represents the change in the deferred tax asset or liability and is
discussed further below.
A reconciliation of the expected federal income tax expense using the
federal statutory rate of 35 percent to the actual income tax expense for each
of the years ended December 31 was as follows:
<TABLE>
<CAPTION>
1998 1997 1996
(Dollars in Millions) ---------- ---------- ----------
<S> <C> <C> <C>
Expected federal tax expense ........................ $ 2,817 $ 3,695 $ 3,259
Increase (decrease) in taxes resulting from
Tax-exempt income ................................. (81) (83) (68)
State tax expense, net of federal benefit ......... 155 287 282
Goodwill amortization ............................. 238 228 97
Reorganization of certain subsidiaries ............ (323) -- --
Other ............................................. 77 (113) (72)
------- ------- -------
Total income tax expense ......................... $ 2,883 $ 4,014 $ 3,498
======= ======= =======
</TABLE>
87
<PAGE>
Significant components of the Corporation's deferred tax (liabilities) assets
on December 31 were as follows:
<TABLE>
<CAPTION>
1998 1997
(Dollars in Millions) ------------ ------------
<S> <C> <C>
Deferred tax liabilities
Securities available for sale ......................... $ (227) $ (314)
Equipment lease financing ............................. (4,565) (3,633)
Depreciation .......................................... (340) (379)
Intangibles ........................................... (628) (741)
Employee retirement benefits .......................... (437) (189)
Loan fees and expenses ................................ (111) --
Deferred gains and losses ............................. (217) (167)
Securities valuation .................................. -- (292)
Other ................................................. (584) (646)
-------- --------
Gross deferred tax liabilities ....................... (7,109) (6,361)
-------- --------
Deferred tax assets
Employee benefits ..................................... 578 242
Net operating loss carryforwards ...................... 159 140
Allowance for credit losses ........................... 2,916 2,671
Foreclosed properties ................................. 70 30
Loan fees and expenses ................................ -- 12
General business credit carryforwards ................. 19 20
Accrued expenses ...................................... 729 286
Other ................................................. 529 620
-------- --------
Gross deferred tax assets ............................ 5,000 4,021
Valuation allowance .................................. (134) (87)
-------- --------
Gross deferred tax assets, net of valuation allowance 4,866 3,934
-------- --------
Net deferred tax liabilities ....................... $ (2,243) $ (2,427)
======== ========
</TABLE>
The Corporation's deferred tax assets on December 31, 1998 included a
valuation allowance of $134 million primarily representing net operating loss
carryforwards for which it is more likely than not that realization will not
occur. The net change in the valuation allowance for deferred tax assets was an
increase in net operating loss carryovers of foreign subsidiaries where
realization is not expected to occur. In the future, the recognition of
deferred tax assets subject to the valuation allowance may result in a
reduction to goodwill of up to $16 million.
At December 31, 1998, federal income taxes had not been provided on $380
million of undistributed earnings of foreign subsidiaries earned prior to 1987
and during 1998 that have been reinvested for an indefinite period of time. If
the undistributed earnings were distributed, credits for foreign taxes paid on
such earnings and for the related foreign withholding taxes payable upon
remittance would be available to offset $90 million of the $170 million
resulting tax expense.
Note Fifteen - 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. Since 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, the estimated 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.
88
<PAGE>
The provisions of SFAS 107 do not require the disclosure of nonfinancial
instruments, including intangible assets such as goodwill, franchise, credit
card and trust relationships and MSR. In addition, the disclosure of fair value
amounts does not include lease financing and factored accounts receivable.
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 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
Securities held for investment, securities available for sale, trading
account instruments, long-term debt and trust preferred securities traded
actively in the secondary market have been valued using quoted market prices.
The fair value of securities and trading account instruments is reported in
Notes Three and Four of the consolidated financial statements on pages 64 and
66.
Loans
Fair values were estimated for groups of similar loans based upon type of
loan, credit quality and maturity. The fair value of loans was determined by
discounting estimated cash flows using interest rates approximating the
Corporation's December 31 origination rates for similar loans. Where quoted
market prices were available, primarily for certain residential mortgage loans,
such market prices were utilized as estimates for fair values. Contractual cash
flows for residential mortgage loans were adjusted for estimated prepayments
using published industry data. Where credit deterioration has occurred,
estimated cash flows for fixed- and variable-rate loans have been reduced to
incorporate estimated losses.
The fair values of domestic commercial loans that do not reprice or mature
within relatively short time frames were estimated using discounted cash flow
models. The discount rates were based on current market interest rates for
similar types of loans, remaining maturities and credit ratings. For domestic
commercial loans that reprice within relatively short time frames, the carrying
values were assumed to approximate their fair values. Substantially all of the
foreign loans reprice within relatively short time frames. Accordingly, for the
majority of foreign loans, the carrying values were assumed to approximate
their fair values. For purposes of these fair value estimates, the fair values
of nonaccrual loans were computed by deducting an estimated market discount
from their carrying values to reflect the uncertainty of future cash flows. The
fair values of commitments to extend credit were not significant at either
December 31, 1998 or 1997.
Deposits
The fair value for deposits with stated maturities was calculated by
discounting contractual cash flows using current market rates for instruments
with similar maturities. For deposits with no stated maturities, the carrying
amount was considered to approximate fair value and does not take into account
the Corporation's long-term relationships with depositors.
The book and fair values of financial instruments for which book and fair
value differed on December 31 were:
<TABLE>
<CAPTION>
1998 1997
----------------------- -----------------------
Book Fair Book Fair
Value Value Value Value
(Dollars in Millions) ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Financial assets
Loans ...................................................... $337,303 $342,936 $328,314 $331,366
Financial liabilities
Deposits ................................................... 357,260 357,915 346,297 346,001
Trust preferred securities ................................. 4,954 5,244 4,578 4,783
Long-term debt (excluding obligations under capital leases). 45,767 47,135 42,754 43,419
</TABLE>
For all other financial instruments, book value approximates fair value.
89
<PAGE>
Off-Balance Sheet Financial Instruments
See Note Four of the consolidated financial statements on page 66 for
information on the Corporation's average fair values of derivative-dealer
assets and liabilities.
The fair value of the Corporation's ALM contracts is presented in the
Derivatives section of Note Eleven of the consolidated financial statements on
page 74 and the MSR section of Note One of the consolidated financial
statements on page 56.
Note Sixteen - Business Segment Information
On January 1, 1998, the Corporation adopted SFAS 131, "Disclosures about
Segments of an Enterprise and Related Information". Certain noncash disclosure
requirements, such as equity in the net income of investments accounted for by
the equity method and stock-based compensation expense, were not presented due
to their immateriality.
Management reports the results of operations of the Corporation through
four business segments: Consumer Banking, which provides comprehensive retail
banking services to individuals and small businesses through multiple delivery
channels; Commercial Banking, which provides a wide range of commercial banking
services for businesses with annual revenues of up to $500 million; Global
Corporate and Investment Banking, which provides a broad array of financial and
investment banking products such as capital-raising products, trade finance,
treasury management, capital markets and financial advisory services to
domestic and international corporations, financial institutions and government
entities; and Principal Investing and Wealth Management, which includes direct
equity investments in businesses and investments in general partnership funds
and the Private Bank which provides asset management, banking and trust
services for high net worth clients both in the U.S. and internationally.
90
<PAGE>
The following table includes revenues, net income and total assets for the
years ended December 31, 1998, 1997 and 1996 and as of December 31, 1998 and
1997 for each business segment (dollars in millions):
Business Segments
<TABLE>
<CAPTION>
Total Corporation Consumer Banking (2)
----------------------------------- -----------------------------------
1998 1997 1996 1998 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net interest income (1) ......... $ 18,461 $ 18,589 $ 17,082 $ 12,043 $ 12,445 $ 11,564
Noninterest income .............. 12,189 11,756 9,604 6,656 6,270 4,995
--------- --------- -------- --------- --------- --------
Total revenue .................. 30,650 30,345 26,686 18,699 18,715 16,559
Provision for credit
losses ......................... 2,920 1,904 1,645 1,252 1,558 1,605
Gains on sales of
securities ..................... 1,017 271 147 10 36 28
Amortization of
intangibles .................... 902 855 544 607 612 393
Depreciation expense ............ 1,096 1,107 989 670 676 652
Merger-related charges,
net ............................ 1,795 374 398 -- -- 122
Other noninterest
expense ........................ 16,743 15,663 13,818 9,856 10,116 8,997
--------- --------- -------- --------- --------- --------
Income before income
taxes ........................ 8,211 10,713 9,439 6,324 5,789 4,818
Income tax expense .............. 3,046 4,171 3,626 2,325 2,266 1,900
--------- --------- -------- --------- --------- --------
Net income ..................... $ 5,165 $ 6,542 $ 5,813 $ 3,999 $ 3,523 $ 2,918
========= ========= ======== ========= ========= ========
Period-end total assets ......... $ 617,679 $ 570,983 $ 269,458 $ 285,686
========= ========= ========= =========
<CAPTION>
Commercial Banking (2)
--------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Net interest income (1) ......... $ 2,006 $ 2,048 $ 1,792
Noninterest income .............. 699 568 480
-------- -------- -------
Total revenue .................. 2,705 2,616 2,272
Provision for credit
losses ......................... 76 (3) 48
Gains on sales of
securities ..................... 4 -- 3
Amortization of
intangibles .................... 99 100 47
Depreciation expense ............ 70 75 54
Merger-related charges,
net ............................ -- -- 7
Other noninterest
expense ........................ 1,150 1,025 944
-------- --------- -------
Income before income
taxes ........................ 1,314 1,419 1,175
Income tax expense .............. 439 558 446
-------- --------- -------
Net income ..................... $ 875 $ 861 $ 729
======== ========= =======
Period-end total assets ......... $ 67,366 $ 65,243
======== =========
</TABLE>
<TABLE>
<CAPTION>
Global Corporate and Principal Investing and
Investment Banking (2) Wealth Management (2)
------------------------------- --------------------------------
1998 1997 1996 1998 1997 1996
---------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net interest income (1) ......... $ 3,716 $ 3,425 $3,137 $ 451 $ 418 $ 325
Noninterest income .............. 2,849 3,083 2,455 1,928 1,935 1,728
-------- -------- ------- ------- ------- --------
Total revenue ................. 6,565 6,508 5,592 2,379 2,353 2,053
Provision for credit
losses ........................ 1,566 342 (24) 26 7 16
Gains (losses) on sales
of securities ................. (5) 10 -- -- 6 --
Amortization of
intangibles ................... 169 119 75 27 24 29
Depreciation expense ............ 291 303 208 65 53 75
Merger-related charges,
net ........................... -- -- 147 -- -- 4
Other noninterest
expense ....................... 4,219 3,145 2,779 1,500 1,367 1,103
-------- -------- -------- ------- ------- --------
Income before income
taxes ........................ 315 2,609 2,407 761 908 826
Income tax expense
(benefit) ..................... 71 977 870 264 348 306
-------- -------- -------- ------- ------- --------
Net income .................... $ 244 $ 1,632 $ 1,537 $ 497 $ 560 $ 520
======== ======== ======== ======= ======= ========
Period-end total assets ......... $248,264 $204,862 $22,246 $18,320
======== ======== ======= =======
<CAPTION>
Corporate Other
-----------------------------------
1998 1997 1996
---------- ------------ -----------
<S> <C> <C> <C>
Net interest income (1) ......... $ 245 $ 253 $ 264
Noninterest income .............. 57 (100) (54)
------- ---------- --------
Total revenue ................. 302 153 210
Provision for credit
losses ........................ -- -- --
Gains (losses) on sales
of securities ................. 1,008 219 116
Amortization of
intangibles ................... -- -- --
Depreciation expense ............ -- -- --
Merger-related charges,
net ........................... 1,795 374 118
Other noninterest
expense ....................... 18 10 (5)
------- ---------- ----------
Income before income
taxes ........................ (503) (12) 213
Income tax expense
(benefit) ..................... (53) 22 104
--------- ---------- ---------
Net income .................... $ (450) $ (34) $ 109
========= ========== =========
Period-end total assets ......... $ 10,345 $(3,128)
========= ==========
</TABLE>
(1) Net interest income is presented on a taxable-equivalent basis.
(2) There were no material intersegment revenues between the four business
segments.
91
<PAGE>
Following is a reconciliation of the business segments' revenue, net
income and total assets to the consolidated totals for the years ended December
31, 1998, 1997 and 1996 and as of December 31, 1998 and 1997 (dollars in
millions):
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------- -----------
<S> <C> <C> <C>
Segments' revenue ..................................... $ 30,348 $ 30,192 $ 26,476
Adjustments:
Earnings associated with unassigned capital ......... 245 253 264
Gains (losses) on sales of subsidiary companies ..... 57 -- --
Other ............................................... -- (100) (54)
--------- --------- --------
Consolidated revenue ............................... $ 30,650 $ 30,345 $ 26,686
========= ========= ========
Segments' net income .................................. $ 5,615 $ 6,576 $ 5,704
Adjustments, net of tax:
Earnings associated with unassigned capital ......... 157 158 168
Gains on sales of subsidiary companies .............. 37 -- --
Gains on sales of securities ........................ 649 140 75
Merger-related charges, net ......................... (1,325) (264) (246)
Other ............................................... 32 (68) 112
---------- ----------- ---------
Consolidated net income ............................ $ 5,165 $ 6,542 $ 5,813
========== =========== =========
Segments' total assets ................................ $ 607,333 $ 574,111
Adjustments:
Investment securities ............................... 63,301 54,181
Elimination of excess earning asset allocations ..... (43,462) (50,460)
Other, net .......................................... (9,493) (6,849)
----------- -----------
Consolidated total assets .......................... $ 617,679 $ 570,983
========== ===========
</TABLE>
The adjustments presented in the table above represent consolidated
income, expense and asset balances not specifically allocated to individual
business segments. In addition, reconciling items also include the effect of
earnings allocations not assigned to specific business segments, as well as the
related earning asset balances.
92
<PAGE>
Note Seventeen - BankAmerica Corporation (Parent Company)
The following tables present consolidated Parent Company financial
information:
Condensed Consolidated Statement of Income
(Dollars in Millions)
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------------
1998 1997 1996
--------- ---------- ----------
<S> <C> <C> <C>
Income
Dividends from consolidated
Subsidiary banks ................................... $4,795 $ 5,730 $ 4,274
Other subsidiaries ................................. 202 728 670
Interest from consolidated subsidiaries .............. 1,911 1,690 1,540
Other income ......................................... 709 647 753
------ ------- -------
7,617 8,795 7,237
------ ------- -------
Expenses
Interest on borrowed funds ........................... 2,805 2,529 2,146
Noninterest expense .................................. 835 632 625
------ ------- -------
3,640 3,161 2,771
------ ------- -------
Earnings
Income before equity in undistributed earnings of
consolidated subsidiaries and income taxes ......... 3,977 5,634 4,466
------ ------- -------
Equity in undistributed earnings of consolidated
Subsidiary banks ................................... 553 471 1,087
Other subsidiaries ................................. 174 106 92
------ ------- -------
727 577 1,179
------ ------- -------
Income before income taxes 4,704 6,211 5,645
Income tax benefit .................................... (461) (331) (168)
------ ------- -------
Net income ............................................ $5,165 $ 6,542 $ 5,813
====== ======= =======
Net income available to common shareholders ........... $5,140 $ 6,431 $ 5,611
====== ======= =======
</TABLE>
Condensed Consolidated Balance Sheet
(Dollars in Millions)
<TABLE>
<CAPTION>
December 31
--------------------
1998 1997
--------- ----------
<S> <C> <C>
Assets
Cash held at subsidiary banks ........................ $ 3,069 $ 2,518
Temporary investments ................................ 1,525 1,208
Receivables from consolidated
Subsidiary banks ................................... 10,456 11,309
Other subsidiaries ................................. 15,178 13,933
Investment in consolidated
Subsidiary banks ................................... 54,127 49,445
Other subsidiaries ................................. 5,108 4,243
Other assets ......................................... 4,190 3,117
------- --------
Total assets ....................................... $93,653 $ 85,773
======= ========
Liabilities and Shareholders' Equity
Commercial paper and other notes payable ............. $ 5,289 $ 3,563
Accrued expenses and other liabilities ............... 2,711 2,200
Payables to consolidated subsidiaries ................ 6,004 4,095
Long-term debt ....................................... 33,711 31,331
Shareholders' equity ................................. 45,938 44,584
------- --------
Total liabilities and shareholders' equity ......... $93,653 $ 85,773
======= ========
</TABLE>
93
<PAGE>
Condensed Consolidated Statement of Cash Flows
(Dollars in Millions)
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------------------
1998 1997 1996
----------- ------------ ------------
<S> <C> <C> <C>
Operating Activities
Net income .................................................................. $ 5,165 $ 6,542 $ 5,813
Reconciliation of net income to net cash provided by operating activities
Equity in undistributed earnings of consolidated subsidiaries .............. (653) (610) (1,232)
Other operating activities ................................................. (486) 247 563
-------- -------- --------
Net cash provided by operating activities ................................. 4,026 6,179 5,144
Investing Activities
Net decrease (increase) in temporary investments ............................ 632 4,037 (3,754)
Net increase in receivables from consolidated subsidiaries .................. (1,002) (2,814) (613)
Additional capital investment in subsidiaries ............................... (1,391) 60 (98)
Acquisitions of subsidiaries, net of cash ................................... (822) (194) (726)
Other investing activities .................................................. (747) 191 353
-------- -------- --------
Net cash (used in) provided by investing activities ....................... (3,330) 1,280 (4,838)
-------- -------- --------
Financing Activities
Net increase (decrease) in commercial paper and other notes payable ......... 1,726 (400) 616
Proceeds from issuance of long-term debt .................................... 7,283 4,887 8,804
Retirement of long-term debt ................................................ (4,533) (4,055) (4,423)
Proceeds from issuance of common stock ...................................... 1,367 1,892 573
Common stock repurchased .................................................... (1,751) (8,540) (3,193)
Cash dividends paid ......................................................... (2,604) (2,175) (1,888)
Other financing activities .................................................. (1,633) (1,519) 955
-------- ---------- --------
Net cash (used in) provided by financing activities ....................... (145) (9,910) 1,444
-------- ---------- --------
Net increase (decrease) in cash held at subsidiary banks ...................... 551 (2,451) 1,750
Cash held at subsidiary banks on January 1 .................................... 2,518 4,969 3,219
-------- -------- --------
Cash held at subsidiary banks on December 31 .............................. $ 3,069 $ 2,518 $ 4,969
======== ======== ========
</TABLE>
94
<PAGE>
Note Eighteen - Performance by Geographic Area
Since the Corporation's operations are highly integrated, certain asset,
liability, income and expense amounts must be allocated to arrive at total
assets and total revenues by geographic area. The Corporation identifies its
geographic performance based upon the business unit in which the assets are
recorded and where the income is earned and the expenses are incurred. In
certain circumstances, units may transact business with customers who are out
of their immediate geographic area. For example, a U.S. domiciled unit may have
made a loan to a borrower who resides in Latin America. In this instance, the
loan and related income would be included in domestic activities. Translation
losses, for those units in hyperinflationary economies, net of hedging, totaled
$12 million, $27 million, and $23 million in 1998, 1997 and 1996, respectively.
These amounts, which are reported in other noninterest income, are included in
the table below:
<TABLE>
<CAPTION>
Total
(Dollars in Millions) Year Total Assets (1) Revenues (2)
- -------------------------------------- ------ ------------------ -------------
<S> <C> <C> <C>
Domestic (3) 1998 $ 554,282 $29,605
1997 $ 513,163 $28,494
1996 $ 424,537 $24,804
--------- -------
Asia 1998 21,302 723
1997 25,411 885
1996 22,472 985
Europe, Middle East and Africa 1998 31,128 (75)
1997 26,037 454
1996 26,282 501
Latin America and the Caribbean 1998 10,967 234
1997 6,372 355
1996 4,411 268
--------- -------
Total Foreign 1998 63,397 882
1997 57,820 1,694
1996 53,165 1,754
--------- -------
Total Consolidated 1998 $ 617,679 $30,487
1997 $ 570,983 $30,188
1996 $ 477,702 $26,558
</TABLE>
(1) Total assets includes long-lived assets, primarily all of which were
located in the U.S.
(2) Total revenues includes net interest income plus noninterest income. There
were no material intercompany revenues between geographic regions for any
of the periods presented.
(3) Includes the Corporation's Canadian operations, which had total assets of
$1,365, $2,466 and $1,525 and total revenues of $48, $52 and $63 as of and
for the years ended December 31, 1998, 1997 and 1996, respectively.
95
<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 2
through 6 of the definitive 1999 Proxy Statement of the registrant furnished to
stockholders in connection with its Annual Meeting to be held on April 28, 1999
(the "1999 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 "Section 16(a) Beneficial Ownership Reporting Compliance" on
page 9 of the 1999 Proxy Statement with respect to Section 16 matters, is
hereby incorporated by reference. In addition, information set forth under the
caption "Special Compensation Arrangements - Employment Agreement with Mr.
Rice" and "Employment Agreements with Messrs. Lewis, Hance and Murray" on page
15 of the 1999 Proxy Statement is hereby incorporated by reference. Additional
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 1999 Proxy Statement (i) under the
caption "Board of Directors' Compensation" on page 10 thereof, (ii) under the
caption "Executive Compensation" on pages 11 through 13 thereof, (iii) under
the caption "Retirement Plans" on pages 13 and 14 thereof, (iv) under the
caption "Deferred Compensation Plan" on page 14 thereof, (v) under the caption
"Special Compensation Arrangements" on pages 14 and 15 thereof, (vi) under the
caption "Compensation Committee Interlocks and Insider Participation" on pages
18 and 19 thereof, and (vii) under the caption "Certain Transactions" on page
19 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 5 percent or more of the outstanding
shares of Common Stock, ESOP Preferred Stock or 7% Cumulative Redeemable
Preferred Stock, Series B, 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 7 through 9 of the 1999
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 percent 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
1999 Proxy Statement under the caption "Compensation Committee Interlocks and
Insider Participation" on pages 18 and 19 and under the caption "Certain
Transactions" on page 19 thereof, is, to the extent such information is
required by Item 404 of Regulation S-K, hereby incorporated by reference.
96
<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
-----
<S> <C> <C>
(1) Financial Statements:
Report of Independent Accountants .......................................................... 51
Consolidated Statement of Income for the years ended December 31, 1998, 1997 and 1996 ...... 52
Consolidated Balance Sheet at December 31, 1998 and 1997 ................................... 53
Consolidated Statement of Cash Flows for the years ended December 31, 1998, 1997 and
1996 ..................................................................................... 54
Consolidated Statement of Changes in Shareholders' Equity for the years ended
December 31, 1998, 1997 and 1996 ......................................................... 55
Notes To Consolidated Financial Statements ................................................. 56
(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, 1998:
Current Report on Form 8-K dated September 24, 1998 and filed October 9,
1998, Items 2, 5 and 7.
Current Report on Form 8-K dated October 14, 1998 and filed October 19,
1998, Items 5 and 7.
Current Report on Form 8-K dated September 30, 1998 and filed November 16,
1998, Items 5 and 7. The following supplemental consolidated financial
information of the registrant was filed as part of this Current Report on
Form 8-K:
Supplemental Consolidated Statement of Income for the years ended
December 31, 1997, 1996 and 1995;
Supplemental Consolidated Balance Sheet as of December 31, 1997 and
1996;
Supplemental Consolidated Statements of Cash Flows for the years
ended December 31, 1997, 1996 and 1995; and
Supplemental Consolidated Statements of Changes in Shareholders'
Equity for the years ended December 31, 1997, 1996 and 1995.
Current Report on Form 8-K dated November 16, 1998 and filed November 18,
1998, Items 5 and 7.
Current Report on Form 8-K dated and filed December 16, 1998, 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-6,
including executive compensation plans and arrangements which are
identified separately by asterisk).
With the exception of the information herein expressly incorporated by
reference, the 1999 Proxy Statement is not to be deemed filed as part of this
Annual Report on Form 10-K.
97
<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.
BANKAMERICA CORPORATION
Date: March 22, 1999
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
- --------------------------------------- ----------------------------------- ---------------
<S> <C> <C>
*/s/ HUGH L. MCCOLL, JR. Chairman of the Board, Chief March 22, 1999
---------------------------------- Executive Officer and Director
Hugh L. McColl, Jr. (Principal Executive Officer)
*/s/ JAMES H. HANCE, JR. Vice Chairman and Chief Financial March 22, 1999
---------------------------------- Officer (Principal Financial
James H. Hance, Jr. Officer)
*/s/ MARC D. OKEN Executive Vice President and March 22, 1999
---------------------------------- Principal Financial Executive
Marc D. Oken (Principal Accounting Officer)
*/s/ CHARLES W. COKER Director March 22, 1999
----------------------------------
Charles W. Coker
*/s/ TIMM F. CRULL Director March 22, 1999
----------------------------------
Timm F. Crull
*/s/ ALAN T. DICKSON Director March 22, 1999
----------------------------------
Alan T. Dickson
*/s/ KATHLEEN F. FELDSTEIN Director March 22, 1999
----------------------------------
Kathleen F. Feldstein
*/s/ PAUL FULTON Director March 22, 1999
----------------------------------
Paul Fulton
*/s/ DONALD E. GUINN Director March 22, 1999
----------------------------------
Donald E. Guinn
*/s/ C. RAY HOLMAN Director March 22, 1999
----------------------------------
C. Ray Holman
*/s/ W. W. JOHNSON Director March 22, 1999
----------------------------------
W. W. Johnson
</TABLE>
98
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
- -------------------------------------------- ---------- ---------------
<S> <C> <C>
*/s/ WALTER E. MASSEY Director March 22, 1999
----------------------------------
Walter E. Massey
*/s/ RICHARD M. ROSENBERG Director March 22, 1999
----------------------------------
Richard M. Rosenberg
*/s/ O. TEMPLE SLOAN, JR. Director March 22, 1999
----------------------------------
O. Temple Sloan, Jr.
*/s/ MEREDITH R. SPANGLER Director March 22, 1999
----------------------------------
Meredith R. Spangler
*/s/ A. MICHAEL SPENCE Director March 22, 1999
----------------------------------
A. Michael Spence
*/s/ RONALD TOWNSEND Director March 22, 1999
----------------------------------
Ronald Townsend
*/s/ SOLOMON D. TRUJILLO Director March 22, 1999
----------------------------------
Solomon D. Trujillo
*/s/ JACKIE M. WARD Director March 22, 1999
----------------------------------
Jackie M. Ward
*/s/ VIRGIL R. WILLIAMS Director March 22, 1999
----------------------------------
Virgil R. Williams
*/s/ SHIRLEY YOUNG Director March 22, 1999
----------------------------------
Shirley Young
*By:/s/ CHARLES M. BERGER
----------------------------------
Charles M. Berger, Attorney-in-Fact
</TABLE>
99
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ------------- --------------------------------------------------------------------------------
<S> <C>
3(a) Amended and Restated Certificate of Incorporation of registrant, as in effect
on the date hereof, incorporated by reference to Exhibit 3.1 of registrant's
Current Report on Form 8-K filed September 28, 1998.
(b) Amended and Restated Bylaws of registrant, as in effect on the date hereof,
incorporated by reference to Exhibit 3.2 of registrant's Current Report on
Form 8-K filed September 28, 1998.
4(a) Specimen certificate of registrant's Common Stock.
(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) Specimen certificate of registrant's 7% Cumulative Redeemable Preferred
Stock, Series B.
(d) Specimen certificate of registrant's $2.50 Cumulative Convertible Preferred
Stock, Series BB.
(e) 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; and First Supplemental Indenture
thereto dated as of September 18, 1998.
(f) 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; and First
Supplemental Indenture thereto dated as of August 28, 1998.
(g) Indenture dated as of January 1, 1992 between registrant and BankAmerica
Trust Company of New York, incorporated by reference to Exhibit 4.1 of
registrant's Registration No. 33-54784; and First Supplemental Indenture
thereto dated as of July 1, 1993 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; and its 5 3/8% Senior Notes, due 2000, incorporated by reference to
Exhibit 4.1 of registrant's Current Report on Form 8-K dated July 6, 1993; and
Second Supplemental Indenture thereto dated as of September 18, 1998.
(h) 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.
(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 Current Report on Form 8-K dated July 6, 1993; and Second
Supplemental Indenture thereto dated as of August 28, 1998.
(j) Indenture dated as of January 1, 1995 between registrant and BankAmerica
National Trust Company, pursuant to which registrant issued its 7% Senior
Notes, due 2003; its 7% Senior Notes, due 2001; its 5 3/4% Senior Notes, due
2001; its 6 3/8% Senior Notes, due 2005; its 6 1/8% Senior Notes, due 2004; and
its Senior Medium-Term Notes, Series D, E, F, G and H, incorporated by
reference to Exhibit 4.1 of registrant's Registration No. 33-57533; and First
Supplemental Indenture thereto dated as of September 18, 1998, incorporated
by reference to Exhibit 4.3 of registrant's Current Report on Form 8-K filed
November 18, 1998.
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ------------- --------------------------------------------------------------------------------
<S> <C>
(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; its 6 1/2% Subordinated Notes, due 2006; its 7.80%
Subordinated Notes, due 2016; its 6 3/8% Subordinated Notes, due 2008; its
6.80% Subordinated Notes, due 2028; its 6.60% Subordinated Notes, due 2010;
and its Subordinated Medium-Term Notes, Series D, E, F, G and H,
incorporated by reference to Exhibit 4.8 of registrant's Registration
No. 33-57533; and First Supplemental Indenture thereto dated as of
August 28, 1998, incorporated by reference to Exhibit 4.8 of registrant's
Current Report on Form 8-K filed November 18, 1998.
(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,
incorporated by reference to Exhibit 4(l) of registrant's Annual Report on
Form 10-K dated March 29, 1996 (the "1995 Form 10-K").
(m) Amended and Restated Agency Agreement dated as of November 16, 1998
between registrant and The Chase Manhattan Bank (London Branch),
pursuant to which registrant issued its Senior Euro Medium-Term Notes.
(n) Issuing and Paying Agency Agreement dated as of May 19, 1998 between
NationsBank, N.A., as Issuer, and Bankers Trust Company, as Issuing and
Paying Agent.
(o) Indenture dated as of November 27, 1996 between registrant and The Bank of
New York, incorporated by reference to Exhibit 4.10 of registrant's
Registration No. 333-15375.
(p) First Supplemental Indenture dated as of December 4, 1996 to the Indenture
dated as of November 27, 1996 between registrant and The Bank of New York
pursuant to which registrant issued its 7.84% Junior Subordinated Deferrable
Interest Notes due 2026, incorporated by reference to Exhibit 4.3 of
registrant's Current Report on Form 8-K dated November 27, 1996.
(q) Second Supplemental Indenture dated as of December 17, 1996 to the
Indenture dated as of November 27, 1996 between the registrant and The
Bank of New York pursuant to which registrant issued its 7.83% Junior
Subordinated Deferrable Interest Notes due 2026, incorporated by reference to
Exhibit 4.3 of registrant's Current Report on Form 8-K dated December 10,
1996.
(r) Third Supplemental Indenture dated as of February 3, 1997 to the Indenture
dated as of November 27, 1996 between registrant and The Bank of New York
pursuant to which registrant issued its Floating Rate Junior Subordinated
Deferrable Interest Notes due 2027, incorporated by reference to Exhibit 4.3 of
registrant's Current Report on Form 8-K dated January 22, 1997.
(s) Fourth Supplemental Indenture dated as of April 22, 1997 to the Indenture
dated as of November 27, 1996 between registrant and The Bank of New York
pursuant to which registrant issued its 8 1/4% Junior Subordinated Deferrable
Interest Notes, due 2027, incorporated by reference to Exhibit 4.3 of
registrant's Current Report on Form 8-K dated April 15, 1997.
(t) Fifth Supplemental Indenture dated as of August 28, 1998 to the Indenture
dated as of November 27, 1996 between registrant and The Bank of New York.
(u) Indenture dated as of November 27, 1996, between Barnett Banks, Inc. and
The First National Bank of Chicago, as Trustee, and First Supplemental
Indenture dated as of January 9, 1998, among registrant, NB Holdings
Corporation, Barnett Banks, Inc. and The First National Bank of Chicago, as
Trustee, pursuant to which registrant (as successor to Barnett Banks, Inc.)
issued its 8.06% Junior Subordinated Debentures, due 2026, incorporated by
reference to Exhibit 4(u) of registrant's Annual Report on Form 10-K dated
March 13, 1998 (the "1997 Form 10-K").
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ------------- ------------------------------------------------------------------------------
<S> <C>
(v) Indenture dated as of September 1, 1990 between the former BankAmerica
Corporation and Chase Manhattan Bank and Trust Company, N. A. (formerly
Manufacturers Hanover Trust Company of California), pursuant to which
registrant (as successor to the former BankAmerica Corporation) issued its
Subordinated Medium Term Notes, Series E; its 9.375% Subordinated Notes
due 2001; its 10.00% Subordinated Notes due 2003; its 9.625% Subordinated
Notes due 2001; its 9.50% Subordinated Notes due 2001; and its 9.20%
Subordinated Notes due 2003; and First Supplemental Indenture thereto
dated as of September 15, 1998.
(w) Indenture dated as of November 1, 1991 between the former BankAmerica
Corporation and Chase Manhattan Bank and Trust Company, N. A. (formerly
Manufacturers Hanover Trust Company of California), pursuant to which
registrant (as successor to the former BankAmerica Corporation) issued its
8.125% Subordinated Notes due 2002; its 7.75% Subordinated Notes due 2002;
its 8.375% Subordinated Notes due 2002; its 7.50% Subordinated Notes due
2002; its 7.20% Subordinated Notes due 2002; its 7.875% Subordinated Notes
due 2002; its 6.85% Subordinated Notes due 2003; its 6.875% Subordinated
Notes due 2003; its Floating Subordinated Notes due 2003; its 7.20%
Subordinated Notes due 2006; its 7.625% Subordinated Notes due 2004; its
8.125% Subordinated Notes due 2004; its 8.95% Subordinated Notes due 2004;
its 6.75% Subordinated Notes due 2005; its 6.20% Subordinated Notes due
2006; its 7.125% Subordinated Notes due 2006; its 6.625% Subordinated Notes
due 2007; its 6.625% Subordinated Notes due 2007; its 7.125% Subordinated
Notes due 2009; its 7.125% Subordinated Notes due 2011; and its 6.25%
Subordinated Notes due 2008; First Supplemental Indenture thereto dated as
of September 8, 1992; and Second Supplemental Indenture thereto dated as of
September 15, 1998.
(x) Indenture dated as of November 1, 1991 between the former BankAmerica
Corporation and U.S. Bank Trust, N. A. (successor to Bankers Trust Company
of California, National Association, and First Trust of California, National
Association), pursuant to which registrant (as successor to the former
BankAmerica Corporation) issued its Floating Rate Note due 1999; its 6.65%
Note due 2001; its 6.625% Note due 2001; and its Senior Medium-Term Notes,
Series H and I; First Supplemental Indenture thereto dated as of August 1,
1994; and Second Supplemental Indenture thereto dated as of September 30,
1998.
(y) Second Amended and Restated Agency Agreement dated as of November 15,
1996 between the former BankAmerica Corporation and First Trust of New
York, National Association, pursuant to which registrant (as successor to the
former BankAmerica Corporation) issued its Senior and Subordinated Euro
Medium-Term Notes; and Amendment thereto dated as of September 30, 1998.
(z) Junior Subordinated Indenture dated as of November 27, 1996 between the
former BankAmerica Corporation and Bankers Trust Company, pursuant to
which registrant (as successor to the former BankAmerica Corporation) issued
its 8.07% Series A Preferred Securities due 2026; and its 7.70% Series B
Preferred Securities due 2026; and First Supplemental Indenture thereto
dated as of September 15, 1998.
(aa) Junior Subordinated Indenture dated as of December 20, 1996 between the
former BankAmerica Corporation and Bankers Trust Company, pursuant to
which registrant (as successor to the former BankAmerica Corporation) issued
its 7.75% Trust Originated Preferred Securities, Series 1 due 2026; its 8.00%
Cumulative Semi-Annual Income Preferred Securities, Series 2 due 2026; its
Floating Rate Capital Securities, Series 3 due 2027; and its 7.00% Trust
Originated Preferred Securities, Series 4 due 2028; and First Supplemental
Indenture thereto dated as of September 15, 1998.
</TABLE>
E-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ------------- ---------------------------------------------------------------------------------
<S> <C> <C>
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.
10(a) 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; 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; and Amendment thereto
dated as of April 24, 1996, incorporated by reference to Exhibit 10(g) of
registrant's Annual Report on Form 10-K dated March 28, 1997 (the "1996
Form 10-K").
(b) 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;
Amendments thereto dated as of December 3, 1992 and 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; 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; Amendments
thereto dated March 27, 1996 and June 25, 1997, incorporated by reference to
Exhibit 10(c) of the 1997 Form 10-K; and Amendments thereto dated April 10,
1998, June 24, 1998 and October 1, 1998.
(c) 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; 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; and Amendments thereto dated April 10, 1998 and October 1,
1998 (filed as Exhibit 10(b) hereto).
(d) 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; Amendments thereto
dated as of December 3, 1992 and 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; Amendment thereto dated as of July 5, 1995,
incorporated by reference to Exhibit 10(l) of the 1995 Form 10-K; and
Amendments thereto dated April 10, 1998 and October 1, 1998 (filed as
Exhibit 10(b) hereto).
(e) 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.
</TABLE>
E-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ------------- -------------------------------------------------------------------------------
<S> <C> <C>
(f) 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, incorporated by
reference to Exhibit 10(o) of the 1995 Form 10-K.
(g) The NationsBank 401(k) Restoration Plan, as amended and restated effective *
April 1, 1998 and as further amended and restated effective July 1, 1998.
(h) Bank of America Executive Incentive Compensation Plan, as amended and *
restated effective April 1, 1998.
(i) Bank of America Director Deferral Plan, as amended and restated effective *
January 27, 1999.
(j) NationsBank Corporation Directors' Stock Plan, incorporated by reference to *
Exhibit 99.1 of registrant's Registration No. 333-02875.
(k) Amendment to Restricted Stock Award Plan Agreements with Hugh L. McColl, *
Jr. dated December 20, 1996, incorporated by reference to Exhibit 10(x) of the
1996 10-K.
(l) Agreement and Plan of Merger, by and between Barnett Banks, Inc. and
registrant, dated as of August 29, 1997, incorporated by reference to Exhibit
2.1 of registrant's Registration No. 333-40515; and Amendment thereto, dated
as of November 18, 1997, incorporated by reference to Exhibit 2.2 of
registrant's Registration No. 333-40515.
(m) Employment Agreement by and between registrant and Charles E. Rice dated *
October 10, 1997, incorporated by reference to Exhibit 10.1 of registrant's
Registration No. 333-40515.
(n) Barnett Banks, Inc. 1989 Long Term Incentive Plan, incorporated by reference *
to Exhibit 99.2 of Post-Effective Amendment No. 1 to registrant's Registration
No. 333-40515.
(o) Barnett Banks, Inc. Management Deferral Plan, as amended through January *
1, 1996.
(p) Barnett Banks, Inc. Trust Owned Life Insurance Trust for Management and *
Directors Deferral Plans, as adopted effective January 1, 1997.
(q) Barnett Banks, Inc. Trust Under Executive Benefit Plan, dated as of
December 5, 1996.
(r) Trust Agreement dated December 31, 1998 between BankAmerica Corporation *
and NationsBank, N.A.
(s) Bank of America Corporation Key Employee Stock Plan, as amended and *
restated effective September 24, 1998, incorporated by reference to Exhibit
10(a) of registrant's Quarterly Report on Form 10-Q dated November 16, 1998
(the "Third Quarter 1998 Form 10-Q").
(t) BankAmerica Corporation and Bank of America National Trust and Savings *
Association Deferred Compensation Plan for Directors, as amended and
restated, incorporated by reference to Exhibit 10(b) of the Third Quarter 1998
Form 10-Q.
(u) BankAmerica Deferred Compensation Plan as amended and restated, *
incorporated by reference to Exhibit 10(c) of the Third Quarter 1998 Form
10-Q.
(v) BankAmerica Corporation Senior Management Incentive Plan, as amended, *
incorporated by reference to Exhibit 10(d) of the Third Quarter 1998 Form
10-Q.
(w) BankAmerica Supplemental Retirement Plan, as amended and restated, *
incorporated by reference to Exhibit 10(e) of the Third Quarter 1998 Form
10-Q.
(x) BankAmerica Corporation Performance Equity Program, incorporated by *
reference to Exhibit 99.1 of Post-Effective Amendment No. 3 to registrant's
Registration No. 333-60553.
(y) BankAmerica Corporation 1992 Management Stock Plan, incorporated by *
reference to Exhibit 99.2 of Post-Effective Amendment No. 3 to registrant's
Registration No. 333-60553.
</TABLE>
E-5
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ------------- -------------------------------------------------------------------------------
<S> <C> <C>
(z) BankAmerica Corporation 1987 Management Stock Plan, incorporated by *
reference to Exhibit 99.3 of Post-Effective Amendment No. 3 to registrant's
Registration No. 333-60553.
(aa) Continental Bank Corporation 1991 Equity Performance Incentive Plan, *
incorporated by reference to Exhibit 99.5 of Post-Effective Amendment No. 3
to registrant's Registration No. 333-60553.
(bb) Continental Bank Corporation 1982 Performance Restricted Stock and Stock *
Option Plan, incorporated by reference to Exhibit 99.1 of Post-Effective
Amendment No. 4 to registrant's Registration No. 333-60553.
(cc) Split Dollar Life Insurance Agreement dated as of October 15, 1998 between *
the registrant and NationsBank, N. A., as Trustee under that certain
Irrevocable Trust Agreement dated October 2, 1998, by and between Hugh L.
McColl, Jr., as Grantor, and NationsBank, N. A., as Trustee.
(dd) Split Dollar Life Insurance Agreement dated as of October 16, 1998 between *
the registrant and NationsBank, N. A., as Trustee under that certain
Irrevocable Trust Agreement No. 2 dated October 1, 1998, by and between
James H. Hance, Jr., as Grantor, and NationsBank, N. A., as Trustee.
(ee) Split Dollar Life Insurance Agreement dated as of September 28, 1998 between *
the registrant and J. Steele Alphin, as Trustee under that certain Irrevocable
Trust Agreement dated June 23, 1998, by and between Kenneth D. Lewis, as
Grantor, and J. Steele Alphin, as Trustee.
(ff) Employment Agreement dated as of April 10, 1998 between the registrant and *
James H. Hance, Jr., incorporated by reference to Exhibit 10.4 of registrant's
Registration No. 333-60553.
(gg) Employment Agreement dated as of April 10, 1998 between the registrant and *
Kenneth D. Lewis, incorporated by reference to Exhibit 10.5 of registrant's
Registration No. 333-60553.
(hh) Employment Agreement dated as of April 10, 1998 between the registrant and *
Michael J. Murray, incorporated by reference to Exhibit 10.2 of registrant's
Registration No. 333-60553.
(ii) Agreement and Plan of Reorganization by and between registrant and the
former BankAmerica Corporation, dated as of April 10, 1998, incorporated by
reference to Exhibit 2.1 of registrant's Registration No. 333-60553.
(jj) Plan of Reincorporation Merger by and between registrant and NationsBank
(DE) Corporation, dated as of August 3, 1998, incorporated by reference to
Exhibit 2.2 of registrant's Registration No. 333-60553.
11 Earnings per share computation.
12 (a) Ratio of Earnings to Fixed Charges.
(b) Ratio of Earnings to Fixed Charges and Preferred Dividends.
21 List of Subsidiaries.
23 Consent of PricewaterhouseCoopers LLP.
24 (a) Power of Attorney.
(b) Corporate Resolution.
27 Financial Data Schedule.
</TABLE>
- ---------
* Denotes executive compensation plan or arrangement.
E-6
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
<PAGE>
EXHIBIT 4A
[FACE OF SPECIMEN CERTIFICATE]
COMMON STOCK COMMON STOCK
NUMBER SHARES
BA
PAR VALUE $.01 PER SHARE PAR VALUE $.01 PER SHARE
THIS CERTIFICATE IS TRANSFERABLE
IN NEW YORK, N.Y. AND RIDGEFIELD PARK, N.J. CUSIP 06605F 10 2
BANKAMERICA CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES THAT
SEE REVERSE FOR
CERTAIN DEFINITIONS
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
BankAmerica Corporation transferable in person or by duly authorized attorney
upon surrender of this certificate properly endorsed. This certificate and the
shares represented hereby are subject to the provisions of the Certificate of
Incorporation, all amendments thereto, and the By-Laws of the Corporation, and
to the rights, preferences and voting powers of the Preferred Stock of the
Corporation now or hereafter outstanding; the terms of all such provisions,
rights, preferences and voting powers being incorporated herein by reference.
This certificate is not valid until countersigned by the Transfer Agent and
registered by the Registrar.
Witness the facsimile seal and the facsimile signatures of the duly
authorized officers of the Corporation.
Dated:
COUNTERSIGNED AND REGISTERED:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT
BY AND REGISTRAR
AUTHORIZED OFFICER SECRETARY CHIEF EXECUTIVE OFFICER
[CORPORATE SEAL]
<PAGE>
[REVERSE OF SPECIMEN CERTIFICATE]
BankAmerica Corporation
BANKAMERICA CORPORATION'S AUTHORIZED CAPITAL STOCK INCLUDES PREFERRED
STOCKS WHICH, WHEN ISSUED, SHALL HAVE CERTAIN PREFERENCES OR SPECIAL RIGHTS IN
THE PAYMENT OF DIVIDENDS, IN VOTING, UPON LIQUIDATION, OR OTHERWISE. THE
CORPORATION WILL, UPON REQUEST, FURNISH TO ANY SHAREHOLDER WITHOUT CHARGE
INFORMATION IN WRITING AS TO THE NUMBER OF SUCH SHARES OF EACH CLASS OR SERIES
OF SUCH PREFFERED STOCKS AUTHORIZED AND OUTSTANDING AND A COPY OF THE PORTIONS
OF THE CERTIFICATE OF INCORPORATION OR RESOLUTIONS CONTAINING THE DESIGNATIONS,
PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF ALL SHARES AND ANY CLASS OR
SERIES THEREOF. ANY SUCH REQUEST IS TO BE ADDRESSED TO THE TRANSFER AGENT NAMED
ON THE FACE OF THIS CERTIFICATE.
---------------------
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN OR
DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
---------------------
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C>
TEN COM -as tenants in common UNIF GIFT MIN ACT-______CUSTODIAN_______
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
JT TEN - as joint tenants, with right of Act_________________________
survivorship and not as tenants (State)
in common
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, _______________________ hereby sell, assign
and transfer unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
______________________________________________________________________ shares of
the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
_______________________________________________________ Attorney to transfer the
said stock on the books of the within named Corporation with full power of
substitution in the premises.
Dated _______________________________
Signature _________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.
<TABLE>
<CAPTION>
<S> <C>
SIGNATURE(S) GUARANTEED: _______________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE
17Ad-15.
</TABLE>
EXHIBIT 4C
[FACE OF SPECIMEN CERTIFICATE]
7% CUMULATIVE REDEEMABLE 7% CUMULATIVE REDEEMABLE
PREFERRED STOCK, SERIES B PREFERRED STOCK, SERIES B
NUMBER SHARES
PB
NationsBank Corporation
SEE REVERSE SIDE FOR CERTAIN DEFINITIONS
CUSIP 06605F 20 1
INCORPORATED UNDER THE LAWS OF THE STATE OF NORTH CAROLINA
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE STATED VALUE OF ONE HUNDRED DOLLARS
EACH OF THE 7% CUMULATIVE REDEEMABLE PREFERRED STOCK, SERIES B OF
NationsBank Corporation transferable only on the Books of the Corporation in
conformity with the Bylaws in person or by Attorney on the surrender of this
certificate. This certificate is not valid until countersigned by the Transfer
Agent.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated: NAME CHANGED TO BANKAMERICA CORPORATION
STATE OF INCORPORATION CHANGED TO DELAWARE
SECRETARY CHIEF EXECUTIVE OFFICER
[CORPORATE SEAL]
COUNTERSIGNED:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT
BY
AUTHORIZED SIGNATURE
<PAGE>
[REVERSE OF SPECIMEN CERTIFICATE]
NationsBank Corporation
NATIONSBANK CORPORATION'S AUTHORIZED CAPITAL STOCK INCLUDES COMMON STOCK
AND ADDITIONAL SERIES OF PREFERRED STOCK WHICH, WHEN ISSUED, MAY HAVE CERTAIN
PREFERENCES OR SPECIAL RIGHTS IN THE PAYMENT OF DIVIDENDS, IN VOTING, UPON
LIQUIDATION, OR OTHERWISE. THE CORPORATION WILL, UPON REQUEST, FURNISH TO ANY
SHAREHOLDER WITHOUT CHARGE INFORMATION IN WRITING AS TO EACH CLASS OR SERIES OF
SUCH COMMON AND PREFERRED STOCK AUTHORIZED AND OUTSTANDING AND A COPY OF THE
PORTIONS OF THE RESTATED ARTICLES OF INCORPORATION OR RESOLUTIONS CONTAINING THE
DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF ALL SHARES AND ANY
CLASS OR SERIES THEREOF. ANY SUCH REQUEST IS TO BE ADDRESSED TO THE TRANSFER
AGENT NAMED ON THE FACE OF THIS CERTIFICATE.
-----------------------
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN OR
DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
-----------------------
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C>
TEN COM -as tenants in common UNIF GIFT MIN ACT-______CUSTODIAN________
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
JT TEN - as joint tenants, with right of Act________________________
survivorship and not as tenants (State)
in common
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, ____________________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
______________________________________________________________________ shares of
the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
_______________________________________________________ Attorney to transfer the
said stock on the books of the within named Corporation with full power of
substitution in the premises.
Dated ___________________________
Signature __________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.
<TABLE>
<CAPTION>
<S> <C>
SIGNATURE(S) GUARANTEED: _______________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND
CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
</TABLE>
EXHIBIT 4d
[FACE OF SPECIMEN CERTIFICATE]
$2.50 CUMULATIVE CONVERTIBLE $2.50 CUMULATIVE CONVERTIBLE
PREFERRED STOCK, SERIES BB PREFERRED STOCK, SERIES BB
NUMBER SHARES
PBB
NationsBank Corporation
SEE REVERSE SIDE FOR CERTAIN DEFINITIONS
CUSIP 06605F 30 0
INCORPORATED UNDER THE LAWS OF THE STATE OF NORTH CAROLINA
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF $2.50 CUMULATIVE CONVERTIBLE PREFERRED
STOCK, SERIES BB OF
NationsBank Corporation transferable on the books of the Corporation by the
holder hereof in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This Certificate is not valid until countersigned
by the Transfer Agent and registered by the Registrar.
NAME CHANGED TO BANKAMERICA
CORPORATION
STATE OF INCORPORATION CHANGED
TO DELAWARE
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
SECRETARY CHIEF EXECUTIVE OFFICER
[CORPORATE SEAL]
COUNTERSIGNED AND REGISTERED:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT AND REGISTRAR
BY:
AUTHORIZED SIGNATURE
<PAGE>
[REVERSE OF SPECIMEN CERTIFICATE]
NationsBank Corporation
NATIONSBANK CORPORATION'S AUTHORIZED CAPITAL STOCK INCLUDES COMMON STOCK
AND ADDITIONAL SERIES OF PREFERRED STOCK WHICH, WHEN ISSUED, MAY HAVE CERTAIN
PREFERENCES OR SPECIAL RIGHTS IN THE PAYMENT OF DIVIDENDS, IN VOTING, UPON
LIQUIDATION, OR OTHERWISE. THE CORPORATION WILL, UPON REQUEST, FURNISH TO ANY
SHAREHOLDER WITHOUT CHARGE INFORMATION IN WRITING AS TO EACH CLASS OR SERIES OF
SUCH COMMON AND PREFERRED STOCK AUTHORIZED AND OUTSTANDING AND A COPY OF THE
PORTIONS OF THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OR RESOLUTIONS
CONTAINING THE DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF ALL
SHARES AND ANY CLASS OR SERIES THEREOF. ANY SUCH REQUEST IS TO BE ADDRESSED TO
THE TRANSFER AGENT NAMED ON THE FACE OF THIS CERTIFICATE.
-------------------
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN OR
DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
--------------------
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C>
TEN COM -as tenants in common UNIF GIFT MIN ACT-____CUSTODIAN___
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
JT TEN - as joint tenants, with right of Act___________________________
survivorship and not as tenants (State)
in common
Additional abbreviations may also be used though not in the above list.
For value received, _____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
</TABLE>
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
shares of the capital stock represented by the within Certificate, and do
hereby irrevocably constitute and appoint
______________________________________________________ Attorney to transfer the
said stock on the books of the within named Corporation with full power of
substitution in the premises.
Dated ______________________
Signature _____________________________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME
AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE GUARANTEE:
___________________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT
TO RULE 17Ad-15 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
-----------------------------------------------------
NationsBank Corporation
NationsBank (DE) Corporation
-----------------------------------------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of September 18, 1998
Supplementing the Indenture, dated
as of August 1, 1982, between
NationsBank Corporation
(formerly known as NCNB Corporation) and
Morgan Guaranty Trust Company of New York, as Trustee
-----------------------------------------------------
U.S. Bank Trust National Association, as successor to
Morgan Guaranty Trust Company of New York,
Trustee
-----------------------------------------------------
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of September 18, 1998 (the "First
Supplemental Indenture"), among NationsBank Corporation, a North Carolina
Corporation (formerly known as NCNB Corporation) ("NationsBank"), NationsBank
(DE) Corporation, a Delaware corporation ("NationsBank (DE)") and a direct
wholly owned subsidiary of NationsBank, and U.S. Bank Trust National
Association, a national banking association, successor to Morgan Guaranty Trust
Company of New York, as Trustee (the "Trustee") under the Indenture referred to
herein;
WHEREAS, NationsBank and the Trustee heretofore executed and delivered an
Indenture, dated as of August 1, 1982 (the "Indenture"); and
WHEREAS, pursuant to the Indenture, NationsBank issued and the Trustee
authenticated and delivered one or more series of NationsBank's Notes (the
"Securities"); and
WHEREAS, NationsBank and BankAmerica Corporation, a Delaware corporation
("BankAmerica"), have entered into the Agreement and Plan of Reorganization,
dated as of April 10, 1998, pursuant to which (i) NationsBank will merge (the
"Reincorporation Merger") with and into NationsBank (DE), in accordance with the
terms and conditions of the Plan of Reincorporation Merger by and between
NationsBank and NationsBank (DE), dated as of August 3, 1998, with NationsBank
(DE) as the surviving corporation in the Reincorporation Merger, and (ii)
BankAmerica will thereafter merge (the "Merger," and together with the
Reincorporation Merger, the "Reorganization") with and into NationsBank (DE),
with NationsBank (DE) as the surviving corporation in the Merger; and
WHEREAS, the Reorganization is expected to be consummated on September 30,
1998; and
WHEREAS, Section 10.01 of the Indenture provides that in the case of the
Reorganization, NationsBank (DE) shall expressly assume by supplemental
indenture all the obligations under the Securities and the Indenture on the part
of NationsBank to be performed or observed; and
WHEREAS, Section 9.01(1) of the Indenture provides that NationsBank and the
Trustee may amend the Indenture and the Securities without notice to or consent
of any holders of the Securities in order to comply with Article Ten of the
Indenture; and
WHEREAS, this First Supplemental Indenture has been duly authorized by all
necessary corporate action on the part of each of NationsBank (DE) and
NationsBank.
-2-
<PAGE>
NOW, THEREFORE, NationsBank (DE), NationsBank and the Trustee agree as
follows for the equal and ratable benefit of the holders of the Securities:
ARTICLE I
ASSUMPTION BY SUCCESSOR CORPORATION
SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby
expressly assumes the due and punctual payment of the principal of (and premium,
if any, on) and any interest on all the Securities, according to their tenor,
and the due and punctual performance and observance of all of the covenants and
conditions of the Indenture to be performed by NationsBank.
SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this First
Supplemental Indenture and agrees to perform the same under the terms and
conditions set forth in the Indenture.
ARTICLE II
MISCELLANEOUS
SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur of
(i) the execution and delivery of this First Supplemental Indenture by
NationsBank (DE), NationsBank and the Trustee and (ii) the consummation of the
Reincorporation Merger, the Indenture shall be supplemented in accordance
herewith, and this First Supplemental Indenture shall form a part of the
Indenture for all purposes, and every holder of Securities heretofore or
hereafter authenticated and delivered under the Indenture shall be bound
thereby.
SECTION 2.2. Indenture Remains in Full Force and Effect. Except as
supplemented hereby, all provisions in the Indenture shall remain in full force
and effect.
SECTION 2.3. Indenture and Supplemental Indenture Construed Together. This
First Supplemental Indenture is an indenture supplemental to and in
implementation of the Indenture, and the Indenture and this First Supplemental
Indenture shall henceforth be read and construed together.
SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture as
supplemented by this First Supplemental Indenture is in all respects confirmed
and preserved.
SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this
First Supplemental Indenture limits, qualifies or conflicts with any
-3-
<PAGE>
provision of the Trust Indenture Act ("TIA") that is required under the TIA to
be part of and govern any provision of this First Supplemental Indenture, the
provision of the TIA shall control. If any provision of this First Supplemental
Indenture modifies or excludes any provision of the TIA that may be so modified
or excluded, the provision of the TIA shall be deemed to apply to the Indenture
as so modified or to be excluded by this First Supplemental Indenture, as the
case may be.
SECTION 2.6. Severability. In case any provision in this First Supplemental
Indenture shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Indenture.
SECTION 2.8. Headings. The Article and Section headings of this First
Supplemental Indenture have been inserted for convenience of reference only, are
not to be considered part of this Supplemental Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 2.9. Benefits of First Supplemental Indenture, etc. Nothing in this
First Supplemental Indenture or the Securities, express or implied, shall give
to any Person, other than the parties hereto and thereto and their successors
hereunder and thereunder and the holders of the Securities, any benefit of any
legal or equitable right, remedy or claim under the Indenture, this First
Supplemental Indenture or the Securities.
SECTION 2.10. Successors. All agreements of NationsBank (DE) in this First
Supplemental Indenture shall bind its successors. All agreements of the Trustee
in this First Supplemental Indenture shall bind its successors.
SECTION 2.11. Trustee Not Responsible for Recitals. The recitals contained
herein shall be taken as the statements of NationsBank and NationsBank (DE), and
the Trustee assumes no responsibility for their correctness. The Trustee makes
no representations as to, and shall not be responsible for, the validity or
sufficiency of this First Supplemental Indenture.
SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In
entering into this First Supplemental Indenture, the Trustee shall be entitled
to the benefit of every provision of the Indenture relating to
-4-
<PAGE>
the conduct or affecting the liability or affording protection to the Trustee,
whether or not elsewhere herein so provided.
SECTION 2.13. Governing Law. This First Supplemental Indenture shall be
governed by, and construed in accordance with, the laws of the State of New York
but without giving effect to applicable principles of conflicts of law to the
extent that the application of the laws of another jurisdiction would be
required thereby.
SECTION 2.14. Counterpart originals. The parties may sign any number of
copies of this First Supplemental Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this First Supplemental
Indenture to be duly executed as of the date first written above.
NationsBank (DE) Corporation
By: /s/ John E. Mack
-------------------------------------------
Name: John E. Mack
Title: Senior Vice President
NationsBank Corporation (formerly
known as NCNB Corporation)
By: /s/ John E. Mack
-------------------------------------------
Name: John E. Mack
Title: Senior Vice President
U.S. Bank Trust National Association, as Trustee
By: /s/ Catherine F. Donohue
-------------------------------------------
Name: Catherine F. Donohue
Title: Vice President
-6-
----------------------------------------
NationsBank Corporation
NationsBank (DE) Corporation
----------------------------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of August 28, 1998
Supplementing the Indenture, dated
as of September 1, 1989, between
NationsBank Corporation
(formerly known as NCNB Corporation) and
The Bank of New York, as Trustee
----------------------------------------
The Bank of New York,
Trustee
----------------------------------------
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of August 28, 1998 (the "First
Supplemental Indenture"), among NationsBank Corporation, a North Carolina
Corporation (formerly known as NCNB Corporation) ("NationsBank"), NationsBank
(DE) Corporation, a Delaware corporation ("NationsBank (DE)") and a direct
wholly owned subsidiary of NationsBank, and The Bank of New York, a New York
banking corporation, as Trustee (the "Trustee") under the Indenture referred to
herein;
WHEREAS, NationsBank and the Trustee heretofore executed and delivered an
Indenture, dated as of September 1, 1989 (the "Indenture"); and
WHEREAS, pursuant to the Indenture, NationsBank issued and the Trustee
authenticated and delivered one or more series of NationsBank's Notes (the
"Securities"); and
WHEREAS, NationsBank and BankAmerica Corporation, a Delaware corporation
("BankAmerica"), have entered into the Agreement and Plan of Reorganization,
dated as of April 10, 1998, pursuant to which (i) NationsBank will merge (the
"Reincorporation Merger") with and into NationsBank (DE), in accordance with the
terms and conditions of the Plan of Reincorporation Merger by and between
NationsBank and NationsBank (DE), dated as of August 3, 1998, with NationsBank
(DE) as the surviving corporation in the Reincorporation Merger, and (ii)
BankAmerica will thereafter merge (the "Merger," and together with the
Reincorporation Merger, the "Reorganization") with and into NationsBank (DE),
with NationsBank (DE) as the surviving corporation in the Merger; and
WHEREAS, the Reorganization is expected to be consummated on September 30,
1998; and
WHEREAS, Section 11.01 of the Indenture provides that in the case of the
Reorganization, NationsBank (DE) shall expressly assume by supplemental
indenture all the obligations under the Securities and the Indenture on the part
of NationsBank to be performed or observed; and
WHEREAS, Section 10.01(a) of the Indenture provides that NationsBank and
the Trustee may amend the Indenture and the Securities without notice to or
consent of any holders of the Securities in order to comply with Article Eleven
of the Indenture; and
WHEREAS, this First Supplemental Indenture has been duly authorized by all
necessary corporate action on the part of each of NationsBank (DE) and
NationsBank.
-2-
<PAGE>
NOW, THEREFORE, NationsBank (DE), NationsBank and the Trustee agree as
follows for the equal and ratable benefit of the holders of the Securities:
ARTICLE I
ASSUMPTION BY SUCCESSOR CORPORATION
SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby
expressly assumes the due and punctual payment of the principal of (and premium,
if any, on) and any interest on all the Securities, according to their tenor,
and the due and punctual performance and observance of all of the covenants and
conditions of the Indenture to be performed by NationsBank.
SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this First
Supplemental Indenture and agrees to perform the same under the terms and
conditions set forth in the Indenture.
ARTICLE II
MISCELLANEOUS
SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur of
(i) the execution and delivery of this First Supplemental Indenture by
NationsBank (DE), NationsBank and the Trustee and (ii) the consummation of the
Reincorporation Merger, the Indenture shall be supplemented in accordance
herewith, and this First Supplemental Indenture shall form a part of the
Indenture for all purposes, and every holder of Securities heretofore or
hereafter authenticated and delivered under the Indenture shall be bound
thereby.
SECTION 2.2. Indenture Remains in Full Force and Effect. Except as
supplemented hereby, all provisions in the Indenture shall remain in full force
and effect.
SECTION 2.3. Indenture and Supplemental Indenture Construed Together. This
First Supplemental Indenture is an indenture supplemental to and in
implementation of the Indenture, and the Indenture and this First Supplemental
Indenture shall henceforth be read and construed together.
SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture as
supplemented by this First Supplemental Indenture is in all respects confirmed
and preserved.
SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this
First Supplemental Indenture limits, qualifies or conflicts with any
-3-
<PAGE>
provision of the Trust Indenture Act ("TIA") that is required under the TIA to
be part of and govern any provision of this First Supplemental Indenture, the
provision of the TIA shall control. If any provision of this First Supplemental
Indenture modifies or excludes any provision of the TIA that may be so modified
or excluded, the provision of the TIA shall be deemed to apply to the Indenture
as so modified or to be excluded by this First Supplemental Indenture, as the
case may be.
SECTION 2.6. Severability. In case any provision in this First Supplemental
Indenture shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Indenture.
SECTION 2.8. Headings. The Article and Section headings of this First
Supplemental Indenture have been inserted for convenience of reference only, are
not to be considered part of this Supplemental Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 2.9. Benefits of First Supplemental Indenture, etc. Nothing in this
First Supplemental Indenture or the Securities, express or implied, shall give
to any Person, other than the parties hereto and thereto and their successors
hereunder and thereunder and the holders of the Securities, any benefit of any
legal or equitable right, remedy or claim under the Indenture, this First
Supplemental Indenture or the Securities.
SECTION 2.10. Successors. All agreements of NationsBank (DE) in this First
Supplemental Indenture shall bind its successors. All agreements of the Trustee
in this First Supplemental Indenture shall bind its successors.
SECTION 2.11. Trustee Not Responsible for Recitals. The recitals contained
herein shall be taken as the statements of NationsBank and NationsBank (DE), and
the Trustee assumes no responsibility for their correctness. The Trustee makes
no representations as to, and shall not be responsible for, the validity or
sufficiency of this First Supplemental Indenture.
SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In
entering into this First Supplemental Indenture, the Trustee shall be entitled
to the benefit of every provision of the Indenture relating to
-4-
<PAGE>
the conduct or affecting the liability or affording protection to the Trustee,
whether or not elsewhere herein so provided.
SECTION 2.13. Governing Law. This First Supplemental Indenture shall be
governed by, and construed in accordance with, the laws of the State of New York
but without giving effect to applicable principles of conflicts of law to the
extent that the application of the laws of another jurisdiction would be
required thereby.
SECTION 2.14. Counterpart originals. The parties may sign any number of
copies of this First Supplemental Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this First Supplemental
Indenture to be duly executed as of the date first written above.
NationsBank (DE) Corporation
By: /s/ John E. Mack
-----------------------------
Name: John E. Mack
Title: Senior Vice President
NationsBank Corporation (formerly
known as NCNB Corporation)
By: /s/ John E. Mack
-----------------------------
Name: John E. Mack
Title: Senior Vice President
The Bank of New York, as Trustee
By: /s/ Sandra Carreker
-----------------------------
Name: Sandra Carreker
Title: Agent
-6-
-----------------------------------------------------
NationsBank Corporation
NationsBank (DE) Corporation
-----------------------------------------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of September 18, 1998
Supplementing the Indenture, dated
as of January 1, 1992, between
NationsBank Corporation and
BankAmerica Trust Company of New York, as Trustee
-----------------------------------------------------
U.S. Bank Trust National Association, as successor to
BankAmerica Trust Company of New York,
Trustee
-----------------------------------------------------
<PAGE>
SECOND SUPPLEMENTAL INDENTURE, dated as of September 18, 1998 (the "Second
Supplemental Indenture"), among NationsBank Corporation, a North Carolina
Corporation ("NationsBank"), NationsBank (DE) Corporation, a Delaware
corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of
NationsBank, and U.S. Bank Trust National Association, a national banking
association, successor to BankAmerica Trust Company of New York, as Trustee (the
"Trustee") under the Indenture referred to herein;
WHEREAS, NationsBank and the Trustee heretofore executed and delivered an
Indenture, dated as of January 1, 1992 which instrument was supplemented by a
First Supplemental Indenture dated as of July 1, 1993 (collectively, the
"Indenture"); and
WHEREAS, pursuant to the Indenture, NationsBank issued and the Trustee
authenticated and delivered one or more series of NationsBank's Notes (the
"Securities"); and
WHEREAS, NationsBank and BankAmerica Corporation, a Delaware corporation
("BankAmerica"), have entered into the Agreement and Plan of Reorganization,
dated as of April 10, 1998, pursuant to which (i) NationsBank will merge (the
"Reincorporation Merger") with and into NationsBank (DE), in accordance with the
terms and conditions of the Plan of Reincorporation Merger by and between
NationsBank and NationsBank (DE), dated as of August 3, 1998, with NationsBank
(DE) as the surviving corporation in the Reincorporation Merger, and (ii)
BankAmerica will thereafter merge (the "Merger," and together with the
Reincorporation Merger, the "Reorganization") with and into NationsBank (DE),
with NationsBank (DE) as the surviving corporation in the Merger; and
WHEREAS, the Reorganization is expected to be consummated on September 30,
1998; and
WHEREAS, Section 11.01 of the Indenture provides that in the case of the
Reorganization, NationsBank (DE) shall expressly assume by supplemental
indenture all the obligations under the Securities and the Indenture on the part
of NationsBank to be performed or observed; and
WHEREAS, Section 10.01(a) of the Indenture provides that NationsBank and
the Trustee may amend the Indenture and the Securities without notice to or
consent of any holders of the Securities in order to comply with Article Eleven
of the Indenture; and
WHEREAS, this Second Supplemental Indenture has been duly authorized by all
necessary corporate action on the part of each of NationsBank (DE) and
NationsBank.
-2-
<PAGE>
NOW, THEREFORE, NationsBank (DE), NationsBank and the Trustee agree as
follows for the equal and ratable benefit of the holders of the Securities:
ARTICLE I
ASSUMPTION BY SUCCESSOR CORPORATION
SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby
expressly assumes the due and punctual payment of the principal of (and premium,
if any, on) and any interest on all the Securities, according to their tenor,
and the due and punctual performance and observance of all of the covenants and
conditions of the Indenture to be performed by NationsBank.
SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this Second
Supplemental Indenture and agrees to perform the same under the terms and
conditions set forth in the Indenture.
ARTICLE II
MISCELLANEOUS
SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur of
(i) the execution and delivery of this Second Supplemental Indenture by
NationsBank (DE), NationsBank and the Trustee and (ii) the consummation of the
Reincorporation Merger, the Indenture shall be supplemented in accordance
herewith, and this Second Supplemental Indenture shall form a part of the
Indenture for all purposes, and every holder of Securities heretofore or
hereafter authenticated and delivered under the Indenture shall be bound
thereby.
SECTION 2.2. Indenture Remains in Full Force and Effect. Except as
supplemented hereby, all provisions in the Indenture shall remain in full force
and effect.
SECTION 2.3. Indenture and Supplemental Indenture Construed Together. This
Second Supplemental Indenture is an indenture supplemental to and in
implementation of the Indenture, and the Indenture and this Second Supplemental
Indenture shall henceforth be read and construed together.
-3-
<PAGE>
SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture as
supplemented by this Second Supplemental Indenture is in all respects confirmed
and preserved.
SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this
Second Supplemental Indenture limits, qualifies or conflicts with any provision
of the Trust Indenture Act ("TIA") that is required under the TIA to be part of
and govern any provision of this Second Supplemental Indenture, the provision of
the TIA shall control. If any provision of this Second Supplemental Indenture
modifies or excludes any provision of the TIA that may be so modified or
excluded, the provision of the TIA shall be deemed to apply to the Indenture as
so modified or to be excluded by this Second Supplemental Indenture, as the case
may be.
SECTION 2.6. Severability. In case any provision in this Second
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Indenture.
SECTION 2.8. Headings. The Article and Section headings of this Second
Supplemental Indenture have been inserted for convenience of reference only, are
not to be considered part of this Supplemental Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 2.9. Benefits of Second Supplemental Indenture, etc. Nothing in
this Second Supplemental Indenture or the Securities, express or implied, shall
give to any Person, other than the parties hereto and thereto and their
successors hereunder and thereunder and the holders of the Securities, any
benefit of any legal or equitable right, remedy or claim under the Indenture,
this Second Supplemental Indenture or the Securities.
SECTION 2.10. Successors. All agreements of NationsBank (DE) in this Second
Supplemental Indenture shall bind its successors. All agreements of the Trustee
in this Second Supplemental Indenture shall bind its successors.
SECTION 2.11. Trustee Not Responsible for Recitals. The recitals contained
herein shall be taken as the statements of NationsBank and NationsBank (DE), and
the Trustee assumes no responsibility for their correctness. The Trustee makes
no representations as to, and shall not be
-4-
<PAGE>
responsible for, the validity or sufficiency of this Second Supplemental
Indenture.
SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In
entering into this Second Supplemental Indenture, the Trustee shall be entitled
to the benefit of every provision of the Indenture relating to the conduct or
affecting the liability or affording protection to the Trustee, whether or not
elsewhere herein so provided.
SECTION 2.13. Governing Law. This Second Supplemental Indenture shall be
governed by, and construed in accordance with, the laws of the State of New York
but without giving effect to applicable principles of conflicts of law to the
extent that the application of the laws of another jurisdiction would be
required thereby.
SECTION 2.14. Counterpart originals. The parties may sign any number of
copies of this Second Supplemental Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Second Supplemental
Indenture to be duly executed as of the date second written above.
NationsBank (DE) Corporation
By: /s/ John E. Mack
------------------------------------------
Name: John E. Mack
Title: Senior Vice President
NationsBank Corporation
By: /s/ John E. Mack
------------------------------------------
Name: John E. Mack
Title: Senior Vice President
U.S. Bank Trust National Association, as Trustee
By: /s/ Catherine F. Donohue
------------------------------------------
Name: Catherine F. Donohue
Title: Vice President
-6-
----------------------------------
NationsBank Corporation
NationsBank (DE) Corporation
----------------------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of August 28, 1998
Supplementing the Indenture, dated
as of November 1, 1992, between
NationsBank Corporation and
The Bank of New York, as Trustee
----------------------------------
The Bank of New York,
Trustee
----------------------------------
<PAGE>
SECOND SUPPLEMENTAL INDENTURE, dated as of August 28, 1998 (the "Second
Supplemental Indenture"), among NationsBank Corporation, a North Carolina
Corporation ("NationsBank"), NationsBank (DE) Corporation, a Delaware
corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of
NationsBank, and The Bank of New York, a New York banking corporation, as
Trustee (the "Trustee") under the Indenture referred to herein;
WHEREAS, NationsBank and the Trustee heretofore executed and delivered an
Indenture, dated as of November 1, 1992 which instrument was supplemented by a
First Supplemental Indenture dated as of July 1, 1993 (collectively, the
"Indenture"); and
WHEREAS, pursuant to the Indenture, NationsBank issued and the Trustee
authenticated and delivered one or more series of NationsBank's Notes (the
"Securities"); and
WHEREAS, NationsBank and BankAmerica Corporation, a Delaware corporation
("BankAmerica"), have entered into the Agreement and Plan of Reorganization,
dated as of April 10, 1998, pursuant to which (i) NationsBank will merge (the
"Reincorporation Merger") with and into NationsBank (DE), in accordance with the
terms and conditions of the Plan of Reincorporation Merger by and between
NationsBank and NationsBank (DE), dated as of August 3, 1998, with NationsBank
(DE) as the surviving corporation in the Reincorporation Merger, and (ii)
BankAmerica will thereafter merge (the "Merger," and together with the
Reincorporation Merger, the "Reorganization") with and into NationsBank (DE),
with NationsBank (DE) as the surviving corporation in the Merger; and
WHEREAS, the Reorganization is expected to be consummated on September 30,
1998; and
WHEREAS, Section 11.01 of the Indenture provides that in the case of the
Reorganization, NationsBank (DE) shall expressly assume by supplemental
indenture all the obligations under the Securities and the Indenture on the part
of NationsBank to be performed or observed; and
WHEREAS, Section 10.01(a) of the Indenture provides that NationsBank and
the Trustee may amend the Indenture and the Securities without notice to or
consent of any holders of the Securities in order to comply with Article Eleven
of the Indenture; and
WHEREAS, this Second Supplemental Indenture has been duly authorized by all
necessary corporate action on the part of each of NationsBank (DE) and
NationsBank.
-2-
<PAGE>
NOW, THEREFORE, NationsBank (DE), NationsBank and the Trustee agree as
follows for the equal and ratable benefit of the holders of the Securities:
ARTICLE I
ASSUMPTION BY SUCCESSOR CORPORATION
SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby
expressly assumes the due and punctual payment of the principal of (and premium,
if any, on) and any interest on all the Securities, according to their tenor,
and the due and punctual performance and observance of all of the covenants and
conditions of the Indenture to be performed by NationsBank.
SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this Second
Supplemental Indenture and agrees to perform the same under the terms and
conditions set forth in the Indenture.
ARTICLE II
MISCELLANEOUS
SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur of
(i) the execution and delivery of this Second Supplemental Indenture by
NationsBank (DE), NationsBank and the Trustee and (ii) the consummation of the
Reincorporation Merger, the Indenture shall be supplemented in accordance
herewith, and this Second Supplemental Indenture shall form a part of the
Indenture for all purposes, and every holder of Securities heretofore or
hereafter authenticated and delivered under the Indenture shall be bound
thereby.
SECTION 2.2. Indenture Remains in Full Force and Effect. Except as
supplemented hereby, all provisions in the Indenture shall remain in full force
and effect.
SECTION 2.3. Indenture and Supplemental Indenture Construed Together. This
Second Supplemental Indenture is an indenture supplemental to and in
implementation of the Indenture, and the Indenture and this Second Supplemental
Indenture shall henceforth be read and construed together.
SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture as
supplemented by this Second Supplemental Indenture is in all respects confirmed
and preserved.
-3-
<PAGE>
SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this
Second Supplemental Indenture limits, qualifies or conflicts with any provision
of the Trust Indenture Act ("TIA") that is required under the TIA to be part of
and govern any provision of this Second Supplemental Indenture, the provision of
the TIA shall control. If any provision of this Second Supplemental Indenture
modifies or excludes any provision of the TIA that may be so modified or
excluded, the provision of the TIA shall be deemed to apply to the Indenture as
so modified or to be excluded by this Second Supplemental Indenture, as the case
may be.
SECTION 2.6. Severability. In case any provision in this Second
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Indenture.
SECTION 2.8. Headings. The Article and Section headings of this Second
Supplemental Indenture have been inserted for convenience of reference only, are
not to be considered part of this Supplemental Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 2.9. Benefits of Second Supplemental Indenture, etc. Nothing in
this Second Supplemental Indenture or the Securities, express or implied, shall
give to any Person, other than the parties hereto and thereto and their
successors hereunder and thereunder and the holders of the Securities, any
benefit of any legal or equitable right, remedy or claim under the Indenture,
this Second Supplemental Indenture or the Securities.
SECTION 2.10. Successors. All agreements of NationsBank (DE) in this Second
Supplemental Indenture shall bind its successors. All agreements of the Trustee
in this Second Supplemental Indenture shall bind its successors.
SECTION 2.11. Trustee Not Responsible for Recitals. The recitals contained
herein shall be taken as the statements of NationsBank and NationsBank (DE), and
the Trustee assumes no responsibility for their correctness. The Trustee makes
no representations as to, and shall not be responsible for, the validity or
sufficiency of this Second Supplemental Indenture.
SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In
entering into this Second Supplemental Indenture, the Trustee shall be entitled
to the benefit of every provision of the Indenture relating to the conduct or
affecting the liability or affording protection to the Trustee, whether or not
elsewhere herein so provided.
SECTION 2.13. Governing Law. This Second Supplemental Indenture shall be
governed by, and construed in accordance with, the laws of the State of New York
but without giving effect to applicable principles of conflicts of law to the
extent that the application of the laws of another jurisdiction would be
required thereby.
SECTION 2.14. Counterpart originals. The parties may sign any number of
copies of this Second Supplemental Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Second Supplemental
Indenture to be duly executed as of the date second written above.
NationsBank (DE) Corporation
By: /s/ John E. Mack
-----------------------------
Name: John E. Mack
Title: Senior Vice President
NationsBank Corporation
By: /s/ John E. Mack
-----------------------------
Name: John E. Mack
Title: Senior Vice President
The Bank of New York, as Trustee
By: /s/ Heidi Van Horn-Bash
-----------------------------
Name: Heidi Van Horn-Bash
Title: Agent
-5-
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
AGENCY AGREEMENT
relating to
BANKAMERICA CORPORATION
and
NATIONSBANK, N.A.
U.S. $8,500,000,000
Euro Medium-Term Note Program
among
BANKAMERICA CORPORATION
and
NATIONSBANK, N.A.
as Issuers
and
THE CHASE MANHATTAN BANK, London Branch
as Issuing and Principal Paying Agent
and
CHASE MANHATTAN BANK LUXEMBOURG S.A.
as Paying Agent
Dated as of November 16, 1998
- --------------------------------------------------------------------------------
<PAGE>
INDEX
Clause Page
- ------ ----
1. Definitions and Interpretation............................................1
2. Appointments of Agent, Paying Agents and Calculation Agents...............2
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...............4
5. Issue of Definitive Notes.................................................6
6. Terms of Issue............................................................6
7. Payments..................................................................7
8. Determinations and Notifications in Respect of Notes and
Interest Determination....................................................8
9. Notice of any Withholding or Deduction...................................11
10. Duties of the Agent in Connection with Early Redemption..................11
11. Receipt and Publication of Notices; Receipt of Certificates..............12
12. Cancellation of Notes, Receipts, Coupons and Talons......................12
13. Issue of Replacement Notes, Receipts, Coupons and Talons.................13
14. Copies of Documents Available for Inspection.............................14
15. Meetings of Noteholders..................................................15
16. Repayment by the Agent...................................................15
17. Conditions of Appointment................................................15
18. Communication Between the Parties........................................16
19. Changes in Agent and Paying Agents.......................................16
20. Merger and Consolidation.................................................18
21. Notification of Changes to Paying Agents.................................18
22. Change of Specified Office...............................................18
23. Notices..................................................................18
24. Taxes and Stamp Duties...................................................19
25. Commissions, Fees and Expenses...........................................20
26. Indemnity................................................................20
27. Reporting................................................................20
28. Governing Law............................................................21
29. Amendments...............................................................21
30. Descriptive Headings.....................................................22
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 Bank
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
i
<PAGE>
THIS AMENDED AND RESTATED AGREEMENT dated as of November 16, 1998 among:
(i) BankAmerica Corporation, a Delaware corporation, and the successor in
interest to NationsBank Corporation (the "Corporation") and
NationsBank, N.A. (the "Bank"; the Bank and the Corporation are each
an "Issuer" and collectively, "Issuers");
(ii) The Chase Manhattan Bank, 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, the Agent and the Paying Agent wish to update the
arrangements originally agreed among them pursuant to that certain Agency
Agreement dated November 8, 1995, as amended and restated to the date hereof,
including the amendment and restatement dated May 12, 1998 which added the Bank
as an additional Issuer of euro medium-term notes (the "Original Agency
Agreement").
WHEREAS, the Issuers propose to issue up to U.S. $6,500,000,000 with
respect to the Corporation and $2,000,000,000 with respect to the Bank (or its
equivalent in other currencies) in aggregate principal amount of Euro
Medium-Term Notes (the "Notes") outstanding at any one time as provided in an
Amended and Restated Program Agreement of even date among the Issuers, the
Arrangers and the Dealers named therein (the "Program Agreement") and as
described in an Offering Circular of even date (the "Offering Circular");
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 7, (d) those which have been purchased and canceled as provided
in Condition 5 (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 9, (f) (for 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 9, (g) any
Temporary Global Note to the extent that it shall have been exchanged for a
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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, an Issuer or any of its
affiliates shall (unless and until ceasing to be so held) be deemed not to
remain outstanding;
"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 relevant Issuer 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 Bank (as defined below)(other than Cedel Bank, if Cedel Bank shall be
an accountholder of Euroclear, and Euroclear, if Euroclear shall be an
accountholder of Cedel Bank) as the Noteholders of particular principal amounts
of Notes (in which regard any certificate or other document issued by Euroclear
or Cedel Bank 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 an Issuer under this
Agreement shall have the meaning set out in Condition 4.
(6) All references in this Agreement to the "relevant currency" shall be
construed as references to the currency in which the relevant Notes and/or
Coupons are denominated (or payable in the case of Dual Currency Notes).
(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 Bank shall, whenever
the context permits, be deemed to include a reference to any additional or
alternative clearance system approved by the Issuers and the Agent.
2. Appointments of Agent, Paying Agents and Calculation Agents
(1) The Issuers hereby appoint The Chase Manhattan Bank, London Branch, as
Agent, and The Chase Manhattan Bank, London Branch, hereby accepts such
appointment as Agent of the Issuers, upon the terms and subject to the
conditions set out below, for the purposes of:
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(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 Issuers for notices to be communicated
to the Noteholders;
(h) preparing and sending monthly reports to the Ministry of Finance
of Japan (the "MoF"), the German Central Bank and the Bank of England and,
subject to confirmation from the relevant Issuer 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 Bank 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 relevant Issuer 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 6 of the Terms
and Conditions) on the Notes. Each Issuer hereby appoints 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 relevant Issuer as such Issuer 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 an Issuer as provided elsewhere
herein.
(3) The Issuers will appoint an agent to make certain calculations with
respect to the Notes (the "Calculation Agent") pursuant to the Terms and
Conditions.
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3. Issue of Temporary Global Notes
(1) Subject to sub-clause (2), following receipt of a notification from an
Issuer 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 such Issuer:
(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 Bank 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 Bank and to instruct
Euroclear or Cedel Bank or both of them (as the case may be) unless
otherwise agreed in writing between the Agent and the relevant Issuer (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 relevant
Issuer's order; and
(d) to ensure that the Notes of each Tranche are assigned a Common
Code and ISIN by Euroclear and Cedel Bank 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 relevant Issuer,
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
(b) master Permanent Global Notes, duly executed by a person or
persons authorized to execute the same on behalf of the relevant Issuer,
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 Bank with the
notifications, instructions or other information to be given by the Agent to
Euroclear and/or Cedel Bank in accordance with the standard procedures of
Euroclear and/or Cedel Bank.
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 relevant Issuer, the relevant Dealer,
Euroclear and Cedel Bank.
(b) The Agent shall deliver, upon notice from Euroclear or Cedel Bank,
a Permanent Global Note or Definitive Notes, as the case may be, in
accordance with the terms of
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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 relevant Issuer:
(i) for 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) for the first Tranche of any Series of Notes, to
authenticate such Permanent Global Note;
(iii) for 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 Bank 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 Bank; 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) For 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.
(b) For 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 40th 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) For 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 40th 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
relevant Issuer 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 relevant Issuer is
notified that either Euroclear or Cedel Bank 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 relevant Issuer, after notice to the Agent, determines
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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 relevant
Issuer:
(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 Bank in exchange for such Global Note.
The Agent shall notify the relevant Issuer 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 relevant Issuer 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.
(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 relevant
Issuer named in the lists referred to in, or notified pursuant to, Clause 17(7)
as sufficient instructions and authority of such Issuer for the Agent to act in
accordance with Clause 3(l).
(3) In the event that a person who has signed on behalf of the relevant
Issuer 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 such Issuer gives notice to the Agent that Notes signed by that person
do not constitute valid and binding obligations of such Issuer or otherwise
until replacements have been provided to the Agent) continue to have authority
to issue any such Notes, and the relevant Issuer hereby warrants to the Agent
that such Notes shall, unless notified as aforesaid, be valid and binding
obligations of such Issuer. Promptly upon such person ceasing to be authorized,
the relevant Issuer 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 relevant
Issuer a confirmation of destruction in respect thereof specifying the Notes so
canceled and destroyed.
(4) If the Agent pays an amount (the "Advance") to an Issuer 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 such
Issuer, the Agent shall notify such Issuer by tested telex or facsimile that the
Payment has not been received and such Issuer 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 relevant Issuer in respect of the purchase price of the Notes being
issued, if on the relevant Issue Date a Dealer
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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 Bank) after such Issue Date,
the Agent will continue to hold the Defaulted Note to the order of the relevant
Issuer. The Agent shall notify the relevant Issuer 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 such Issuer 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 relevant Issuer, 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 relevant Issuer 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
relevant Issuer may agree.
(2) The relevant Issuer 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 relevant Issuer an
irrevocable confirmation in the form of a SWIFT message or tested telex that
such payment shall be made. For the purposes of this Clause 7 "Business Day"
means a day which is both:
(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) in relation to a payment to be made in a Specified Currency, 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).
(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 Bank 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
relevant Issuer in the manner provided in the Terms and Conditions. If any
payment provided for in sub-clause (l) 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 relevant Issuer 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 relevant Issuer will, in
addition to paying amounts due under
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sub-clause (l), pay to the Agent on demand interest (at a 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.
(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
relevant Issuer has been or will be made and such payment has in fact not been
so made by such Issuer, then such Issuer 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 relevant Issuer'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 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 relevant Issuer 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.
(3) The Agent or the Calculation Agent, as the case may be, shall promptly
notify (and confirm in writing to) the relevant Issuer, 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
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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(l)) 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 relevant Issuer and the Paying Agents 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 relevant
Issuer 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, each Issue of Partly Paid 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 as of the Agreement Date for
such Notes on the basis of the spot rate for the sale of the U.S. dollar
against the purchase of the relevant currency quoted by a foreign exchange
dealer selected by the relevant Issuer on the relevant day of calculation;
(B) the U.S. dollar equivalent of Dual Currency Notes and Indexed
Notes shall be calculated in the manner specified above by reference to the
original nominal amount of such Notes; and
(C) the U.S. dollar equivalent of Zero Coupon Notes and other Notes
issued at a discount shall be calculated in the manner specified above by
reference to the net proceeds received by the relevant Issuer for the
relevant issue; and
(D) the U.S. Dollar equivalent of Partly Paid Notes shall be
determined in the manner specified above by reference to the original
principal amount of such Notes regardless of the amount paid on the Notes.
(b) Interest Determination, Screen Rate Determination including Fallback
Provisions
(1) Where screen rate determination ("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:
(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,
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(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 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).
(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 expression "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 relevant Issuer 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 relevant Issuer shall give notice thereof to the Agent as soon
as it becomes aware of the
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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 relevant Issuer 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, such Issuer shall give notice of
such decision to the Agent not less than seven London Business Days before the
date on which such Issuer 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 relevant Issuer
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 Bank. 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 relevant Issuer 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 Agents of any
date fixed for redemption of any Notes.
(4) Immediately prior to the date on which any notice of redemption is to
be given to the Noteholders, the relevant Issuer shall deliver to the Agent a
certificate stating that such Issuer 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
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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
relevant Issuer.
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 relevant Issuer.
(2) On behalf of and at the request and expense of the relevant Issuer, the
Agent shall cause to be published all notices required to be given by such
Issuer to the Noteholders in accordance with the Terms and Conditions.
(3) The Agent shall have no responsibility to obtain the certificate of the
relevant Issuer delivered by such Issuer to the Agent pursuant to Condition 8 if
such a certificate is required to be issued, nor shall the Agent have any
responsibility to notify the relevant Issuer that the Agent has not obtained
such a certificate from such Issuer 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 relevant Issuer 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 relevant Issuer shall have the right to request that the Agent
provide, without limitation, the following information:
(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 relevant Issuer 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 9) 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 relevant Issuer and any
persons authorized by it for inspection and for the taking of copies thereof or
extracts therefrom.
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(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 Issuers 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 its 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 relevant Issuer 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 relevant Issuer
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;
(b) furnished it with such evidence and indemnity as the relevant
Issuer 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 relevant Issuer with a certificate stating the serial numbers of the Notes,
Receipts, Coupons and Talons so canceled and, unless otherwise instructed by
such Issuer in writing, shall destroy such canceled Notes, Receipts, Coupons and
Talons and furnish such Issuer 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 relevant Issuer, 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 relevant Issuer and any persons authorized by it
for inspection and for the taking of copies thereof or extracts therefrom.
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(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 relevant Issuer and the other Paying
Agents and shall not make payment in respect thereto, until instructed by such
Issuer.
14. Copies of Documents Available for Inspection
The Agent and the Paying Agents shall hold available for inspection copies
of:
(i) the organizational documents of the Issuers;
(ii) the latest available audited consolidated financial statements of
BankAmerica Corporation and its consolidated subsidiaries, including the
Bank, beginning with such financial statements for the fiscal years ended
December 31, 1995, December 31, 1996 and December 31, 1997 and the publicly
available portions of the Call Reports with respect to the Bank;
(iii) the Program Agreement and this Agreement;
(iv) the Offering Circular; and
(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 document).
For this purpose, the Issuers 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 (l), 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 relevant Issuer 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 at 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 relevant Issuer 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
relevant Issuer sums equivalent to any amounts paid to it by such Issuer for the
purposes of such payments.
17. Conditions of Appointment
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(1) The Agent shall be entitled to deal with money paid to it by an Issuer
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 relevant Issuer 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 Issuers 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.
(3) The Agent and the Paying Agents hereby undertake to the Issuers 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 relevant Issuer 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 relevant Issuer.
(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 relevant Issuer 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 relevant Issuer as freely as if the
Agent or the relevant Paying Agent, as the case may be, were not appointed
hereunder.
(7) The relevant Issuer 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 relevant Issuer'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 any Issuer 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
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(1) The Issuers agree 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 relevant
Issuer 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.
In addition, the Issuers shall appoint a Paying Agent having a specified
office in New York City in the circumstances described in the final paragraph of
Condition 4(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 Issuers 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 Issuers unless the Issuers agree
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 each Issuer 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 Issuers as hereinafter
provided, of a successor Agent and (other than in cases of insolvency of the
Agent) on the expiration of the notice to be given under Clause 21. The Issuers
agree with the Agent that if, by the day falling ten days before the expiration
of any notice under sub-clause (2), the Issuers have not appointed a successor
Agent, then the Agent shall be entitled, on behalf of the Issuers, 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 Issuers 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 (l):
(A) the Issuers 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
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(B) the Issuers may in respect of the Program or the relevant Issuer
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.
(7) Subject to sub-clause (l), all or any of the Paying Agents may resign
their respective appointments hereunder at any time by giving the Issuers 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 Issuers 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 Issuers, 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 Issuers by the relevant Agent or Paying
Agent.
21. Notification of Changes to Paying Agents
Following receipt of notice of 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 Issuers) 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 Issuers 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 Issuers) 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
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terminate pursuant to Clause 19 on or prior to the date of 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: BankAmerica Corporation
100 North Tryon Street
NC 1007-23-1
Charlotte, North Carolina 28255-0065
Attn: John E. Mack
Senior Vice President
Telecopy: (704)386-0270
with a copy to:
BankAmerica Corporation
100 North Tryon Street
Legal Department
NC 1007-20-1
Charlotte, North Carolina 28255-0065
Attn: Paul J. Polking, Esq.
General Counsel
Telecopy: (704)386-6453
The Bank: NationsBank, N.A.
100 North Tryon Street
Charlotte, North Carolina 28255
Attn: James T. Houghton
Senior Vice President
Telecopy: (704) 386-9946
The Agent: The Chase Manhattan Bank, London Branch
Trinity Tower
9 Thomas More Street
London E1 9YT
United Kingdom
Attn: Manager, Corporate Trust Operations
Telecopy: 44-1202-347438
The Paying Agent: Chase Manhattan Bank Luxembourg S.A.
5 rue Plaetis
L-2338 Luxembourg - Grund
Attn: Manager, Corporate Trust Operations
Telecopy: 352-462685-380
or at any other address of which any of the foregoing shall have notified the
others in writing.
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(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 acknowledgment 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 Issuers agree 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
(1) The Issuers undertake 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
Issuers.
(2) The Issuers 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
(1) The relevant Issuer (or Issuers, as the case may be) undertake 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.
(2) Each of the Agent and the Paying Agents shall severally indemnify and
hold harmless the relevant Issuer (or Issuers, as the case may be) 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.
(3) 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
19
<PAGE>
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 26,
"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
(1) The Agent shall upon receipt of a written request therefor from an
Issuer and after the payment of any further remuneration agreed between such
Issuers and the Agent (on behalf of such Issuers 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.
(2) 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.
(3) 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.
(4) The Agent will notify the Bank of England of such details relating to
Sterling Notes and provide such other information about the Program to the Bank
of England as may be required.
28. Governing Law
(1) 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.
(2) The Issuers and the Agent each hereby irrevocably submit 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 Issuers and the Agent each
irrevocably waive, 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 Issuers and the Agent each agree that final judgment in the
Proceedings brought in such a court shall be conclusive and binding upon the
Issuers or the Agent, as the case may be, and may be enforced in any court of
the jurisdiction to which the relevant Issuer (or Issuers, as the case may be)
or the Agent is subject by a suit upon such judgment, provided that the service
of process is effected upon such Issuers and the Agent in the manner specified
in subsection (C) below or as otherwise permitted by law.
(3) As long as any of the Notes, Receipts, Coupons or Talons remains
outstanding, the relevant Issuer 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 relevant Issuer
shall, to the fullest extent permitted by law, be deemed in every respect
effective service of process upon such Issuer in the Proceedings. Each Issuer
hereby appoints CT Corporation System located at 1633 Broadway, New York, New
York 10019 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 relevant Issuer 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.
20
<PAGE>
29. Amendments
Without the consent of the Noteholders, Receiptholders or Couponholders,
the Agent and the Issuers 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 an Issuer and the
assumption by any such successor of the covenants of such Issuer in
this Agreement, the Notes, Receipts or Coupons;
(ii) to add to the covenants of an Issuer for the benefit of the
Noteholders, the Receiptholders or the Couponholders, or to surrender
any right or power herein conferred upon such Issuer;
(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 the
Program Agreement.
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 12 as soon as practicable thereafter.
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 counterparts, all of which
shall constitute one and the same instrument. Any party may enter into this
Agreement by signing such a counterpart.
21
<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.
BANKAMERICA CORPORATION
as Issuer
By /s/ John E. Mack
------------------------------------
Name:
Title:
NATIONSBANK, N.A.
as Issuer
By /s/ James T. Houghton
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
LONDON BRANCH
as Agent and
Principal Paying Agent
By /s/ Cris Green
------------------------------------
Name:
Title:
CHASE MANHATTAN BANK LUXEMBOURG S.A.
as Paying Agent
By /s/ Chris Green
------------------------------------
Name:
Title:
22
================================================================================
================================================================================
ISSUING AND PAYING AGENCY AGREEMENT
between
NATIONSBANK, N.A.,
as Issuer
and
BANKERS TRUST COMPANY,
as Issuing and Paying Agent,
Dated as of May 19, 1998
---------------------------
SHORT-TERM AND MEDIUM-TERM NOTES
Due 7 Days or More From Date of Issue
================================================================================
================================================================================
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Table of Contents
Page
----
SECTION 1. Definitions......................................................................1
SECTION 2. Appointment of Agents............................................................6
(a) Issuing and Paying Agent..................................................6
(b) Selling Agents............................................................7
(c) Registrar.................................................................7
(d) Transfer Agents...........................................................7
(e) Calculation Agents........................................................8
SECTION 3. The Notes........................................................................8
(a) Note Form; Signature......................................................8
(b) Denominations............................................................10
(c) Completion of Notes......................................................11
(d) Date.....................................................................11
(e) Certificate of Authentication............................................11
(f) Original Issue Discount Notes............................................11
(g) Custody of Notes.........................................................11
(h) Certificated Notes.......................................................11
SECTION 4. Authorized Representatives......................................................11
SECTION 5. Completion, Authentication and Delivery of Notes................................12
SECTION 6. Procedure Upon Sale of the Notes................................................15
SECTION 7. Payment of Interest; Actions on Days Other than Business Days...................15
SECTION 8. Payment of Principal............................................................16
SECTION 9. Designation of Accounts to Receive Payment......................................16
SECTION 10. Information Regarding Amounts Due...............................................17
SECTION 11. Specified Currency Notes........................................................17
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<PAGE>
SECTION 12. Deposit of Funds................................................................17
SECTION 13. Optional Redemption.............................................................17
(a) Optional Redemption......................................................17
(b) Optional Repayment.......................................................18
(c) Optional Extension of Maturity...........................................18
(d) Optional Renewal.........................................................19
SECTION 14. Events of Default...............................................................20
SECTION 15. Registration; Transfer..........................................................21
SECTION 16. Persons Deemed Owners...........................................................22
SECTION 17. Mutilated, Lost, Stolen or Destroyed Notes......................................22
SECTION 18. Return of Unclaimed Funds.......................................................23
SECTION 19. Amendment or Supplement.........................................................23
SECTION 20. Resignation or Removal of Agents; Appointment of Successors to Agents...........24
(a) Resignation or Removal of Agent..........................................24
(b) Appointment of Successor to Agent........................................25
(c) Successor of Agent.......................................................25
(d) Merger, Etc. of Agent....................................................26
(e) Change in Duties of an Agent.............................................26
(f) Additional Agents........................................................26
SECTION 21. Reliance on Instructions........................................................26
SECTION 22. Cancellation of Unissued Notes..................................................26
SECTION 23. Representation and Warranties of the Issuer; Instructions by Certificate.......26
SECTION 24. Fees............................................................................27
SECTION 25. Notices.........................................................................27
SECTION 26. Information Furnished by the Issuing and Paying Agent...........................28
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<PAGE>
SECTION 27. Liability.......................................................................29
SECTION 28. Additional Responsibilities; Attorneys Fees.....................................29
SECTION 29. Transfer of Notes and Moneys....................................................29
SECTION 30. Indemnity.......................................................................30
SECTION 31. Limitation of Liability; Reliance on Opinions and Certificates..................31
SECTION 32. Benefit of Agreement............................................................31
SECTION 33. Governing Law...................................................................32
SECTION 34. Headings and Table of Contents..................................................32
SECTION 35. Counterparts....................................................................32
SECTION 36. Termination of Prior Issuing and Paying Agent Agreements........................32
EXHIBIT A Forms of DTC Letters of Representations.........................................34
EXHIBIT B Administrative Procedures.......................................................35
EXHIBIT C Form of Face of Fixed Rate Note.................................................36
EXHIBIT D Form of Face of Floating Rate Note..............................................37
EXHIBIT E Form of Legend for Original Issue Discount Notes................................38
EXHIBIT F NationsBank, N.A. Authorized Representatives....................................39
EXHIBIT G Form of Issuing and Paying Agent's Officer's Certificate Referencing
Authorized Representatives......................................................40
</TABLE>
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<PAGE>
NATIONSBANK, N.A.
SHORT-TERM AND MEDIUM-TERM NOTES
ISSUING AND PAYING AGENCY AGREEMENT
ISSUING AND PAYING AGENCY AGREEMENT dated as of May 19, 1998, between
NATIONSBANK, N.A., a national banking association organized under the laws of
the United States, as Issuer, and BANKERS TRUST COMPANY, a New York banking
corporation, as Issuing and Paying Agent.
SECTION 1. Definitions. Except as otherwise expressly provided herein or
in the applicable Note or unless the context otherwise requires: (1) 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.
AUTHORIZED DENOMINATION - Has the meaning given such term in Section 3
(b)
AUTHORIZED REPRESENTATIVE - With respect to the Issuer, any duly
authorized representative of the Issuer as set forth in Exhibit F hereto, and
any other representative of the Issuer as to which the 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 the 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 or Charlotte, North Carolina (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) are
generally authorized or obligated by law to close. With respect to LIBOR Notes
(as described herein),
<PAGE>
"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 or Charlotte, North Carolina 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 the Issuer, such
person appointed by the 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.
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 as of May 15,
1998, among the Issuer, NationsBanc Montgomery Securities LLC, Credit Suisse
First Boston Corporation, Lehman Brothers Inc. (including its affiliate Lehman
Commercial Paper Inc.), Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Morgan Stanley & Co. Incorporated and Salomon Brothers Inc,
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 the Issuer as provided in Section 13(c)
hereof.
EXTENSION PERIOD(S) - The period or periods, by which the Issuer may
extend the Stated Maturity of Notes which provide for such extension, as
described more fully in Section 13(c) hereof.
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<PAGE>
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 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 - NationsBank, N.A., a national banking association, and its
successors and assigns is referred to herein as the "Issuer".
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 and Bank, as appropriate, to be furnished to DTC in accordance 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.
3
<PAGE>
NEW MATURITY DATE - Has the meaning given such term in Section 13(d).
NOTE OR NOTES - Any of the Issuer's Short-Term Notes or Medium-Term
Notes issued, authenticated and delivered under this Agreement.
OFFERING CIRCULAR - The Offering Circular of the Issuer relating to the
Notes dated May 15, 1998 as the same may be amended or supplemented from time to
time.
OFFICER'S CERTIFICATE - With respect to the Issuer, a certificate (i)
signed by the Chairman of the Board, the President, or any Executive Vice
President or Senior Vice President of the Issuer or such other persons as the
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 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.
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,
limited liability company, 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
4
<PAGE>
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.
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 Issuer, 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 Issuer 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.
5
<PAGE>
RENEWABLE NOTE - A Note the maturity of which may be renewed at the
option of the Holder in accordance with the terms thereof.
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 the Issuer, to the Distribution
Agreement, including any party added to such agreement after its initial date of
execution. The initial Selling Agents are: NationsBanc Montgomery Securities
LLC, Credit Suisse First Boston Corporation, Lehman Brothers Inc. (including its
affiliate, Lehman Commercial Paper Inc.), Merrill Lynch & Co., Merrill, Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co., Incorporated and
Salomon Brothers Inc.
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 Issuing and 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.
TRANSFER AGENT - With respect to any Note issued by the Issuer, any
Person appointed by the Issuer to exchange or transfer Notes issued by the
Issuer.
SECTION 2. Appointment of Agents.
(a) Issuing and Paying Agent. The Issuer hereby appoints Bankers
Trust Company, as Issuing and Paying Agent of the Issuer 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
6
<PAGE>
authority granted to and conferred upon it in the Notes and this
Agreement and such further powers and authority to act on behalf of the
Issuer as may be agreed upon by the 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.
The 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 the
Issuer of any occurrence or event that renders it unable to continue to
make the aforesaid representation.
(b) Selling Agents. The Issuer has appointed NationsBanc
Montgomery Securities LLC, Credit Suisse First Boston Corporation,
Lehman Brothers Inc. (Including its affiliate Lehman Commercial Paper
Inc.), Merrill Lynch & Co., Merrill, Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley & Co., Incorporated and Salomon Brothers
Inc, as Selling Agents for the Notes by and under the terms of the
Distribution Agreement, under which the Issuer may, from time to time,
appoint other Selling Agents.
(c) Registrar. The Issuer hereby appoints Bankers Trust Company as
Registrar of the Issuer 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. The 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
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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. The 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 all in accordance with the terms of the Floating
Rate Notes.
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.
The 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. The 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 the 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
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
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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 registered
owner hereof, CEDE & CO., has an interest herein."
The Issuer will from time to time and upon request 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
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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 (7) seven days 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 the
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 and in
either such case a successor Depositary is not appointed by the Issuer
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 Certificated 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.
As of the date hereof, the Issuer has authorized the issuance and
sale of up to not more than $25,000,000,000 aggregate principal amount
of Notes with maturities of 7 days or more. Subject to the last sentence
of this paragraph, the maximum aggregate principal amount of Notes
outstanding at any one time is limited to $25,000,000,000. In addition,
subject to the last sentence of this paragraph, the aggregate principal
amount of Notes having maturities of more than 270 days which may be
issued throughout the term of the Issuing and Paying Agency Agreement is
limited to $25,000,000,000. Notwithstanding the foregoing, if the Issuer
authorizes the issuance of additional Notes and, to the extent
necessary, registers such Notes with the Office of the Comptroller of
the Currency (the "OCC") such additional Notes may be sold to or through
the Agents pursuant to the terms of this Agreement, all as though the
issuance of such Notes were authorized as of the date hereof.
(b) Denominations. Unless otherwise indicated in the applicable
Notes and the applicable Pricing Supplement except as provided in
Section 3(h) and to the extent that the 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.
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(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.
(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 Notes. 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 that the Issuer delivers to it and that
it holds hereunder and shall complete and issue such Notes only in the
terms hereof.
(h) Certificated Notes. If at any time the Depositary notifies the
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 Issuer within ninety (90) days, the Issuer will
execute and the Issuing and Paying Agent will, upon the receipt of
procedures for certificated securities in form and substance
satisfactory to the Issuer and the Issuing and Paying Agent and upon
receipt of instructions in writing from the Issuer, authenticate and
deliver to the Holder or the Holder's designee Notes of like tenor and
terms in definitive form in an aggregate principal amount equal to the
Global Notes then outstanding in exchange for such Global Notes.
SECTION 4. Authorized Representatives. The Issuer hereby certifies that
each person named in Exhibit F hereto and designated as affiliated with the
Issuer is a duly Authorized Representative of the Issuer and that the signature
set forth opposite such representative's name is
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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 the 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 the 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 the
Issuer. Any Note bearing the signature of a person who is an Authorized
Representative in Group I of Exhibit F with respect to the Issuer on the date he
or she signs such Note shall be a binding obligation of the 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) 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 Issuer
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 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. Principal Amount of the Note, CUSIP Number and, if
applicable, the Specified Currency.
2. (a) Fixed Rate Notes:
(i) Interest Rate,
(ii) Interest Payment Dates, and
(iii) Regular Record Dates.
(b) Floating Rate Notes:
(i) Base Rate or Rates,
(ii) Initial Interest Rate,
(iii) Spread and/or Spread Multiplier, if any,
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(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, and
(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
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 underwriting discount
and the Selling Agent's participant account at the
Depositary for settlement.
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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 addendum, text to be included under
"Other Provisions" on the face of such Note, or
otherwise), including, with respect to any Specified
Currency Note, provisions regarding the calculation of
any interest or principal 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 the Issuer has given instructions to the Issuing
and Paying Agent but which have not yet been settled.
For purposes of monitoring the aggregate principal amount of Notes
issued and/or outstanding at any time hereunder, the Issuing and Paying Agent
shall determine the U.S. Dollar equivalent of the principal amount of each
Original Issue Discount Note or series of Original Issue Discount Notes and each
Specified Currency Note or series of Specified Currency Notes as follows:
(i) the U.S. Dollar equivalent of Specified Currency Notes
shall be determined by the Issuing and Paying Agent as of
2:30 P.M., London time, on the Original Issue Date for
such Notes by reference to the spot rate for U.S. Dollars
against the Specified Currency provided to the Issuing
and Paying Agent by the Issuer or, if such spot rate is
not so provided on a timely basis, by reference to the
Issuing and Paying Agent's middle market spot rate for
U.S. Dollars against the Specified Currency on the London
Business Day immediately preceding the date on which the
Issuing and Paying Agent receives the Issuer's
instruction to issue the Notes.
(ii) the principal amount of Original Issue Discount Notes and
any other Notes issued at a discount shall be deemed to
be (x) the principal amount received by the Issuer for
the relevant issue or (y) in the case of a Specified
Currency Note, the U.S. Dollar equivalent, determined in
the manner specified in clause (i) above, of the
principal amount received by the Issuer for the relevant
issue.
The Issuing and Paying Agent shall promptly notify the Issuer of each
determination made as aforesaid.
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(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
settlement information required in the Administrative Procedures.
(d) Instructions regarding the completion of a Note must be
received by the Issuing and Paying Agent not later than the time and
date specified in the Administrative Procedures.
SECTION 6. Procedure Upon Sale of the Notes. The Issuing and Paying
Agent will upon reasonable written request, promptly deliver copies of such
Global Notes (with any additional terms provided by the Issuer included thereon)
to the appropriate Selling Agents in accordance with 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. Unless
otherwise specified on the face of the Note and in an applicable Pricing
Supplement, 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 7 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 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. Unless otherwise specified on the face of the Note and
in an applicable Pricing Supplement, 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
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Redemption) will be paid by check of the Issuing and Paying Agent mailed
by such Issuing and Paying Agent to the Holder as such Holders 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.
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. Upon payment in full, 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 the 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
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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, or
Payment Date, as the case may be.
SECTION 10. Information Regarding Amounts Due. The Issuing and Paying
Agent shall provide to the 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 Issuer by the fifteenth day of each month a list of the
Principal and 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 unless otherwise provided in the applicable Pricing
Supplement, with such changes and additions as may be reasonably satisfactory to
the Issuing and Paying Agent.
SECTION 12. Deposit of Funds. The 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 the 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 the 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. In accordance with and subject to the
terms and conditions provided in the applicable Note and Pricing
Supplement, the 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. Unless otherwise specified in an
applicable Pricing Supplement and in the Note, the 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. The Issuer shall notify the Issuing and Paying Agent of
its election to redeem any Note at least forty-five (45) days prior to
the date of redemption (unless a shorter period is satisfactory to the
Issuing and Paying Agent). 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
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Agreement. Unless otherwise 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. In accordance with and subject to the
terms and conditions provided in the applicable Note and Pricing
Supplement, 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 and Pricing Supplement, in order for the Note to be
repaid, the Issuer (or the Issuing and Paying Agent, on behalf of the
Issuer) 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 and Pricing Supplement, the Stated Maturity of such Note
may be extended at the option of the Issuer, 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. Unless otherwise specified in the Applicable Note
and Pricing Supplement, 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 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.
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Notwithstanding the foregoing unless otherwise provided in the
Note and applicable Pricing Supplement, not later than twenty (20) days
prior to the Original Stated Maturity of such Note the 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 the 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 follow 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 and
Pricing Supplement, 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
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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 and Pricing Supplement, any portion
constituting an Authorized Denomination 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 and Pricing
Supplement, 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,
continues 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 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
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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.
(b) Upon surrender for registration of transfer of any Note to the
Registrar or any Transfer Agent, the Issuer 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 or in the applicable Pricing Supplement and Note, 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
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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, evidencing the
same debt, and entitled to the same benefits as the Notes 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 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, the Issuing and Paying Agent and any
agent of the 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 the Issuer, the
Issuing and Paying Agent nor any agent of the 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 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 the 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 the Issuer and to
the Issuing and Paying Agent evidence to their satisfaction of the 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 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 may
require the payment of a sum sufficient to cover any expense connected
therewith. In case any Note which has matured
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or is about to mature shall become mutilated or be destroyed, lost or stolen,
the Issuer 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 the 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 the 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 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 Issuer and the Issuing and
Paying Agent may modify, amend or supplement this Agreement without the consent
of any Holder. In addition, the Issuer may modify, amend or supplement the terms
and conditions of the Notes, without the consent of any Holder thereof: (i) to
evidence succession of another party to the Issuer, and such party's assumption
of the 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 additional 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 the 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
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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 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 the opinion of the Issuer, to any provisions
contained in any such modification, amendment or supplement may be prepared by
the Issuer, authenticated by the Issuing and Paying Agent (or any Authenticating
Agent) and delivered in exchange for Outstanding Notes.
The Issuer may not 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 the 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 the Issuer, and the performance or
observance of every provision of the Notes on the part of the Issuer to be
performed or observed; and (ii) immediately after giving effect to such
transaction, no Event of Default with respect to the Issuer, and no event which,
after notice or the lapse of time or both, would become an Event of Default with
respect to the 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 Issuer 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 Issuer 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 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 the Issuer agrees to accept less notice.
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The Issuer may remove any Agent with respect to Notes issued by the
Issuer at any time by filing with it an instrument in writing signed by
or on behalf of the 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 the Issuer shall become effective on the date set forth in the notice
thereof and shall only be effective with respect to the Issuer and Notes
issued by the Issuer, except that any resignation or removal of the
Issuing and Paying Agent or the Registrar shall take effect upon the
Issuer's, 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 Issuer has not
appointed a replacement Agent within 30 days after any such removal or
replacement, the affected Agent (at the expense of the Issuer) 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 Issuer 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 the Issuer's removal of, or (iii) following the Issuer's 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 Issuer 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 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
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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 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 Issuer 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 Issuer may vary the
appointment of any Agent other than the Issuing and Paying Agent.
(f) Additional Agents. The 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
the 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 the 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
Issuer of such discrepancy promptly upon receipt of such written confirmation.
SECTION 22. Cancellation of Unissued Notes. Promptly upon the written
request of the Issuer, the Issuing and Paying Agent shall cancel and return to
the Issuer all unissued Notes of the Issuer in its possession.
SECTION 23. Representation and Warranties of the Issuer; 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 Issuing and Paying Agent by the Issuer that the issuance
and delivery of the Notes is in accordance with the terms and conditions
described in the Offering Circular and the applicable Pricing
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Supplement, have been duly and validly authorized by the Issuer and,
when completed, authenticated and delivered pursuant hereto, the Notes
will constitute the valid and legally binding obligations of the Issuer
enforceable against the Issuer in accordance with its terms.
(b) Any instruction given by the Issuer to the Issuing and Paying
Agent under this Agreement shall be in the form of an Officer's
Certificate. For the purposes of this Agreement, "Officer's 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 Issuer
from time to time and the Issuer agrees 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 the 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 Issuer). The
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 Issuer). The Issuing and Paying Agent will, upon written
request, advise the Issuer 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 follows, or to such other address as the party receiving
such notice shall have previously specified:
If to the Issuer:
NationsBank, N.A.
NationsBank Corporate Center
100 North Tryon Street
6th Floor, NC1-007-06-07
Charlotte, North Carolina 28255
Telephone: (704) 388-2375
Telecopier:(704) 386-9946
Attention: James T. Houghton
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With copies to:
NationsBank Corporation
NationsBank Corporate Center
Legal Department, 20th Floor, NC1-007-20-01
Charlotte, North Carolina 28255
Telephone: (704) 386-9036
Telecopier: (704) 386-6453
Attention: Jacqueline Jarvis Jones
and
Smith Helms Mulliss & Moore, L.L.P.
201 North Tryon Street
Charlotte, North Carolina 28202
Telephone: (704) 343-2229
Telecopier: (704) 334-8467
Attention: Robert M. Donlon
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
with a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Telephone: (212) 715-9392
Telecopies: (212) 715-8000
Attention: Michele D. Ross, Esq.
SECTION 26. Information Furnished by the Issuing and Paying Agent. Upon
the reasonable request of the Issuer and from time to time, the Issuing and
Paying Agent shall promptly provide the 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 the 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 the 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 the 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 the 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, the
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 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.
29
<PAGE>
(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 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) 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 the 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 Issuer covenants and agrees to indemnify the
Issuing and Paying Agent (including its directors, officers, attorneys,
employees and agents) for, and to
30
<PAGE>
hold it harmless against, any loss, liability or expense (including reasonable
attorneys 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 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 insolvency 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 ISSUER 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 the 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 Officer's
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.
31
<PAGE>
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.
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.
The Issuer and Bankers Trust Company agree that on the day on which no notes
issued by the 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 the 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]
32
<PAGE>
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., as Issuer
By: /s/ PAGE P.C. STEPHENS
_____________________________________
Name: Page P.C. Stephens
Title: Senior Vice President
BANKERS TRUST COMPANY, as
Issuing and Paying Agent
By: /s/ SANDRA J. SHAFFER
_____________________________________
Name: Sandra J. Shaffer
Title: Assistant Vice President
33
<PAGE>
EXHIBIT A
---------
Forms of DTC Letters of Representations
34
<PAGE>
EXHIBIT B
---------
Administrative Procedures
35
<PAGE>
EXHIBIT C
---------
Form of Face of Fixed Rate Note
36
<PAGE>
EXHIBIT D
---------
Form of Face of Floating Rate Note
37
<PAGE>
EXHIBIT E
---------
Form of Legend for Original Issue Discount Notes
THIS NOTE IS AN "ORIGINAL ISSUE DISCOUNT NOTE." FOR PURPOSES OF SECTIONS 1272,
1273 AND 1275 OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED,
THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, STATED AS A PERCENTAGE OF ITS (ORIGINAL)
PRINCIPAL AMOUNT IS ____ THE ISSUE DATE IS ___________________ AND THE YIELD TO
MATURITY ON THE ISSUE DATE IS ________% PER ANNUM, COMPOUNDED [SEMI-ANNUALLY].
(THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ALLOCABLE TO THE SHORT INITIAL ACCRUAL
PERIOD IS ______% OF ITS [ORIGINAL] PRINCIPAL AMOUNT AND THE AMOUNT ALLOCABLE TO
THE SHORT FINAL ACCRUAL PERIOD IS ____% OF ITS [ORIGINAL] PRINCIPAL AMOUNT, EACH
DETERMINED ON THE BASIS OF A METHOD TAKING INTO ACCOUNT DAILY COMPOUNDING.]*
*1. Include the word "ORIGINAL" each place it appears in brackets only
in the case of Amortizing Notes.
2. Omit the last sentence in the case of Notes that are issued and
mature exactly on regularly scheduled interest payment dates.
38
<PAGE>
EXHIBIT F
---------
NationsBank, N.A.
Authorized Representatives
Group I Name Title Signature
------- ---- ----- ---------
Group II Name Title Signature
-------- ---- ----- ---------
39
<PAGE>
EXHIBIT G
---------
See Tab 15
Form of Issuing and Paying Agent's
Officer's Certificate Referencing
Authorized Representatives
40
----------------------------------
NationsBank Corporation
NationsBank (DE) Corporation
----------------------------------
FIFTH SUPPLEMENTAL INDENTURE
Dated as of August 28, 1998
Supplementing the Indenture, dated
as of November 27, 1996, between
NationsBank Corporation and
The Bank of New York, as Trustee
----------------------------------
The Bank of New York,
Trustee
----------------------------------
<PAGE>
FIFTH SUPPLEMENTAL INDENTURE, dated as of August 28, 1998 (the "Fifth
Supplemental Indenture"), among NationsBank Corporation, a North Carolina
Corporation ("NationsBank"), NationsBank (DE) Corporation, a Delaware
corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of
NationsBank, and The Bank of New York, a New York banking corporation, as
Trustee (the "Trustee") under the Indenture referred to herein;
WHEREAS, NationsBank and the Trustee heretofore executed and delivered an
Indenture, dated as of November 27, 1996 (the "Indenture"); and
WHEREAS, pursuant to the Indenture, NationsBank issued and the Trustee
authenticated and delivered one or more series of NationsBank's unsecured junior
subordinated debt securities (the "Securities"); and
WHEREAS, NationsBank and BankAmerica Corporation, a Delaware corporation
("BankAmerica"), have entered into the Agreement and Plan of Reorganization,
dated as of April 10, 1998, pursuant to which (i) NationsBank will merge (the
"Reincorporation Merger") with and into NationsBank (DE), in accordance with the
terms and conditions of the Plan of Reincorporation Merger by and between
NationsBank and NationsBank (DE), dated as of August 3, 1998, with NationsBank
(DE) as the surviving corporation in the Reincorporation Merger, and (ii)
BankAmerica will thereafter merge (the "Merger," and together with the
Reincorporation Merger, the "Reorganization") with and into NationsBank (DE),
with NationsBank (DE) as the surviving corporation in the Merger; and
WHEREAS, the Reorganization is expected to be consummated on September 30,
1998; and
WHEREAS, Section 10.01 of the Indenture provides that in the case of the
Reorganization, NationsBank (DE) shall expressly assume by supplemental
indenture all the obligations under the Securities and the Indenture on the part
of NationsBank to be performed or observed; and
WHEREAS, Section 9.01(a) of the Indenture provides that NationsBank and the
Trustee may amend the Indenture and the Securities without notice to or consent
of any holders of the Securities in order to comply with Article Ten of the
Indenture; and
WHEREAS, this Fifth Supplemental Indenture has been duly authorized by all
necessary corporate action on the part of each of NationsBank (DE) and
NationsBank.
-2-
<PAGE>
NOW, THEREFORE, NationsBank (DE), NationsBank and the Trustee agree as
follows for the equal and ratable benefit of the holders of the Securities:
ARTICLE I
ASSUMPTION BY SUCCESSOR CORPORATION
SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby
expressly assumes the due and punctual payment of the principal of, premium, if
any, and interest on all of the Securities of all series in accordance with the
terms of each series, according to their tenor and the due and punctual
performance and observance of all the covenants and conditions of the Indenture
to be performed by NationsBank.
SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this Fifth
Supplemental Indenture and agrees to perform the same under the terms and
conditions set forth in the Indenture.
ARTICLE II
MISCELLANEOUS
SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur of
(i) the execution and delivery of this Fifth Supplemental Indenture by
NationsBank (DE), NationsBank and the Trustee and (ii) the consummation of the
Reincorporation Merger, the Indenture shall be supplemented in accordance
herewith, and this Fifth Supplemental Indenture shall form a part of the
Indenture for all purposes, and every holder of Securities heretofore or
hereafter authenticated and delivered under the Indenture shall be bound
thereby.
SECTION 2.2. Indenture Remains in Full Force and Effect. Except as
supplemented hereby, all provisions in the Indenture shall remain in full force
and effect.
SECTION 2.3. Indenture and Supplemental Indenture Construed Together. This
Fifth Supplemental Indenture is an indenture supplemental to and in
implementation of the Indenture, and the Indenture and this Fifth Supplemental
Indenture shall henceforth be read and construed together.
SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture as
supplemented by this Fifth Supplemental Indenture is in all respects confirmed
and preserved.
SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this
Fifth Supplemental Indenture limits, qualifies or conflicts with any
-3-
<PAGE>
provision of the Trust Indenture Act ("TIA") that is required under the TIA to
be part of and govern any provision of this Fifth Supplemental Indenture, the
provision of the TIA shall control. If any provision of this Fifth Supplemental
Indenture modifies or excludes any provision of the TIA that may be so modified
or excluded, the provision of the TIA shall be deemed to apply to the Indenture
as so modified or to be excluded by this Fifth Supplemental Indenture, as the
case may be.
SECTION 2.6. Severability. In case any provision in this Fifth Supplemental
Indenture shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Indenture.
SECTION 2.8. Headings. The Article and Section headings of this Fifth
Supplemental Indenture have been inserted for convenience of reference only, are
not to be considered part of this Supplemental Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 2.9. Benefits of Fifth Supplemental Indenture, etc. Nothing in this
Fifth Supplemental Indenture or the Securities, express or implied, shall give
to any Person, other than the parties hereto and thereto and their successors
hereunder and thereunder and the holders of the Securities, any benefit of any
legal or equitable right, remedy or claim under the Indenture, this Fifth
Supplemental Indenture or the Securities.
SECTION 2.10. Successors. All agreements of NationsBank (DE) in this Fifth
Supplemental Indenture shall bind its successors. All agreements of the Trustee
in this Fifth Supplemental Indenture shall bind its successors.
SECTION 2.11. Trustee Not Responsible for Recitals. The recitals contained
herein shall be taken as the statements of NationsBank and NationsBank (DE), and
the Trustee assumes no responsibility for their correctness. The Trustee makes
no representations as to, and shall not be responsible for, the validity or
sufficiency of this Fifth Supplemental Indenture.
SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In
entering into this Fifth Supplemental Indenture, the Trustee shall be entitled
to the benefit of every provision of the Indenture relating to
-4-
<PAGE>
the conduct or affecting the liability or affording protection to the Trustee,
whether or not elsewhere herein so provided.
SECTION 2.13. Governing Law. This Fifth Supplemental Indenture shall be
governed by, and construed in accordance with, the laws of the State of New York
but without giving effect to applicable principles of conflicts of law to the
extent that the application of the laws of another jurisdiction would be
required thereby.
SECTION 2.14. Counterpart originals. The parties may sign any number of
copies of this Fifth Supplemental Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Fifth Supplemental
Indenture to be duly executed as of the date first written above.
NationsBank (DE) Corporation
By: /s/ John E. Mack
---------------------------------
Name: John E. Mack
Title: Senior Vice President
NationsBank Corporation
By: /s/ John E. Mack
---------------------------------
Name: John E. Mack
Title: Senior Vice President
The Bank of New York, as Trustee
By: /s/ Sandra Carreker
---------------------------------
Name: Sandra Carreker
Title: Agent
-6-
[CONFORMED COPY]
================================================================================
BANKAMERICA CORPORATION
TO
MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA,
Trustee
----------
Indenture
Dated as of September 1, 1990
----------
Subordinated Debt Securities
================================================================================
<PAGE>
BANKAMERICA CORPORATION
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture dated as of September 1, 1990
Trust Indenture Act Section Indenture Section
ss. 3l0(a)(1) ................................................. 609
(a)(2) ................................................. 609
(a)(3) ................................................. Not Applicable
(a)(4) ................................................. Not Applicable
(a)(5) ................................................. 609
(b) .................................................... 608
610
(c) .................................................... Not Applicable
ss. 311(a) .................................................... 613(a)
(b) .................................................... 613(b)
(b)(2) ................................................. 703(a)(2)
703(b)
ss. 312(a) .................................................... 701
702(a)
(b) .................................................... 702(b)
(c) .................................................... 702(c)
ss. 313(a) .................................................... 703(a)
(b) .................................................... 703(b)
(c) .................................................... 703(c)
(d) .................................................... 703(d)
ss. 314(a) .................................................... 704
(b) .................................................... Not Applicable
(c)(l) ................................................. 102
(c)(2) ................................................. 102
(c)(3) ................................................. Not Applicable
(d) .................................................... Not Applicable
(e) .................................................... 102
ss. 315(a) .................................................... 601(a)
601(c)
(b) .................................................... 602
703(a)(6)
(c) .................................................... 601(b)
(d) .................................................... 601(c)
(d)(1) ................................................. 601(a)
(d)(2) ................................................. 601(c)(2)
(d)(3) ................................................. 601(c)(3)
(e) .................................................... 514
ss. 316(a) .................................................... 101
(a)(1)(A) .............................................. 502
512
(a)(1)(B) .............................................. 513
(a)(2) ................................................. Not Applicable
(b) .................................................... 508
(c) .................................................... 104(h)
ss. 317(a)(1) ................................................. 503
(a)(2) ................................................. 504
(b) .................................................... 1003
ss. 318(a) .................................................... 107
- ----------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C> <C>
PARTIES ........................................................................................................................ 1
RECITALS ....................................................................................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions: ..................................................................................................... 1
Act .............................................................................................................. 1
Affiliate; control; controlling; controlled ...................................................................... 1
Authorized Newspaper ............................................................................................. 1
Bank ............................................................................................................. 2
Bearer Security .................................................................................................. 2
Board of Directors ............................................................................................... 2
Board Resolution ................................................................................................. 2
Business Day ..................................................................................................... 2
Capital Exchange Agent ........................................................................................... 2
Capital Exchange Date ............................................................................................ 2
Capital Exchange Price ........................................................................................... 2
Capital Securities ............................................................................................... 2
Capital Security Election Form ................................................................................... 2
CEDEL; CEDEL S.A. ................................................................................................ 2
Closing Price .................................................................................................... 2
Commission ....................................................................................................... 2
Common Stock ..................................................................................................... 2
Company .......................................................................................................... 3
Company Request; Company Order ................................................................................... 3
Controlled Subsidiary ............................................................................................ 3
Conversion Price ................................................................................................. 3
Convertible Securities ........................................................................................... 3
Corporate Trust Office ........................................................................................... 3
Corporation ...................................................................................................... 3
Coupon ........................................................................................................... 3
Debt Securities .................................................................................................. 3
Defaulted Interest ............................................................................................... 3
Depositary ....................................................................................................... 3
Designated Currency .............................................................................................. 3
Dollar ........................................................................................................... 3
ECU .............................................................................................................. 3
Eligible Instruments ............................................................................................. 3
Euro-clear ....................................................................................................... 3
European Communities ............................................................................................. 3
Event of Default ................................................................................................. 3
Exchange Rate .................................................................................................... 3
Exchange Rate Agent .............................................................................................. 3
Exchange Rate Officer's Certificate .............................................................................. 4
Foreign Currency ................................................................................................. 4
Global Exchange Agent ............................................................................................ 4
Global Exchange Date ............................................................................................. 4
Global Security .................................................................................................. 4
Holder ........................................................................................................... 4
</TABLE>
- ----------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
<TABLE>
<CAPTION>
ii
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<S> <C> <C>
Indenture ........................................................................................................ 4
Interest ......................................................................................................... 4
Interest Payment Date ............................................................................................ 4
Market Value ..................................................................................................... 4
Maturity ......................................................................................................... 4
Officers' Certificate ............................................................................................ 4
Opinion of Counsel ............................................................................................... 4
Optional Securities Fund ......................................................................................... 4
Original Issue Discount Security ................................................................................. 4
Outstanding ...................................................................................................... 5
Paying Agent ..................................................................................................... 5
Perpetual Preferred Stock ........................................................................................ 5
Person ........................................................................................................... 5
Place of Capital Exchange ........................................................................................ 5
Place of Payment ................................................................................................. 5
Predecessor Security ............................................................................................. 5
Primary Federal Regulator ........................................................................................ 5
Redemption Date .................................................................................................. 5
Redemption Price ................................................................................................. 5
Registered Security .............................................................................................. 6
Regular Record Date .............................................................................................. 6
Remarketing Entity ............................................................................................... 6
Repayment Date ................................................................................................... 6
Repayment Price .................................................................................................. 6
Responsible Officer .............................................................................................. 6
Rights ........................................................................................................... 6
Secondary Offering ............................................................................................... 6
Securities Fund .................................................................................................. 6
Security Register; Security Registrar ............................................................................ 6
Senior Debt ...................................................................................................... 6
Special Record Date .............................................................................................. 6
Stated Maturity .................................................................................................. 6
Trust indenture Act .............................................................................................. 6
Trustee .......................................................................................................... 6
United States .................................................................................................... 6
United States Alien .............................................................................................. 6
U.S. Government Obligations ...................................................................................... 7
Voting Stock ..................................................................................................... 7
SECTION 102. Compliance Certificates and Opinions ............................................................................. 7
SECTION 103. Form of Documents Delivered to Trustee ........................................................................... 7
SECTION 104. Acts of Holders .................................................................................................. 8
SECTIoN 105. Notices; etc.; to Trustee and Company ............................................................................ 9
SECTION 106. Notice to Holders; Waiver ........................................................................................ 9
SECTION 107. Conflict with Trust Indenture Act ................................................................................ 10
SECTION 108. Effect of Headings and Table of Contents ......................................................................... 10
SECTION 109. Successors and Assigns ........................................................................................... 10
SECTION 110. Separability Clause .............................................................................................. 10
SECTION 111. Benefits of Indenture ............................................................................................ 10
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
iii
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<S> <C> <C>
SECTION 112. Governing Law .................................................................................................... 10
SECTION 113. Legal Holidays ................................................................................................... 10
SECTION 114. Counterparts ..................................................................................................... 10
ARTICLE TWO
DEBT SECURITY FORMS
SECTION 201. Forms Generally .................................................................................................. 11
SECTION 202. Form of Trustee's Certificate of Authentication .................................................................. 11
SECTION 203. Debt Securities in Global Form ................................................................................... 11
ARTICLE THREE
THE DEBT SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series ............................................................................. 12
SECTION 302. Denominations .................................................................................................... 14
SEcTION 303. Execution, Authentication, Delivery and Dating ................................................................... 14
SECTION 304. Temporary Debt Securities ........................................................................................ 16
SECTION 305. Registration, Registration of Transfer and Exchange .............................................................. 18
SECTIoN 306. Mutilated, Destroyed, Lost and Stolen Debt Securities ............................................................ 20
SECTION 307. Payment of Interest; Interest Rights Preserved ................................................................... 21
SECTION 308. Persons Deemed Owners ............................................................................................ 22
SECTION 309. Cancellation ..................................................................................................... 23
SECTION 310. Computation of Interest .......................................................................................... 23
SECTION 311. Certification by a Person Entitled to Delivery of a Bearer Security .............................................. 23
SECTION 312. Judgments ........................................................................................................ 23
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture .......................................................................... 24
SECTION 402. Application of Trust Money and Eligible Instruments .............................................................. 25
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default ................................................................................................ 25
SECTION 502. Acceleration of Maturity; Rescission and Annulment ............................................................... 25
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee .................................................. 26
SECTION 504. Trustee May File Proofs of Claim ................................................................................. 27
SECTION 505. Trustee May Enforce Claims without Possession of Debt Securities or Coupons ...................................... 27
SECTION 506. Application of Money Collected, .................................................................................. 28
SECTION 507. Limitation on Suits .............................................................................................. 28
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest and to
Exchange Debt Securities for Capital Securities .................................................................. 28
SECTION 509. Restoration of Rights and Remedies ............................................................................... 29
SECTION 510. Rights and Remedies Cumulative ................................................................................... 29
SECTION 511. Delay or Omission Not Waiver ..................................................................................... 29
SECTION 512. Control by Holders of Debt Securities ............................................................................ 29
SECTIoN 513. Waiver of Past Defaults .......................................................................................... 29
SECTION 514. Undertaking for Costs ............................................................................................ 30
SECTION 515. Waiver of Stay or Extension Laws ................................................................................. 30
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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ARTICLE SIX
THE TRUSTEE
<S> <C> <C>
SECTION 601. Certain Duties and Responsibilities .............................................................................. 30
SECTION 602. Notice of Defaults ............................................................................................... 31
SECTION 603. Certain Rights of Trustee ........................................................................................ 31
SECTION 604. Not Responsible for Recitals or Issuance of Debt Securities ...................................................... 32
SECTION 605. May Hold Debt Securities or Coupons .............................................................................. 32
SECTION 606. Money Held in Trust .............................................................................................. 32
SECTION 607. Compensation and Reimbursement ................................................................................... 32
SECTION 608. Disqualification; Conflicting Interests .......................................................................... 33
(a) Elimination of Conflicting Interest or Resignation ........................................................ 33
(b) Notice of Failure to Eliminate Conflicting interest or Resign ............................................. 33
(c) "Conflicting Interest" Defined ............................................................................ 33
(d) Definitions of Certain Terms Used in this Section ......................................................... 35
(e) Calculation of Percentages of Securities .................................................................. 36
(f) Amendments to Trust Indenture Act ......................................................................... 36
SECTION 609. Corporate Trustee Required; Eligibility .......................................................................... 37
SECTION 610. Resignation and Removal; Appointment of Successor ................................................................ 37
SECTION 611. Acceptance of Appointment by Successor ........................................................................... 38
SECTION 612. Merger, Conversion; Consolidation or Succession to Business ...................................................... 39
SECTION 613. Preferential Collection of Claims Against Company ................................................................ 39
(a) Segregation and Apportionment of Certain Collections by Trustee;
Certain Exceptions ...................................................................................... 39
(b) Certain Creditor Relationships Excluded from Segregation and
Apportionment ........................................................................................... 41
(c) Definitions of Certain Terms Used in this Section ......................................................... 41
SECTION 614. Authenticating Agent ............................................................................................. 41
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders ........................................................ 43
SECTION 702. Preservation of Information; Communications to Holders ........................................................... 43
SECTION 703. Reports by Trustee ............................................................................................... 44
SECTION 704. Reports by Company ............................................................................................... 45
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, etc.; Only on Certain Terms ............................................................. 45
SECTION 802. Successor Corporation Substituted ................................................................................ 46
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures without Consent of Holders ............................................................... 46
SECTION 902. Supplemental Indentures with Consent of Holders .................................................................. 47
SECTION 903. Execution of Supplemental Indentures ............................................................................. 48
SECTION 904. Effect of Supplemental Indentures ................................................................................ 48
SECTION 905. Conformity with Trust Indenture Act .............................................................................. 48
SECTION 906. Reference in Debt Securities to Supplemental Indentures .......................................................... 48
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COVENANTS
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SECTION 1001. Payment of Principal, Premium and Interest ....................................................................... 49
SECTION 1002. Maintenance of Office or Agency .................................................................................. 49
SECTION 1003. Money for Debt Securities Payments to Be Held in Trust ........................................................... 50
SECTION 1004. Officers' Certificate as to Default .............................................................................. 51
SECTION 1005. Limitation on Disposition of Voting Stock of, and Merger and Sale of Assets by, the Bank ......................... 51
SECTION 1006. Payment of Additional Amounts .................................................................................... 51
SECTION 1007. Waiver of Certain Covenants ...................................................................................... 52
ARTICLE ELEVEN
REDEMPTION OF DEBT SECURITIES
SECTION 1101. Applicability of Article ......................................................................................... 52
SECTION 1102. Election to Redeem; Notice to Trustee ............................................................................ 52
SECTION 1103. Selection by Trustee of Debt Securities to Be Redeemed ........................................................... 52
SECTION 1104. Notice of Redemption ............................................................................................. 53
SECTION 1105. Deposit of Redemption Price ...................................................................................... 53
SECTION 1106. Debt Securities Payable on Redemption Date ....................................................................... 53
SECTION 1107. Debt Securities Redeemed in Part ................................................................................. 54
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article ......................................................................................... 54
SECTION 1202. Satisfaction of Sinking Fund Payments with Debt Securities ....................................................... 54
SECTION 1203. Redemption of Debt Securities for Sinking Fund ................................................................... 55
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. Applicability of Article ......................................................................................... 55
SECTION 1302. Repayment of Debt Securities ..................................................................................... 55
SECTION 1303. Exercise of Option: Notice ....................................................................................... 55
SECTION 1304. Election of Repayment by Remarketing Entities .................................................................... 56
SECTION 1305. Debt Securities Payable on the Repayment Date .................................................................... 56
ARTICLE FOURTEEN
EXCHANGE OF CAPITAL SECURITIES FOR DEBT SECURITIES
SECTION 1401. Applicability of Article ......................................................................................... 56
SECTION 1402. Exchange of Capital Securities for Debt Securities at Stated Maturity ............................................ 57
SECTION 1403. Right of Early Exchange of Capital Securities for Debt Securities ................................................ 57
SECTION 1404. Notices of Exchange .............................................................................................. 58
SECTION 1405. Rights and Duties of Holders of Debt Securities to be Exchanged for Capital Securities ........................... 59
SECTION 1406. Election to Exchange ............................................................................................. 60
SECTION 1407. Deposit of Capital Exchange Price ................................................................................ 60
SECTION 1408. Debt Securities Due on Capital Exchange Date; Debt Securities Exchanged in Part .................................. 60
SECTION 1409. Form of Capital Security Election Form ........................................................................... 61
SECTION 1410. Fractional Capital Securities .................................................................................... 62
SECTION 1411. Company to Obtain Governmental and Regulatory Approvals .......................................................... 62
SECTION 1412. Taxes on Exchange ................................................................................................ 62
SECTION 1413. Covenants as to Capital Securities and Secondary Offering ........................................................ 62
SECTION 1414. Provision in Case of Consolidation, Merger or Transfer of Assets ................................................. 62
SECTION 1415. Responsibility of Trustee ........................................................................................ 63
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SECTION 1416. Revocation of Obligation to Exchange Capital Securities for Debt Securities ...................................... 63
SECTION 1417. Optional Securities Funds ........................................................................................ 63
ARTICLE FIFTEEN
SECURITIES FUNDS
SECTION 1501. Creation of Securities Funds ..................................................................................... 64
SECTION 1502. Designations of Securities Funds ................................................................................. 64
SECTION 1503. Covenant of the Company to Obtain Securities Funds ............................................................... 65
ARTICLE SIXTEEN
MEETINGS OF HOLDERS OF DEBT SECURITIES
SECTION 1601. Purposes for Which Meetings May Be Called ........................................................................ 65
SECTION 1602. Call, Notice and Place of Meetings ............................................................................... 65
SECTION 1603. Persons Entitled to Vote at Meetings ............................................................................. 66
SECTION 1604. Quorum; Action ................................................................................................... 66
SECTION 1605. Determination of Voting Rights; Conduct and Adjournment of Meetings .............................................. 66
SECTION 1606. Counting Votes and Recording Action of Meetings .................................................................. 67
ARTICLE SEVENTEEN
DEFEASANCE
SECTION 1701. Termination of Company's Obligations ............................................................................. 67
SECTION 1702. Repayment to Company ............................................................................................. 68
SECTION 1703. Indemnity for Eligible Instruments ............................................................................... 68
ARTICLE EIGHTEEN
SUBORDINATION OF DEBT SECURITIES
SECTION 1801. Debt Securities Subordinate to Senior Debt ....................................................................... 68
SECTION 1802. Trustee and Holders of Debt Securities May Rely on Certificate of Liquidating Agent:
Trustee May Require Further Evidence as to Ownership of Senior Debt: Trustee Not
Fiduciary to Holders of Senior Debt ............................................................................ 70
SECTION 1803. Payment Permitted If No Default .................................................................................. 71
SECTION 1804. Trustee Not Charged With Knowledge of Prohibition ................................................................ 71
SECTION 1805. Trustee to Effectuate Subordination .............................................................................. 71
SECTION 1806. Rights of Trustee as Holder of Senior Debt ....................................................................... 71
SECTION 1807. Article Applicable to Paying Agents .............................................................................. 71
SECTION 1808. Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of
Senior Debt .................................................................................................... 71
ARTICLE NINETEEN
CONVERSION OF CONVERTIBLE SECURITIES
SECTION 1901. Applicability of Article ......................................................................................... 72
SECTION 1902. Right to Convert ................................................................................................. 72
SECTION 1903. Exercise of Conversion Privilege; Delivery of Common Stock on Conversion:
No Adjustment for Interest or Dividends ........................................................................ 72
SECTION 1904. Cash Payments in Lieu of Fractional Shares ....................................................................... 73
SECTION 1905. Conversion Price ................................................................................................. 73
SECTION 1906. Adjustment to Conversion Price ................................................................................... 73
SECTION 1907. Effect of Reclassification. Consolidation, Merger or Sale ........................................................ 76
SECTION 1908. Taxes on Shares Issued ........................................................................................... 76
SECTION 1909. Shares to be Fully Paid; Compliance with Governmental Requirements; Listing of Common
Stock .......................................................................................................... 77
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SECTION 1910. Responsibility of Trustee ........................................................................................ 77
SECTION 1911. Notice to Holders Prior to Certain Actions ....................................................................... 77
SECTION 1912. Covenant to Reserve Shares ....................................................................................... 78
TESTIMONIUM .................................................................................................................... 79
SIGNATURES AND SEALS ........................................................................................................... 79
ACKNOWLEDGEMENTS ............................................................................................................... 80
EXHIBIT A ...................................................................................................................... A-1
EXHIBIT B ...................................................................................................................... B-1
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INDENTURE dated as of September 1. 1990, between BANKAMERICA CORPORATION, a
Delaware corporation (hereinafter called the "Company"), having its principal
place of business at Bank of America Center, 555 California Street, San
Francisco, California 94104 and Manufacturers Hanover Trust Company of
California, a California corporation (hereinafter called the "Trustee"), having
its Corporate Trust Office at 50 California Street, San Francisco, California
94111.
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its subordinated
debentures, notes, bonds or other evidences of indebtedness (herein called the
"Debt Securities"), to be issued in one or more series.
All things necessary have been done to make this Indenture a valid
agreement of the Company, in accordance with its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Debt
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Debt Securities or of any
series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation; and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act" when used with respect to any Holder has the meaning specified in
Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authorized Newspaper" means a newspaper in an official language of the
country of publication or in the English language customarily published on each
Business Day, whether or not published on Saturdays, Sundays or holidays, and of
general circulation in the place in connection with which the term is used or in
the financial community of such place. Where successive publications are
required to be made in Authorized Newspapers, the
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2
successive publications may be made in the same or in different newspapers in
the same city meeting the foregoing requirements and in each case on any
Business Day.
"Bank" means Bank of America National Trust and Savings Association, a
national banking association, and any successors to any substantial part of the
present business thereof.
"Bearer Security" means any Debt Security in the form of bearer securities
established pursuant to Section 201 which is payable to bearer.
"Board of Directors" means either the board of directors of the Company, or
the executive or any other committee of that board duly authorized to act in
respect hereof.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment or Place of
Capital Exchange, means any day which is not a Saturday or Sunday and which is
not a legal holiday or a day on which banking institutions or trust companies in
that Place of Payment or Place of Capital Exchange are authorized or obligated
by law or executive order to close.
"Capital Exchange Agent" means the Person or Persons appointed by the
Company to give notices and to exchange Debt Securities of any series for
Capital Securities as specified in Article Fourteen.
"Capital Exchange Date", when used with respect to the Debt Securities of
any series, means any date on which such Debt Securities are to be exchanged for
Capital Securities pursuant to this Indenture.
"Capital Exchange Price", when used with respect to any Debt Security of
any series to be exchanged for Capital Securities, means the amount of Capital
Securities for which such Debt Security is to be exchanged pursuant to this
Indenture or the aggregate sale price of such Capital Securities in the
Secondary Offering for such Debt Security, as the case may be.
"Capital Securities" means any securities issued by the Company which
consist of any of the following: (i) Common Stock, (ii) Perpetual Preferred
Stock or (iii) securities which at the date of issuance may be issued in
exchange for, or the proceeds from the sale of which may be designated as
Securities Funds or Optional Securities Funds for the payment of the principal
of, "mandatory convertible securities" under applicable regulations of the
Primary Federal Regulator. Capital Securities may have such terms, rights and
preferences as may be determined by the Company.
"Capital Security Election Form" means a form substantially in the form
included in Section 1409.
"CEDEL" or "CEDEL S.A." means Centrale de Livraison de Valeurs Mobilieres
S.A.
"Closing Price" has the meaning specified in Section 1906(d).
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties on such date.
"Common Stock" means when used with reference to the capital stock of the
Company, the class of stock which, at the date of execution of this Indenture
[ILLEGIBLE] designated as common stock of the Company and stock of any class or
classes into which such common stock or such other class may thereafter be
changed or reclassified. In case by reason of the operation of Article Nineteen
the Convertible Securities shall be convertible into any other shares or other
securities or property of the Company or any other corporation, any reference in
this Indenture to the conversion of Convertible Securities pursuant to Article
Nineteen shall be deemed to refer to and include conversion of Convertible
Securities into such other shares or other securities or property.
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3
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.
"Company Request" and "Company Order" mean, respectively, a written request
or order signed in the name of the Company by the Chairman of the Board, the
Chairman of the Executive Committee of the Board, a Vice Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, a Vice
Chairman or a Vice President (any reference to a Vice President of the Company
herein shall be deemed to include any Vice President of the Company whether or
not designated by a number or word or words added before or after the title
"Vice President"), and by the Treasurer, an Assistant Treasurer, Secretary or an
Assistant Secretary of the Company, and delivered to the Trustee.
"Controlled Subsidiary" means any corporation more than 80% of the
outstanding shares of Voting Stock, except for directors' qualifying shares, of
which shall at the time be owned directly by the Company.
"Conversion Price" has the meaning specified in Section 1904.
"Convertible Securities" means any series of Debt Securities that are
designated as such pursuant to Section 301.
"Corporate Trust Office" means the principal corporate trust office of the
Trustee at which at any particular time its corporate trust business shall be
administered.
The term "corporation" includes corporations, associations, companies and
business trusts.
The term "coupon" means any interest coupon appertaining to a Bearer
Security.
"Debt Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Debt Securities authenticated and
delivered under this Indenture.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means, with respect to the Debt Securities of any series
issuable or issued in the form of a Global Security, the Person designated as
Depositary by the Company pursuant to Section 301 until a successor Depositary
shall have become such pursuant to the applicable provisions of this Indenture,
and thereafter "Depositary" shall mean or include each Person who is then a
Depositary hereunder, and if at any time there is more than one such Person,
"Depositary" as used with respect to the Debt Securities of any such series
shall mean the Depositary with respect to the Debt Securities of that series.
"Designated Currency" has the meaning specified in Section 312.
"Dollar" or "$" means the 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.
"ECU" means the European Currency Unit as defined and revised from time to
time by the Council of the European Communities.
"Eligible Instruments" means monetary assets, money market instruments and
securities that are payable in U.S. Dollars only and essentially risk free as to
collection of principal and interest, including U.S. Government Obligations.
"Euro-clear" means Morgan Guaranty Trust Company of New York, Brussels
Office, as operator of the Euro-clear System.
"European Communities" means the European Economic Community, the European
Coal and Steel Community and the European Atomic Energy Community.
"Event of Default" has the meaning specified in Section 501.
"Exchange Rate" shall have the meaning specified as contemplated in Section
301.
"Exchange Rate Agent" shall have the meaning specified as contemplated in
Section 301.
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"Exchange Rate Officer's Certificate", with respect to any date for the
payment of principal of (and premium, if any) and interest on any series of Debt
Securities, means a certificate setting forth the applicable Exchange Rate and
the amounts payable in Dollars and Foreign Currencies in respect of the
principal of (and premium, if any) and interest on Debt Securities denominated
in ECU, and other composite currency or Foreign Currency, and signed by the
Chairman of the Board, the Chairman of the Executive Committee of the Board, a
Vice Chairman of the Board, the President, the Treasurer or any Assistant
Treasurer of the Company or the Exchange Rate Agent appointed pursuant to
Section 301 and delivered to the Trustee.
"Foreign Currency" means a currency issued by the government of any country
other than the United States of America.
"Global Exchange Agent" has the meaning specified in Section 304.
"Global Exchange Date" has the meaning specified in Section 304.
"Global Security" means a Debt Security issued to evidence all or a part of
a series of Debt Securities in accordance with Section 303.
"Holder", with respect to a Registered Security, means a Person in whose
name such Registered Security is registered in the Security Register and, with
respect to a Bearer Security or a coupon, means the bearer thereof.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented, amended or restated by or pursuant to one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof and, unless the context otherwise requires, shall include the
terms of a particular series of Debt Securities established as contemplated by
Section 301.
The term "interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.
"Interest Payment Date", with respect to any Debt Security, means the
Stated Maturity of an instalment of interest on such Debt Security.
"Market Value" of any Capital Securities issued on any Capital Exchange
Date for Debt Securities of any series shall be the sale price of such Capital
Securities which are sold in the Secondary Offering for the Debt Securities of
such series. In the event no such Secondary Offering takes place, the Market
Value of such Capital Securities shall be the fair value of such Capital
Securities on such Capital Exchange Date for Debt Securities of such series as
determined by three independent nationally recognized investment banking firms
selected by the Company.
"Maturity", when used with respect to any Debt Security, means the date on
which the principal of such Debt Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or exchange, repayment at the option of the
Holder or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the Chairman of the Executive Committee of the Board, a Vice Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, a Vice Chairman or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may (except as
otherwise expressly provided in this Indenture) be counsel for the Company, or
who may be other counsel acceptable to the Trustee, which is delivered to the
Trustee.
"Optional Securities Fund" means a fund pursuant to which the proceeds of
sales of Capital Securities may be designated on the books of the Company for
the amount of any of the principal of any Debt Security pursuant to Section 1417
of this Indenture.
"Original Issue Discount Security" means a Debt Security which
provides for an amount less than the principal amount thereof to be due and
payable upon declaration of acceleration of the Maturity thereof pursuant to
Section 502.
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5
"Outstanding" when used with respect to Debt Securities means, as of the
date of determination, all Debt Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Debt Securities theretofore cancelled by the Trustee or delivered
to the Trustee for cancellation;
(ii) Debt Securities or portions thereof for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Company) in trust or
set aside and segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of such Debt Securities and any
coupons appertaining thereto; provided, however, that if such Debt
Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made; and
(iii) Debt Securities in exchange for or in lieu of which other Debt
Securities have been authenticated and delivered, or which have been paid,
pursuant to this Indenture;
provided, however, that in determining whether the Holders of the requisite
principal amount of Debt Securities Outstanding have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Debt Securities
owned by the Company or any other obligor upon the Debt Securities or any
Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon such request, demand, authorization,
direction, notice, consent or waiver, only Debt Securities which the Trustee
knows to be so owned shall be so disregarded. Debt Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Debt Securities and that the pledgee is not the Company or
any other obligor upon the Debt Securities or any Affiliate of the Company or of
such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Debt Securities on behalf
of the Company.
"Perpetual Preferred Stock" means any stock of any class of the Company
which has a preference over Common Stock in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which is not mandatorily redeemable or repayable,
or redeemable or repayable at the option of the Holder, otherwise than in shares
of Common Stock or Perpetual Preferred Stock of another class or series or with
the proceeds of the sale of Common Stock or Perpetual Preferred Stock.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Capital Exchange", when used with respect to Debt Securities of
any series, means any place where the Debt Securities of such series are
exchangeable for Capital Securities as specified pursuant to Section 301.
"Place of Payment", when used with respect to the Debt Securities of any
series means any place where the principal of (and premium, if any) and interest
on the Debt Securities of that series are payable as specified as contemplated
by Section 301.
"Predecessor Security" of any particular Debt Security means every previous
Debt Security evidencing all or a portion of the same debt as that evidenced by
such particular Debt Security; and, for the purposes of this definition, any
Debt Security authenticated and delivered under Section 306 in lieu of a lost,
destroyed or stolen Debt Security shall be deemed to evidence the same debt as
the lost, destroyed or stolen Debt Security.
"Primary Federal Regulator" means the primary United States federal
regulator of the Company (which at the date of this Indenture is the Board of
Governors of the Federal Reserve System), or any successor body or institution.
"Redemption Date", when used with respect to any Debt Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Debt Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
<PAGE>
6
"Registered Security" means any Debt Security in the form of Registered
Securities established pursuant to Section 201 which is registered in the
Security Register.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Registered Securities of any series means the date specified for that
purpose as contemplated by Section 301.
"Remarketing Entity", when used with respect to Debt Securities of any
series which are repayable at the option of the Holders thereof before their
Stated Maturity, means any person designated by the Company to purchase any such
Debt Securities.
"Repayment Date", when used with respect to any Debt Security to be repaid
upon exercise of option for repayment by the Holder, means the date fixed for
such repayment pursuant to this Indenture.
"Repayment Price", when used with respect to any Debt Security to be repaid
upon exercise of option for repayment by the Holder, means the price at which it
is to be repaid pursuant to this Indenture.
"Responsible Officer" when used with respect to the Trustee, means any
officer within the Corporate Trust Department (or any successor group) of the
Trustee, including any vice president, assistant vice president, trust officer,
assistant secretary or any other officer or assistant officer of the Trustee
customarily performing functions similar to those performed by the persons who
at the time shall be such officers, respectively, or to whom any corporate trust
matter is referred at the Trustee's Corporate Trust Office because of his
knowledge of and familiarity with the particular subject.
"Rights" has the meaning specified in Section 1906(c).
"Secondary Offering", when used with respect to the Debt Securities of any
series, means the offering and sale by the Company of Capital Securities for the
account of Holders of Debt Securities of such series who elect to receive cash
and not Capital Securities on the Capital Exchange Date for such series.
"Securities Fund" means a fund pursuant to which the proceeds of sales of
Capital Securities are designated on the books of the Company for the payment of
any principal of any Debt Security pursuant to the provisions of Section 1501.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Senior Debt" means any obligation of the Company to its creditors whether
now outstanding or subsequently incurred other than (i) any obligation as to
which, in the instrument creating or evidencing the same or pursuant to which
the same is outstanding, it is provided that such obligation is not Senior Debt
and (ii) obligations evidenced by the Debt Securities.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Debt Security or any
instalment of interest thereon, means the date specified in such Debt Security
or a coupon representing such instalment of interest as the fixed date on which
the principal of such Debt Security or such instalment of interest is due and
payable.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed, except as provided in Section
905.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person. "Trustee" as used with respect to the Debt Securities
of any series shall mean the Trustee with respect to Debt Securities of that
series.
"United States" means the United States of America (including the District
of Columbia) and its possessions.
"United States Alien" means any Person who, for United States Federal
income tax purposes, is a foreign corporation, a non-resident alien individual,
a non-resident alien fiduciary of a foreign estate or trust, or a foreign
<PAGE>
7
partnership one or more of the members of which is, for United States Federal
income tax purposes, a foreign corporation, a non-resident alien individual or a
non-resident alien fiduciary of a foreign estate or trust.
"U.S. Government Obligations" means direct obligations of the United States
for the payment of which its full faith and credit is pledged, or obligations of
a person controlled or supervised by and acting as an agency or instrumentality
of the United States the timely payment of which is unconditionally guaranteed
as a full faith and credit obligation by the United States.
"Voting Stock", as applied to the stock (or the equivalent thereof) of any
corporation, means stock (or the equivalent thereof) of any class or classes,
however designated, having ordinary voting power for the election of a majority
of the directors of such corporation, other than stock (or such equivalent)
having such power only by reason of the happening of a contingency.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture (other than the delivery of any
Debt Security to the Trustee for authentication pursuant to Section 303), the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than certificates provided
pursuant to Section 704(4)) shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based is
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters is erroneous.
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing.
If Debt Securities of a series are issuable in whole or in part as Bearer
Securities, any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this indenture to be given or taken by
Holders may, alternatively, be embodied in and evidenced by the record of
Holders of Debt Securities voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Debt Securities
duly called and held in accordance with the provisions of Article Sixteen, or a
combination of such instruments and any such record. Except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee, and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this indenture and (subject to Section 601)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section. The record of any meeting of Holders of Debt
Securities shall be proved in the manner provided in Section 1606.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved in any manner which the Trustee deems sufficient.
(c) The ownership of Registered Securities shall be proved by the Security
Register.
(d) The principal amount and serial numbers of Bearer Securities held by
any Person, and the date of holding the same, may be proved by the production of
such Bearer Securities or by a certificate executed, as depositary, by any trust
company, bank, banker or other depositary, wherever situated, if such
certificate shall be deemed sufficient by the Trustee, showing that at the date
therein mentioned such Person had on deposit with such depositary, or exhibited
to it, the Bearer Securities in the amount and with the serial numbers therein
described; or such facts may be proved by the certificate or affidavit of the
Person holding such Bearer Securities, if such certificate or affidavit is
deemed sufficient by the Trustee. The Trustee and the Company may assume that
such ownership of any Bearer Security continues until (1) another certificate or
affidavit bearing a later date issued in respect of the same Bearer Security is
produced, or (2) such Bearer Security is produced to the Trustee by some other
Person, or (3) such Bearer Security is surrendered in exchange for a Registered
Security, or (4) such Bearer Security is no longer Outstanding.
(e) The fact and date of execution of any such instrument or writing, the
authority of the Person executing the same and the principal amount and serial
numbers of Bearer Securities held by the Person so executing such instrument or
writing and the date of holding the same may also be proved in any other manner
which the Trustee deems sufficient; and the Trustee may in any instance require
further proof with respect to any of the matters referred to in this Section.
(f) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Debt Security shall bind every future holder
of the same Debt Security and the Holder of every Debt Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, suffered or omitted by the Trustee or the Company's
reliance thereon, whether or not notation of such action is made upon such Debt
Security.
(g) For purposes of determining the principal amount of Outstanding
Debt Securities of any series the Holders of which are required, requested or
permitted to give, request, demand, authorization, direction, notice,
consent, waiver or take any other Act under this indenture, each Original
Issue Discount Security shall be deemed to have the principal amount determined
by the Trustee [ILLEGIBLE] could be declared to be due and payable pursuant to
the terms of such Original Issue Discount Security as of the date there is
delivered to the Trustee and, where it is hereby expressly required, to the
Company, such Act by Holders of the required aggregate principal amount of the
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9
Outstanding Debt Securities of such series and (ii) each Debt Security
denominated in a Foreign Currency or composite currency shall be deemed to have
the principal amount determined by the Exchange Rate Agent by converting the
principal amount of such Debt Security in the currency in which such Debt
Security is denominated into Dollars at the Exchange Rate as of the date such
Act is delivered to the Trustee and, where it is hereby expressly required, to
the Company by Holders of the required aggregate principal amount of the
Outstanding Debt Securities of such series (or, if there is no such rate on such
date, such rate on the date determined as specified as contemplated in Section
301).
(h) The Company may set a record date for purposes of determining the
identity of Holders of Debt Securities of any series entitled to vote or consent
to any action by vote or consent authorized or permitted by Section 512 or
Section 513. Such record date shall be the later of 30 days prior to the first
solicitation of such consent or the date of the most recent list of Holders of
such Debt Securities furnished to the Trustee pursuant to Section 701 prior to
such solicitation.
SECTION 105. Notices, etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent waiver or
other Act of Holders or other document provided or permitted by this Indenture
to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided),
if made, given, furnished or filed in writing to or with the Trustee at its
Corporate Trust Office, Attention: Corporate Trust Department, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to the attention of its Secretary at the address of its principal
office specified in the first paragraph of this instrument or at any other
address previously furnished in writing to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of any event, (1) such notice shall be
sufficiently given to Holders of Registered Securities if in writing and mailed,
first-class postage prepaid, to each Holder of a Registered Security affected by
such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice: and (2) such notice shall be sufficiently given to
Holders of Bearer Securities by publication thereof in an Authorized Newspaper
in The City of New York and, if the Debt Securities of such series are then
listed on The International Stock Exchange of the United Kingdom and the
Republic of Ireland and such stock exchange shall so require, in London, and, if
the Debt Securities of such series are then listed on the Luxembourg Stock
Exchange and such stock exchange shall so require, in Luxembourg and, if the
Debt Securities of such series are then listed on any other stock exchange
outside the United States and such stock exchange shall so require, in any other
required city outside the United States or, if not practicable, in Europe on a
Business Day at least twice, the first such publication to be not earlier than
the earliest date and not later than the latest date prescribed for the giving
of such notice.
In case, by reason of the suspension of or irregularities in regular mail
service or for any other reason, it shall be impossible or impracticable to mail
notice of any event to Holders when said notice is required to be given pursuant
to any provision of this Indenture or of the Debt Securities, then any manner of
giving such notice as shall be satisfactory to the Trustee shall be deemed to be
a sufficient giving of such notice. In any case where notice to Holders of
Registered Securities is given by mail, neither the failure to mail such notice,
nor any defect in any notice so mailed, to any particular Holder of a Registered
Security shall affect the sufficiency of such notice with respect to other
Holders of Registered Securities or the sufficiency of any notice by publication
to Holders of Bearer Securities given as provided above.
In case, by reason of the suspension of publication of any Authorized
Newspaper, or by reason of any other cause, it shall be impossible or
impracticable to make publication of any notice to Holders of Bearer Securities
as provided above, then such method of publication or notification as shall be
made with the approval of the Trustee shall constitute a sufficient publication
of such notice. Neither failure to give notice by publication to Holders of
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10
Bearer Securities as provided above, nor any defect in any notice so published,
shall affect the sufficiency of any notice mailed to Holders of Registered
Securities as provided above.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
Any request, demand, authorization, direction, notice, consent, election,
waiver or other Act required or permitted under this Indenture shall be in the
English language, except that any published notice may be in an official
language of the country of publication.
SECTION 107. Conflict with Trust Indenture Act
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the Trust Indenture Act, such required provision shall
control.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Debt Securities or
coupons shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 111. Benefits of indenture.
Nothing in this Indenture or in the Debt Securities or coupons, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, any Paying Agent and the Holders, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
SECTION 112. Governing Law.
This indenture and the Debt Securities and coupons shall be governed by and
construed in accordance with the laws of the State of California.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, Repayment
Date, Capital Exchange Date or Stated Maturity of any Debt Security shall not be
a Business Day at any Place of Payment or Place of Capital Exchange, then
(notwithstanding any other provision of this Indenture or of the Debt Securities
or coupons) payment of interest or principal (and premium, if any) or exchange
of Debt Securities for Capital Securities or cash need not be made at such Place
of Payment or Place of Capital Exchange on such date, but may be made on the
next succeeding Business Day at such Place of Payment or Place of Capital
Exchange with the same force and effect as if made on the Interest Payment Date,
Redemption Date, Repayment Date, Capital Exchange Date or Stated Maturity, and
no interest shall accrue for the period from and after such interest Payment
Date, Redemption Date, Repayment Date, Capital Exchange Date or Stated Maturity,
as the case may be.
SECTION 114. Counterparts.
This Indenture may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same Indenture.
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ARTICLE TWO
DEBT SECURITY FORMS
SECTION 201. Forms Generally.
The Registered Securities, if any, and the Bearer Securities and related
coupons, if any, of each series shall be in substantially the form (including
temporary or permanent global form) as shall be established in or pursuant to a
Board Resolution or in one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon, as may be required to comply with the rules of any securities exchange,
or as may, consistently herewith, be determined by the officers executing such
Debt Securities or coupons, as evidenced by their signatures on the Debt
Securities or coupons. If the form of Debt Securities of any series or coupons
(including any such Global Security) is established by action taken pursuant to
a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 303 or the authentication and delivery of such Debt
Securities or coupons.
Unless otherwise specified as contemplated by Section 301, Debt Securities
in bearer form shall have coupons attached.
The definitive Debt Securities and coupons, if any, shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Debt Securities,
as evidenced by the execution of such Debt Securities and coupons.
SECTION 202. Form of Trustee's Certificate of Authentication.
This is one of the Debt Securities of the series designated herein,
described in the within-mentioned Indenture.
MANUFACTURERS HANOVER TRUST COMPANY OF
CALIFORNIA
as Trustee
By ___________________________________
Authorized Officer
SECTION 203. Debt Securities in Global Form.
If Debt Securities of a series are issuable in whole or in part in global
form, as specified as contemplated by Section 301, then, notwithstanding clause
(12) of Section 301 and the provisions of Section 302, such Global Security
shall represent such of the outstanding Debt Securities of such series as shall
be specified therein and may provide that it shall represent the aggregate
amount of Outstanding Debt Securities from time to time endorsed thereon and
that the aggregate amount of Outstanding Debt Securities represented thereby may
from time to time be reduced to reflect exchanges. Any endorsement of a Global
Security to reflect the amount, or any increase or decrease in the amount, of
Outstanding Debt Securities represented thereby shall be made in such manner and
upon instructions given by such Person or Persons as shall be specified therein
or in the Company Order to be delivered to the Trustee pursuant to Section 303
or Section 304.
The provisions of the last sentence of Section 303(g) shall apply to any
Debt Securities represented by a Debt Security in global form if such Debt
Security was never issued and sold by the Company and the Company delivers to
the Trustee the Debt Security in global form together with written instructions
(which need not comply with Section 102 and need not be accompanied by an
Opinion of Counsel) with regard to the reduction in the principal amount of Debt
Securities represented thereby, together with the written statement contemplated
by the last sentence of Section 303(g).
Global Securities may be issued in either registered or bearer form and in
either temporary or permanent form.
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ARTICLE THREE
THE DEBT SECURITIES
SECTION 301. Amount Unlimited: Issuable in Series.
The aggregate principal amount of Debt Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Debt Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of Debt Securities of any series:
(1) the title of the Debt Securities of the series (which shall
distinguish the Debt Securities of the series from all other Debt
Securities);
(2) the limit if any, upon the aggregate principal amount of the Debt
Securities of the series which may be authenticated and delivered under
this Indenture (except for Debt Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Debt
Securities of the series pursuant to Section 304, 305, 306, 906, 1107,
1303, 1408 or 1903 and except for any Debt Securities which, pursuant to
Section 303, are deemed never to have been authenticated and delivered
hereunder);
(3) the date or dates on which the principal and premium, if any, of
the Debt Securities of the series are payable;
(4) the rate or rates, if any, at which the Debt Securities of the
series shall bear interest, or the method or methods by which such rate or
rates may be determined, the date or dates from which such interest shall
accrue, the Interest Payment Dates on which such interest shall be payable,
the Regular Record Date for the interest payable on any Registered Security
on any Interest Payment Date and the circumstances, if any, in which the
Company may defer interest payments;
(5) the place or places where, subject to the provisions of Section
1002, the principal of (and premium, if any) and interest on Debt
Securities of the series shall be payable, any Registered Securities of the
series may be surrendered for registration of transfer, Debt Securities of
the series may be surrendered for exchange and notices and demands to or
upon the Company in respect of the Debt Securities of the series and this
Indenture may be served and where notices to Holders pursuant to Section
106 will be published;
(6) if applicable, the period or periods within which or the date or
dates on which, if any, the price or prices at which and the terms and
conditions upon which Debt Securities of the series may be redeemed, in
whole or in part, at the option of the Company;
(7) if applicable, the place or places at which, the period or periods
within which, the price or prices at which and the terms and conditions
upon which Debt Securities shall be exchangeable for Capital Securities of
the Company, which terms and conditions shall not be inconsistent with
Article Fourteen;
(8) any covenant or option of the Company to create a Securities Fund
for the repayment of the Debt Securities and the terms and conditions of
such Securities Fund, which terms and conditions shall not be inconsistent
with Article Fifteen;
(9) the obligation, if any, of the Company to redeem, repay or
purchase Debt Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the period or
periods within which, the price or prices at which and the terms and
conditions upon which Debt Securities of the series shall be redeemed,
repaid or repurchased, in whole or in part, pursuant to such obligation:
(10) whether Debt Securities of the series are to be issuable as
Registered Securities, Bearer Securities or both, whether Debt Securities
of the series are to be issuable with or without coupons or both and, in
the case of Bearer Securities, the date as of which such Bearer Securities
shall be dated if other than the date of original issuance of the first
Debt Security of such series of like tenor and term to be issued;
(11) whether the Debt Securities of the series shall be issued in
whole or in part in the form of a Global Security or Securities and, in
such case, the Depositary and Global Exchange Agent for such Global
Security
<PAGE>
13
or Securities, whether such global form shall be permanent or temporary and, if
applicable, the Global Exchange Date;
(12) if Debt Securities of the series are to be issuable initially in the
form of a temporary Global Security, the circumstances under which the temporary
Global Security can be exchanged for definitive Debt Securities and whether the
definitive Debt Securities will be Registered and/or Bearer Securities and will
be in global form and whether interest in respect of any portion of such Global
Security payable in respect of an Interest Payment Date prior to the Global
Exchange Date shall be paid to any clearing organization with respect to a
portion of such Global Security held for its account and, in such event, the
terms and conditions (including any certification requirements) upon which any
such interest payment received by a clearing organization will be credited to
the Persons entitled to interest payable on such Interest Payment Date if other
than as provided in this Article Three;
(13) whether, and under what conditions, additional amounts will be payable
to Holders of Debt Securities of the series pursuant to Section 1006;
(14) the denominations in which Registered Securities of the series shall
be issuable, if other than denominations of $1,000 and any integral multiple
thereof, and the denominations in which Bearer Securities of such series, if
any, shall be issuable if other than the denomination of $5,000;
(15) if other than the principal amount thereof, the portion of the
principal amount of Debt Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502;
(16) the currency or currencies of denomination of the Debt Securities of
any series, which may be in Dollars, any Foreign Currency or any composite
currency, including but not limited to the ECU, and, if any such currency of
denomination is a composite currency other than the ECU, the agency or
organization, if any, responsible for overseeing such composite currency;
(17) the currency or currencies in which payment of the principal of (and
premium, if any) and interest on the Debt Securities will be made, the currency
or currencies, if any, in which payment of the principal of (and premium, if
any) or the interest on Registered Securities, at the election of each of the
Holders thereof, may also be payable and the periods within which and the terms
and conditions upon which such election is to be made and the Exchange Rate and
Exchange Rate Agent;
(18) if the amount of payments of principal of (and premium, if any) or
interest on the Debt Securities of the series may be determined with reference
to an index based on a currency or currencies other than that in which the Debt
Securities are denominated or designated to be payable, the manner in which such
amounts shall be determined;
(19) if payments of principal of (and premium, if any) or interest on the
Debt Securities of the series are to be made in a Foreign Currency other than
the currency in which such Debt Securities are denominated, the manner in which
the Exchange Rate with respect to such payments shall be determined or if the
Exchange Rate is to be determined otherwise than as provided in Section 101;
(20) any Events of Default with respect to Debt Securities of such series,
if not set forth herein;
(21) the terms and conditions, if any, pursuant to which the Company's
obligations under this Indenture may be terminated through the deposit of money
or Eligible Instruments as provided in Article Seventeen;
(22) the Person or Persons who shall be Security Registrar for the Debt
Securities of such series if other than the Trustee, and the place or places
where the Security Register for such series shall be maintained and the Person
or Persons who will be the initial Paying Agent or Agents, if other than the
Trustee;
(23) whether the Debt Securities of the series are Convertible Securities
and the terms related thereto including the Conversion Price and the date on
which the right to convert expires; and
(24) any other terms of the series (which terms shall not be inconsistent
with the provisions of this Indenture).
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14
All Debt Securities of any one series and the coupons appertaining to
Bearer Securities of such series, if any, shall be substantially identical
except, in the case of Registered Securities, as to denomination and except as
may otherwise be provided in or pursuant to such Board Resolution and set forth
in such Officers' Certificate or in any such indenture supplement hereto.
Debt Securities of any particular series may be issued at various times,
with different dates on which the principal or any instalment of principal is
payable, with different rates of interest, if any, or different methods by which
rates of interest may be determined, with different dates on which such interest
may be payable with different Redemption or Repayment Dates and may be
denominated in different currencies or payable in different currencies.
If any of the terms of a series of Debt Securities are established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the series.
SECTION 302. Denominations.
Debt Securities of each series shall be issuable in such form and
denominations as shall be specified in the form of Debt Security for such series
approved or established pursuant to Section 201 or in the Officers' Certificate
delivered pursuant to Section 301. In the absence of any specification with
respect to the Debt Securities of any series, the Registered Securities of such
series, if any, shall be issuable in denominations of $1,000 and any integral
multiple thereof and the Bearer Securities of such series, if any, shall be
issuable in the denomination of $5,000.
SECTION 303. Execution, Authentication, Delivery and Dating.
(a) The Debt Securities shall be executed on behalf of the Company by its
Chairman of the Board, the Chairman of the Executive Committee of the Board, a
Vice Chairman of the Board, the Chief Executive Officer, the President, the
Chief Operating Officer, a Vice Chairman or a Vice President, and by its
Treasurer or one of its Assistant Treasurers or its Secretary or one of its
Assistant Secretaries under its corporate seal reproduced thereon. The signature
of any of these officers on the Debt Securities may be manual or facsimile.
Coupons shall bear the facsimile signature of the Treasurer or any Assistant
Treasurer of the Company.
Debt Securities and coupons bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Debt
Securities or coupons of any series or did not hold such offices at the date of
such Debt Securities or coupons.
(b) At any time and from time to time after the execution and delivery of
this Indenture, Debt Securities of any series may be executed by the Company and
delivered to the Trustee for authentication, and, except as otherwise provided
in this Article Three, shall thereupon be authenticated and delivered by the
Trustee upon Company Order, without any further action by the Company; provided,
however, that, in connection with its original issuance, a Bearer Security may
be delivered only outside the United States and, except in the case of a
temporary Global Security, only if the Company or its agent shall have received
the certification required pursuant to Sections 304(b) (iii) and (iv), unless
such certification shall have been provided earlier pursuant to Section 304(b)
(v) hereof, and only if the Company has no reason to know that such
certification is false.
To the extent authorized in or pursuant to a Board Resolution and set forth
in an Officers' Certificate, or established in one or more indentures
supplemental hereto, such written Company Order may be given by any one officer
of the Company, may be electronically transmitted, and may provide instructions
as to registration of holders, principal amounts, rates of interest, maturity
dates and other matters contemplated by such Board Resolution and Officers'
Certificate or supplemental indenture to be so instructed in respect thereof.
Before authorizing and delivering the first Debt Securities of any series (and
upon request of the Trustee thereafter), the Company shall deliver to the
Trustee (i) the certificates called for under Sections 201 and 301 hereof and
(ii) an Opinion of Counsel described in the next sentence.
In authenticating such Debt Securities, and accepting the additional
responsibilities under this Indenture in relation to any Debt Securities, the
Trustee shall be entitled to receive, prior to the initial authentication of
such Debt Securities, and (subject to Section 601) shall be fully protected in
relying upon:
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15
(i) a Board Resolution relating thereto and, if applicable, an
appropriate record of any action taken pursuant to such resolution
certified by the Secretary or an Assistant Secretary of the Company;
(ii) an executed supplemental indenture, if any, relating thereto;
(iii) an Officers' Certificate setting forth the form and terms of the
Debt Securities of such series and coupons, if any, pursuant to Sections
201 and 301 and stating that all conditions precedent provided for in this
Indenture relating to the issuance of such Debt Securities have been
complied with, that no Event of Default with respect to any series of Debt
Securities has occurred and is continuing and that the issuance of such
Debt Securities is not and will not result in an Event of Default or an
event or condition which, upon the giving of notice (or the acquisition of
knowledge) or the lapse of time or both, would become an Event of Default;
and
(iv) an Opinion of Counsel stating
(A) that the form of such Debt Securities and coupons, if any,
has been established in or pursuant to a Board Resolution or by a
supplemental indenture as permitted by Section 201 in conformity with
the provisions of this Indenture;
(B) that the terms of such Debt Securities and coupons, if any,
have been established in or pursuant to a Board Resolution or by a
supplemental indenture as permitted by Section 301 in conformity with
the provisions of this Indenture;
(C) that such Debt Securities and coupons, if any, when
authenticated and delivered by the Trustee and issued by the Company
in the manner and subject to any conditions specified in such Opinion
of Counsel, will constitute valid and binding obligations of the
Company, enforceable in accordance with their terms, subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights
generally and the application of general principles of equity, except
that where the Debt Securities of any series are to be exchanged for
Capital Securities or paid from the Securities Fund, the issuance of
Capital Securities will require further action by the Board of
Directors;
(D) that the Company has the corporate power to issue such Debt
Securities and coupons, if any, and has duly taken all necessary
corporate action with respect to such issuance;
(E) that the issuance of such Debt Securities and coupons, if
any, will not contravene the charter or by-laws of the Company or
result in any violation of any of the terms or provisions of any law
or regulation or of any indenture, mortgage or other agreement known
to such counsel by which the Company or any of its subsidiaries is
bound;
(F) that all laws and requirements in respect of the execution
and delivery by the Company of such Debt Securities and coupons, if
any, have been complied with and that authentication and delivery of
such Debt Securities by the Trustee will not violate the terms of the
Indenture; and
(G) such other matters as the Trustee may reasonably request.
(c) If the Company shall establish pursuant to Section 301 that the Debt
Securities of a series are to be issued in whole or in part in the form of one
or more Global Securities, then the Company shall execute and the Trustee shall,
in accordance with this Section and the Company Order with respect to such
series, authenticate and deliver one or more Global Securities in permanent or
temporary form that (i) shall represent and shall be denominated in an aggregate
amount equal to the aggregate principal amount of the Outstanding Debt
Securities of such series to be represented by one or more Global Securities,
(ii) shall be registered in the name of the Depositary for such Global Security
or Securities or the nominee of such Depositary and (iii) shall be delivered by
the Trustee to such Depositary or pursuant to such Depositary's instruction.
(d) The Trustee shall have the right to decline to authenticate and deliver
any Debt Securities under this Section 303 if (i) the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or (ii) the
Trustee in good faith by a committee of Responsible Officers shall determine
that such action would be unjustly prejudicial to Holders of Outstanding Debt
Securities or (iii) the issuance of such Debt Securities will
<PAGE>
16
adversely affect the Trustee's own rights, duties or immunities under the Debt
Securities and this Indenture or otherwise in a manner which is not reasonably
acceptable to the Trustee.
(e) If all the Debt Securities of any series are not to be issued at one
time, it shall not be necessary to deliver an Opinion of Counsel at the time of
issuance of each Debt Security, but such Opinion of Counsel, with appropriate
modifications, may instead be delivered at or prior to the time of the first
issuance of Debt Securities of such series.
(f) Each Registered Security shall be dated the date of its authentication.
Each Bearer Security shall be dated as of the date specified as contemplated by
Section 301.
(g) No Debt Security or coupon attached thereto shall be entitled to any
benefit under this Indenture or be valid or obligatory for any purpose, unless
there appears on such Debt Security a certificate of authentication
substantially in the form provided for herein executed by the Trustee, and such
certificate upon any Debt Security shall be conclusive evidence, and the only
evidence, that such Debt Security has been duly authenticated and delivered
hereunder. Except as permitted by Section 306, the Trustee shall not
authenticate and deliver any Bearer Security unless all appurtenant coupons for
interest then matured have been detached and cancelled. Notwithstanding the
foregoing, if any Debt Security or portion thereof shall have been duly
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Debt Security to the Trustee for cancellation
as provided in Section 309 together with a written statement (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
stating that such Debt Security or portion thereof has never been issued and
sold by the Company, for all purposes of this indenture such Debt Security shall
be deemed never to have been authenticated and delivered hereunder and shall
never be entitled to the benefits of this Indenture.
(h) Each Depositary designated pursuant to Section 301 for a Global
Security in registered form must, at the time of its designation and at all
times while it serves as Depositary, be a clearing agency registered under the
Securities Exchange Act of 1934 and any other applicable statute or regulation.
SECTION 304. Temporary Debt Securities.
(a) Pending the preparation of definitive Debt Securities of any series,
the Company may execute, and upon receipt of documents required by Sections 301
and 303, together with a Company Order, the Trustee shall authenticate and
deliver, temporary Debt Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any denomination, substantially of the
tenor and terms of the definitive Debt Securities in lieu of which they are
issued in registered form or, if authorized, in bearer form with one or more
coupons or without coupons, and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Debt
Securities may determine, as evidenced by their signatures on such Debt
Securities. In the case of Debt Securities of any series issuable as Bearer
Securities, such temporary Debt Securities may be in global form, representing
all or any part of the Outstanding Debt Securities of such series.
(b) Unless otherwise provided pursuant to Section 301:
(i) Except in the case of temporary Debt Securities in global form, if
temporary Debt Securities of any series are issued, the Company will cause
definitive Debt Securities of such series to be prepared without
unreasonable delay. After the preparation of definitive Debt Securities of
such series, the related temporary Debt Securities shall be exchangeable
for such definitive Debt Securities upon surrender of the temporary Debt
Securities of such series at the office or agency of the Company in a Place
of Payment for such series, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Debt Securities of any series
(accompanied, if applicable, by all unmatured coupons and all matured
coupons in default appertaining thereto), the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Debt Securities of the same series of like
tenor and terms and of authorized denominations; provided, however, that no
Bearer Security shall be delivered in exchange for a Registered Security;
and provided, further, that a Bearer Security shall be delivered in
exchange for a Bearer Security only in compliance with the conditions set
forth in Section 305.
(ii) If Debt Securities of any series are issued in temporary global
form, any such temporary Global Security shall, unless otherwise provided
pursuant to Section 301, be delivered to the Depositary for the benefit
<PAGE>
17
of Euro-clear and CEDEL S.A. for credit to the respective accounts of the
beneficial owners of such Debt Securities (or to such other accounts as
they may direct).
(iii) Without unnecessary delay but in any event not later than the
date specified in, or determined pursuant to the terms of, any such
temporary Global Security (the "Global Exchange Date"), the Company shall
deliver definitive Debt Securities to the Trustee or the agent appointed by
the Company pursuant to Section 301 to effect the exchange of the temporary
Global Security for definitive Debt Securities (the "Global Exchange
Agent"), in an aggregate principal amount equal to the principal amount of
such temporary Global Security, executed by the Company. On or after the
Global Exchange Date, such temporary Global Security shall be surrendered
by the Depositary to the Global Exchange Agent, to be exchanged in whole
or from time to time in part for definitive Debt Securities without charge
and the Trustee or the Global Exchange Agent, if authorized by the Trustee
pursuant to Section 614, shall authenticate and deliver, in exchange for
each portion of such temporary Global Security, an equal aggregate
principal amount of definitive Debt Securities of the same series of
authorized denominations and of like tenor and terms as the portion of such
temporary Global Security to be exchanged. Upon any exchange of a part of
such temporary Global Security for definitive Debt Securities, the portion
of the principal amount and any interest thereon so exchanged shall be
endorsed by the Global Exchange Agent on a schedule to such temporary
Global Security, whereupon the principal amount and interest payable with
respect to such temporary Global Security shall be reduced for all purposes
by the amount so exchanged and endorsed. The definitive Debt Securities to
be delivered in exchange for any such temporary Global Security shall be in
bearer form, registered form, global registered form or global bearer form,
or any combination thereof, as specified as contemplated by Section 301,
and, if any combination thereof is so specified, as requested by the
beneficial owner thereof; provided, however, that, in the case of the
exchange of the temporary Global Security for definitive Bearer Securities
(including a definitive Global Bearer Security), unless otherwise specified
in such temporary Global Security, upon such presentation by the
Depositary, such temporary Global Security shall be accompanied by a
certificate signed by Euro-clear as to the portion of such temporary Global
Security held for its account then to be exchanged and a certificate signed
by CEDEL S.A. as to the portion of such temporary Global Security held for
its account then to be exchanged, each in the form set forth in Exhibit B
to this Indenture, unless such certificate(s) shall have been provided
earlier pursuant to Section 304(b) (v) hereof; and provided, further, that
definitive Bearer Securities (including a definitive global Bearer
Security) shall be delivered in exchange for a portion of a temporary
Global Security only in compliance with the requirements of Section 303.
(iv) The interest of a beneficial owner of Debt Securities of a series
in a temporary Global Security shall be exchanged for definitive Debt
Securities of the same series and of like tenor and terms following the
Global Exchange Date when the account holder instructs Euro-clear or CEDEL
S.A., as the case may be, to request such exchange on his behalf and in the
case of the exchange of the temporary Global Security for definitive Bearer
Securities (including a definitive Global Bearer Security), unless such
certificate has been earlier provided pursuant to Section 304(b) (v)
hereof, the accountholder delivers to Euro-clear or CEDEL S.A., as the case
may be, a certificate in the form set forth in Exhibit A- 1 and, if
applicable, A-2 to this Indenture, dated no earlier than 15 days prior to
the Global Exchange Date, copies of which certificate shall be available
from the offices of Euro-clear and CEDEL S.A., the Global Exchange Agent,
any authenticating agent appointed for such series of Debt Securities and
each Paying Agent. Unless otherwise specified in such temporary Global
Security, any such exchange shall be made free of charge to the beneficial
owners of such temporary Global Security, except that a Person receiving
definitive Debt Securities must bear the cost of insurance, postage,
transportation and the like in the event that such Person does not take
delivery of such definitive Debt Securities in person at the offices of
Euro-clear and CEDEL S.A. Definitive Debt Securities in bearer form to be
delivered in exchange for any portion of a temporary Global Security shall
be delivered only outside the United States.
(v) Until exchanged in full as hereinabove provided, the temporary
Debt Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as definitive Debt Securities of the same
series and of like tenor and terms authenticated and delivered hereunder,
except that, unless otherwise specified as contemplated by Section 301.
interest payable on a temporary Global Security on an Interest Payment Date
for Debt Securities of such series occurring prior to the applicable Global
Exchange Date shall be payable to Euro-clear and CEDEL S.A. on such
Interest Payment Date only if there has been delivery by Euro-clear and
CEDEL
<PAGE>
18
S.A. to the Global Exchange Agent of a certificate or certificates in the
form set forth in Exhibit B to this Indenture dated no earlier than the
first Interest Payment Date, for credit without further interest on or
after such Interest Payment Date to the respective accounts of the Persons
who are the beneficial owners of such temporary Global Security on such
Interest Payment Date and who have each delivered to Euro-clear or CEDEL
S.A., as the case may be, a certificate in the form set forth in Exhibit A-
I and, if applicable, A-2 to this Indenture dated no earlier than the first
Interest Payment Date. Any interest so received by Euro-clear and CEDEL
S.A. and not paid as herein provided prior to the Global Exchange Date
shall be returned to the Global Exchange Agent which, upon expiration of
two years after such Interest Payment Date shall repay such interest to the
Company in accordance with Section 1003.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at one of the offices or agencies to be
maintained by the Company in accordance with the provisions of this Section 305
and Section 1002, with respect to the Debt Securities of each series which are
Registered Securities, a register (herein sometimes referred to as the "Security
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Registered Securities and of
transfers of Registered Securities. Pursuant to Section 301, the Company shall
appoint, with respect to Debt Securities of each series which are Registered
Securities, a "Security Registrar" for the purpose of registering such Debt
Securities and transfers and exchanges of such Debt Securities as herein
provided.
Upon surrender for registration of transfer of any Registered Security of
any series at the office or agency of the Company maintained for such purpose,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Registered
Securities of the same series of any authorized denomination or denominations,
of like tenor and terms and aggregate principal amount.
At the option of the Holder, Registered Securities of any series may be
exchanged for other Registered Securities of the same series of any authorized
denomination or denominations, of like tenor and terms and aggregate principal
amount, upon surrender of the Registered Securities to be exchanged at such
office or agency. Bearer Securities may not be delivered in exchange for
Registered Securities.
At the option of the Holder, Registered Securities or Bearer Securities of
any series may be issued in exchange for Bearer Securities (except as otherwise
specified as contemplated by Section 301 with respect to a Bearer Security in
global form) of the same series, of any authorized denominations and of like
tenor and terms and aggregate principal amount, upon surrender of the Bearer
Securities to be exchanged at any such office or agency, with all unmatured
coupons and all matured coupons in default thereto appertaining. If the Holder
of a Bearer Security is unable to produce any such unmatured coupon or coupons
or matured coupon or coupons in default, such exchange may be effected if the
Bearer Securities are accompanied by payment in funds acceptable to the Company
and the Trustee in an amount equal to the face amount of such missing coupon or
coupons, or the surrender of such missing coupon or coupons may be waived by the
Company and the Trustee if there be furnished to them such security or indemnity
as they may require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Security shall surrender to any Paying Agent any
such missing coupon in respect of which such a payment shall have been made,
such Holder shall be entitled to receive the amount of such payment; provided,
however, that, except as otherwise provided in Section 1002, interest
represented by coupons shall be payable only upon presentation and surrender of
those coupons at an office or agency located outside the United States.
Notwithstanding the foregoing, in case a Bearer Security of any series is
surrendered at any such office or agency in exchange for a Registered Security
of the same series and like tenor and terms after the close of business at such
office or agency on (i) any Regular Record Date and before the opening of
business at such office or agency on the relevant Interest Payment Date, or (ii)
any Special Record Date and before the opening of business at such office or
agency on the related date for payment of Defaulted Interest, such Bearer
Security shall be surrendered without the coupon relating to such Interest
Payment Date or proposed date of payment, as the case may be.
Whenever any Debt Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Debt
Securities, which the Holder making the exchange is entitled to receive.
If at any time the Depositary for the Debt Securities of a series notifies
the Company that it is unwilling or unable to continue as Depositary for the
Debt Securities of such series or if at any time the Depositary for the Debt
<PAGE>
19
Securities of such series shall no longer be eligible under Section 303(h), the
Company shall appoint a successor Depositary with respect to the Debt Securities
of such series. If a successor Depositary for the Debt Securities of such series
is not appointed by the Company within 90 days after the Company receives such
notice or becomes aware of such ineligibility, the Company's election pursuant
to Section 301 (11) shall no longer be effective with respect to the Debt
Securities of such series and the Company will execute, and the Trustee, upon
receipt of a Company Order for the authentication and delivery of definitive
Debt Securities of such series, will authenticate and deliver, Debt Securities
of such series in definitive form in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing such series
in exchange for such Global Security or Securities.
The Company may at any time and in its sole discretion determine that the
Debt Securities of any series issued in the form of one or more Global
Securities shall no longer be represented by such Global Security or Securities.
In such event the Company will execute, and the Trustee, upon receipt of a
Company Order for the authentication and delivery of definitive Debt Securities
of such series, will authenticate and deliver, Debt Securities of such series in
definitive form and in an aggregate principal amount equal to the principal
amount of the Global Security or Securities representing such series in exchange
for such Global Security or Securities.
If specified by the Company pursuant to Section 301 with respect to a
series of Debt Securities, the Depositary for such series of Debt Securities may
surrender a Global Security for such series of Debt Securities in exchange in
whole or in part for Debt Securities of such series of like tenor and terms and
in definitive form on such terms as are acceptable to the Company and such
Depositary. Thereupon, the Company shall execute, and the Trustee shall
authenticate and deliver, without service charge,
(a) to each Person specified by such Depositary a new Debt Security or
Securities of the same series, of like tenor and terms and of any
authorized denomination as requested by such Person in aggregate principal
amount equal to and in exchange for such Person's beneficial interest in
the Global Security; and
(b) to such Depositary a new Global Security of like tenor and terms
and in a denomination equal to the difference, if any, between the
principal amount of the surrendered Global Security and the aggregate
principal amount of Debt Securities delivered to Holders thereof.
In any exchange provided for in any of the preceding three paragraphs, the
Company will execute and the Trustee will authenticate and deliver Debt
Securities (a) in definitive registered form in authorized denominations, if the
Debt Securities of such series are issuable as Registered Securities, (b) in
definitive bearer form in authorized denominations, with coupons attached, if
the Debt Securities of such series are issuable as Bearer Securities or (c) as
either Registered or Bearer Securities, if the Debt Securities of such series
are issuable in either form; provided, however, that no definitive Bearer
Security shall be delivered in exchange for a temporary Global Security unless
the Company or its agent shall have received from the person entitled to receive
the definitive Bearer Security a certificate substantially in the form set forth
in Exhibit A-1 and, if applicable, A-2 hereto; and provided further that
delivery of a Bearer Security shall occur only outside the United States; and
provided further that no definitive Bearer Security will be issued if the
Company has reason to know that any such certificate is false.
Upon the exchange of a Global Security for Debt Securities in definitive
form, such Global Security shall be cancelled by the Trustee. Registered
Securities issued in exchange for a Global Security pursuant to this Section
shall be registered in such names and in such authorized denominations as the
Depositary for such Global Security, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Registered Securities to the persons in whose names such Debt
Securities are so registered. The Trustee shall deliver Bearer Securities issued
in exchange for a Global Security pursuant to this Section to the persons, and
in such authorized denominations, as the Depositary for such Global Security,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee; provided, however, that no definitive Bearer
Security shall be delivered in exchange for a temporary Global Security unless
the Company or its agent shall have received from the person entitled to receive
the definitive Bearer Security a certificate substantially in the form set forth
in Exhibit A- 1 and, if applicable, A-2 hereto; and provided further that
delivery of a Bearer Security shall occur only outside the United States; and
provided further that no definitive Bearer Security will be issued if the
Company has reason to know that any such certificate is false.
<PAGE>
20
All Debt Securities issued upon any registration of transfer or exchange of
Debt Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the Debt
Securities surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company, the Security
Registrar or the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed, by the Holder thereof or his attorney
duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer, registration of transfer or exchange of Debt
Securities, other than exchanges expressly provided in this indenture to be made
at the Company's own expense or without expense or without charge to the
Holders.
The Company shall not be required (i) to issue, register the transfer of or
exchange Debt Securities of any particular series to be redeemed or exchanged
for Capital Securities for a period of fifteen days preceding the first
publication of the relevant notice of redemption or, if Registered Securities
are outstanding and there is no publication, the mailing of the relevant notice
of redemption, or (ii) to register the transfer of or exchange any Registered
Security so selected for redemption or exchange in whole or in part, except the
unredeemed or unexchanged portion of such Registered Security being redeemed or
exchanged in part, or (iii) to exchange any Bearer Security so selected for
redemption or exchange except that such a Bearer Security may be exchanged for a
Registered Security of like tenor and terms of that series, provided that such
Registered Security shall be surrendered for redemption or exchange.
Notwithstanding anything herein to the contrary, the exchange of Bearer
Securities into Registered Securities shall be subject to applicable laws and
regulations in effect at the time of exchange; neither the Company, the Trustee
nor the Security Registrar shall exchange any Bearer Securities into Registered
Securities if it has received an Opinion of Counsel that as a result of such
exchanges the Company would suffer adverse consequences under the United States
federal income tax laws and regulations then in effect and the Company has
delivered to the Trustee a Company Order directing the Trustee not to make such
exchanges thereafter unless and until the Trustee receives a subsequent Company
Order to the contrary. The Company shall deliver copies of such Company Orders
to the Security Registrar.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Debt Securities.
If (i) any mutilated Debt Security or a Bearer Security with a mutilated
coupon appertaining to it is surrendered to a Paying Agent outside the United
States designated by the Company, or, in the case of any Registered Security, to
the Trustee, or (ii) the Company and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Debt Security or coupon,
and there is delivered to the Company and the Trustee such security or indemnity
as may be required by them to save each of them harmless, then, in the absence
of notice to the Company and the Trustee that such Debt Security or coupon has
been acquired by a bona fide purchaser, the Company shall execute and upon its
written record the Trustee shall authenticate and deliver, in exchange for any
such mutilated Debt Security or Bearer Security with a mutilated coupon
appertaining to it or to which a destroyed, lost or stolen coupon appertains
(with all appurtenant coupons not destroyed, lost or stolen) or in lieu of any
such destroyed, lost or stolen Debt Security, a new Debt Security of like tenor
and terms and principal amount, bearing a number not contemporaneously
outstanding, with coupons corresponding to the coupons, if any, appertaining to
such destroyed, lost or stolen Security or to the [ILLEGIBLE] to which such
destroyed, lost or stolen coupon appertains; provided, however, that any such
new Bearer Security will be delivered only in compliance with the conditions set
forth in Section 305.
In case any such mutilated, destroyed, lost or stolen Debt Security or
coupon has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Debt Security, pay such Debt Security
or coupon; provided, however, that payment of principal of (and premium, if any)
and any interest on Bearer Securities shall, except as otherwise provided in
Section 1002, be payable only at an office or agency located outside the United
States; and provided, further, that, with respect to any such coupons, interest
represented thereby (but
<PAGE>
21
not any additional amounts payable as provided in Section 1006), shall be
payable only upon presentation and surrender of the coupons appertaining
thereto.
Upon the issuance of any new Debt Security or coupon under this Section,
the Company 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 Trustee and printing expenses)
connected therewith.
Every new Debt Security of any series, with its coupons, if any, issued
pursuant to this Section in lieu of any destroyed, lost or stolen Debt Security,
or in exchange for a Bearer Security to which a destroyed, lost or stolen coupon
appertains, shall constitute an original additional contractual obligation of
the Company, whether or not the destroyed, lost or stolen Debt Security and its
coupons, if any, or the destroyed, lost or stolen coupon shall be at any time
enforceable by anyone, and any such new Debt Security and coupons, if any, shall
be entitled to all the benefits of this Indenture equally and proportionately
with any and all other Debt Securities of that series and their coupons, if any,
duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debt Securities or coupons.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Registered Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Registered Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest. In case a Bearer Security of any series is surrendered in
exchange for a Registered Security of such series after the close of business
(at an office or agency in a Place of Payment for such series) on any Regular
Record Date and before the opening of business (at such office or agency) on the
next succeeding Interest Payment Date, such Bearer Security shall be surrendered
without the coupon relating to such Interest Payment Date and interest will not
be payable on such Interest Payment Date in respect of the Registered Security
issued in exchange for such Bearer Security, but will be payable only to the
Holder of such coupon when due in accordance with the provisions of this
Indenture. At the option of the Company, payment of interest on any Registered
Security may be made by check in the currency designated for such payment
pursuant to the terms of such Registered Security mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register or
by wire transfer to an account in such currency designated by such Person in
writing not less than ten days prior to the date of such payment.
Any interest on any Registered Security of any series which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of his having
been such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Registered Securities of such series (or
their respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Registered Security of such series and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money and/or, to the extent such Debt Securities are
denominated and payable in Dollars only, Eligible Instruments the payments
of principal and interest on which when due (and without reinvestment and
providing no tax liability will be imposed upon the Trustee or the Holder
of such Registered Securities) will provide money in such amounts as will
(together with any money irrevocably deposited in trust with the Trustee,
without investment) be equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment
such money and/or Eligible Instruments when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as in
this Clause provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than 15
days and not less than 10 days prior to the date of the proposed
<PAGE>
22
payment and not less than 10 days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date. Unless the Trustee is acting as the
Security Registrar, promptly after such Special Record Date, the Company
shall furnish the Trustee with a list, or shall make arrangements
satisfactory to the Trustee with respect thereto, of the names and
addresses of, and principal amounts of Registered Securities of such series
held by, the Holders appearing on the Security Register at the close of
business on such Special Record Date. In the name and at the expense of the
Company, the Trustee shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder of Registered Securities of
such series at his address as it appears in the Security Register, not less
than 10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid to
the Persons in whose names the Registered Securities of such series (or
their respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2). In case a Bearer Security of any
series is surrendered at the office or agency in a Place of Payment for
such series in exchange for a Registered Security of such series after the
close of business at such office or agency on any Special Record Date and
before the opening of business at such office or agency on the related
proposed date for payment of Defaulted Interest, such Bearer Security shall
be surrendered without the coupon relating to such proposed date of payment
and Defaulted Interest will not be payable on such proposed date of payment
in respect of the Registered Security issued in exchange for such Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture.
(2) The Company may make payment of any Defaulted Interest on the
Registered Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Registered Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this Clause, such manner of
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Debt Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Debt Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Debt
Security.
Subject to the limitations set forth in Section 1002, the Holder of any
coupon appertaining to a Bearer Security shall be entitled to receive the
interest payable on such coupon upon presentation and surrender of such coupon
on or after the Interest Payment Date of such coupon at an office or agency
maintained for such purpose pursuant to Section 1002.
If any Registered Security is exchanged for Capital Securities after any
record date and on or prior to the next succeeding Interest Payment Date (other
than any Debt Security whose Maturity is prior to such Interest Payment Date),
interest whose Stated Maturity is on such Interest Payment Date shall be paid by
the Company on such Interest Payment Date notwithstanding such exchange, and
such interest (whether or not punctually paid or duly provided for) shall be
paid to the Person in whose name that Debt Security is registered at the close
of business on such record date.
If any Bearer Security is exchanged for Capital Securities after any record
date and on or prior to the next succeeding Interest Payment Date (other than
any Debt Security whose Maturity is prior to such Interest Payment Date),
interest whose Stated Maturity is on such Interest Payment Date shall be payable
on such Interest Payment Date notwithstanding such exchange, and such
interest, whether or not punctually paid or duly provided for) shall be paid
by the Company pursuant to such procedure as may be satisfactory to the Trustee.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Registered Security [MISSING] registration of
transfer, the Company, the Trustee and any agent of the Company or of the
Trustee [ILLEGIBLE] the Person in whose name such Registered Security is
registered as the owner of such Registered Securities [MISSING] the purpose of
receiving payment of principal of (and premium, if any) and (subject to Section
307) [ILLEGIBLE] on such Registered Security and for all other purposes
<PAGE>
23
whatsoever, whether or not such Registered Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the bearer of any Bearer Security and the bearer of any coupon as the
absolute owner of such Bearer Security or coupon for the purpose of receiving
payment thereof or on account thereof and for all other purposes whatsoever,
whether or not such Bearer Security or coupon be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Global Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
SECTION 309. Cancellation.
Unless otherwise provided with respect to a series of Debt Securities, all
Debt Securities and coupons surrendered for payment, redemption, repayment,
transfer, exchange or credit against any sinking fund payment pursuant to this
Indenture, shall, if surrendered to the Company or any agent of the Company, be
delivered to the Trustee and shall be promptly cancelled by it. The Company may
at any time deliver to the Trustee for cancellation any Debt Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Debt Securities so delivered shall be
promptly cancelled by the Trustee. No Debt Securities shall be authenticated in
lieu of or in exchange for any Debt Securities cancelled as provided in this
Section, except as expressly permitted by this Indenture. All cancelled Debt
Securities and coupons held by the Trustee shall be destroyed and certification
of their destruction delivered to the Company unless by a Company Order the
Company shall direct that the cancelled Debt Securities or coupons be returned
to it.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for Debt
Securities of any series, interest on the Debt Securities of each series shall
be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 311. Certification by a Person Entitled to Delivery of a Bearer
Security.
Whenever any provision of this Indenture or a Debt Security contemplates
that certification be given by a Person entitled to delivery of a Bearer
Security, such certification shall be provided substantially in the form of
Exhibit A-1 and, if applicable, A-2 hereto, with only such changes as shall be
approved by the Company and consented to by the Trustee whose consent shall not
unreasonably be withheld.
SECTION 312. Judgments.
The Company may provide, pursuant to Section 301, for the Debt Securities
of any series that, to the fullest extent possible under applicable law and
except as may otherwise be specified as contemplated in Section 301, (a) the
obligation, if any, of the Company to pay the principal of (and premium, if any)
and interest on the Debt Securities of any series and any appurtenant coupons in
a Foreign Currency, composite currency or Dollars (the "Designated Currency") as
may be specified pursuant to Section 301 is of the essence and agrees that
judgments in respect of such Debt Securities shall be given in the Designated
Currency: (b) the obligation of the Company to make payments in the Designated
Currency of the principal of (and premium, if any) and interest on such Debt
Securities and any appurtenant coupons shall, notwithstanding any payment in any
other currency (whether pursuant to a judgment or otherwise), be discharged only
to the extent of the amount in the Designated Currency that the Holder receiving
such payment may, in accordance with normal banking procedures, purchase with
the sum paid in such other currency (after any premium and cost of exchange) in
the country of issue of the Designated Currency in the case of Foreign Currency
or Dollars or in the international banking community in the case of a composite
currency on the Business Day immediately following the day on which such Holder
receives such payment (c) if the amount in the Designated Currency that may be
so purchased for any reason falls short of the amount originally due, the
Company shall pay such additional amounts as may be necessary to compensate for
such shortfall; and (d) any obligation of the Company not discharged by such
payment shall be due as a separate and independent obligation and, until
discharged as provided herein, shall continue in full force and effect.
<PAGE>
24
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Debt Securities herein expressly provided for and rights to receive payments of
principal and interest thereon and any right to receive additional amounts, as
provided in Section 1006) and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture when
(1) either
(A) all Debt Securities theretofore authenticated and delivered
and all coupons appertaining thereto (other than (i) coupons
appertaining to Bearer Securities surrendered in exchange for
Registered Securities and maturing after such exchange, surrender of
which is not required or has been waived as provided in Section 305,
(ii) Debt Securities and coupons which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section
306, (iii) coupons appertaining to Bearer Securities called for
redemption or surrendered for repayment and maturing after the
relevant Redemption Date or Repayment Date, as appropriate, surrender
of which has been waived as provided in Section 1106 or 1303 and (iv)
Debt Securities and coupons for whose payment money and/or Eligible
Instruments have theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee cancelled or for cancellation; or
(B) all such Debt Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of
notice by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose money and/or, to the extent such
Debt Securities are denominated and payable in Dollars only, Eligible
Instruments the payments of principal and interest on which when due
(and without reinvestment and providing no tax liability will be
imposed upon the Trustee or the Holders of Debt Securities) will
provide money in such amounts as will (together with any money
irrevocably deposited in trust with the Trustee, without investment)
be sufficient to pay and discharge the entire indebtedness on such
Debt Securities and coupons of such series for principal (and premium,
if any) and interest, and any mandatory sinking fund, repayment or
analogous payments thereon, on the scheduled due dates therefor to the
date of such deposit (in the case of Debt Securities and coupons which
have become due and payable) or to the Stated Maturity or Redemption
Date, if any, and all Repayment Dates (in the case of Debt Securities
repayable at the option of the Holders thereof); provided, however,
that in the event a petition for relief under the Bankruptcy Reform
Act of 1978 or a successor statute is filed with respect to the
Company within 91 days after the deposit, the obligations of the
Company under the Indenture with respect to the Debt Securities of
such series shall not be deemed terminated or discharged, and in such
event the Trustee shall be required to return the deposited money and
Eligible Instruments to the Company;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
have been complied with.
<PAGE>
25
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Sections 607 and, if money or
Eligible Instruments shall have been deposited with the Trustee pursuant to
Subclause (B) of Clause (1) of this Section, the obligations of the Trustee
under Section 402 and the last paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money and Eligible Instruments.
Subject to the provisions of the last paragraph of Section 1003, all money
and Eligible Instruments deposited with the Trustee pursuant to Section 401
shall be held in trust and such money and the principal and interest received on
such Eligible Instruments shall be applied by it, in accordance with the
provisions of the Debt Securities, the coupons and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal (and premium, if any) and interest for whose
payment such money or Eligible Instruments have been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Debt Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law, pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the entry of a decree or order for relief in respect of the
Company or the Bank by a court having jurisdiction in the premises in an
involuntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or State bankruptcy,
insolvency or other similar law, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of
the Company or the Bank or of any substantial part of the property of
either, or ordering the winding up or liquidation of the affairs of either,
and the continuance of any such decree or order unstayed and in effect for
a period of 60 consecutive days; or
(2) the commencement by the Company or the Bank of a voluntary case
under the Federal bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal or State bankruptcy, insolvency or other similar
law, or the consent by the Company or the Bank to the entry of a decree or
order for relief in an involuntary case under any such law or to the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or other similar official of either of the foregoing or of any
substantial part of the property of either, or the making by the Company or
the Bank of an assignment for the benefit of creditors, or the admission by
the Company or the Bank in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the
Company or the Bank in furtherance of any such action; or
(3) any other Event of Default provided with respect to Debt
Securities of such series.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Debt Securities of any series at the
time Outstanding occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of Outstanding
Debt Securities of such series may declare the principal amount (or, if the Debt
Securities of such series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of such series) of and
all accrued but unpaid interest on all the Debt Securities of such series to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal
amount (or specified amount) shall become immediately due and payable. Upon
payment of such amount, all obligations of the Company in respect of the payment
of principal of the Debt Securities of such series shall terminate.
<PAGE>
26
At any time after such a declaration of acceleration with respect to Debt
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Debt Securities of such series, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue instalments of interest on all Debt Securities of
such series and any related coupons,
(B) the principal of (and premium, if any, on) any Debt
Securities of such series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates
prescribed therefor in such Debt Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue instalments of interest on each Debt Security
and any related coupons at the rate or rates prescribed therefor in
such Debt Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Debt Securities of such
series have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if:
(1) default is made in the payment of any instalment of interest on
any Debt Security or any related coupon when such interest becomes due and
payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Debt Security at the Maturity thereof, or
(3) defaults in the deposit of any sinking fund payment, when and as
due by the terms of a Debt Security of such series, or
(4) defaults in any required designation of funds as Securities Funds,
or
(5) defaults in the performance, or breach of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in this Section
specifically dealt with or which has been expressly included in this
Indenture solely for the benefit of series of Debt Securities other than
such series), and such default or breach continues for a period of 30 days
after there has been given, by registered or certified mail to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least
25% in principal amount of the Outstanding Debt Securities of such series a
written notice specifying such default or breach and requiring it
to be remedied and stating that such notice is a "Notice of Default"
hereunder,
the Company will, upon demand of the Trustee, [ILLEGIBLE] for the benefit of the
Holders of such Debt Securities and coupons, the amount then due and payable on
such Debt Securities and coupons for any overdue principal (and premium, if any)
and interest, sinking fund installment and interest, including the
delivery of any Capital Securities then required to be delivered, and, to the
extent that payment of such interest shall be legally enforceable, interest upon
the overdue principal (and premium, if any) [ILLEGIBLE] upon overdue instalments
of interest, at the rate or rates prescribed therefor in such Debt Securities;
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
<PAGE>
27
If the Company fails to pay such amounts (including the delivery of any
Capital Securities then required to be delivered) forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid and the
delivery of any Capital Securities required to be delivered and not so
delivered, or, in the case of the failure to deliver Capital Securities, money
equal to the principal amount of the Debt Securities for which the Capital
Securities were to be exchanged, and may prosecute such proceeding to judgment
or final decree, and may enforce the same against the Company or any other
obligor upon such Debt Securities and coupons and collect the moneys (or money
equal to the principal amount of any Debt Securities for which Capital
Securities were to be exchanged) adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other obligor upon
such Debt Securities and coupons, wherever situated.
If an Event of Default or a default specified in this Section with respect
to Debt Securities of any series occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders of Debt Securities of such series and any related coupons by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceedings, or any voluntary or involuntary case under the Federal
bankruptcy laws as now or hereafter constituted, relative to the Company or any
other obligor upon the Debt Securities of a particular series or any related
coupons or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of such Debt
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
on the Company for the payment of overdue principal or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Debt
Securities of such series and any appurtenant coupons and to file such
other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding,
and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same:
and any receiver, assignee, trustee, custodian, liquidator, sequestrator or
other similar official in any such proceeding is hereby authorized by each
Holder to make such payments to the Trustee, and in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Debt
Securities or coupons or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee May Enforce Claims without Possession of Debt
Securities or Coupons.
All rights of action and claims under this Indenture or the Debt Securities
or coupons may be prosecuted and enforced by the Trustee without the possession
of any of the Debt Securities or coupons or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name, as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Debt Securities
and coupons in respect of which such judgment has been recovered.
<PAGE>
28
SECTION 506. Application of Money Collected,
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (and premium,
if any) or interest, upon presentation of the Debt Securities or coupons, or
both, as the case may be, and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607;
SECOND: To the payment of amounts then due and unpaid to the holders
of Senior Debt, to the extent required by Article Eighteen;
THIRD: To the payment of the amounts then due and unpaid for principal
of (and premium, if any) and interest on the Debt Securities and any
coupons, in respect of which or for the benefit of which such money has
been collected ratably, without preference or priority of any kind,
according to the amounts due and payable on such Debt Securities and any
coupons for principal (and premium, if any) and interest, respectively, The
Holders of each series of Debt Securities denominated in ECU, any other
composite currency or a Foreign Currency and any matured coupons relating
thereto shall be entitled to receive a ratable portion of the amount
determined by the Exchange Rate Agent by converting the principal amount
Outstanding of such series of Debt Securities and matured but unpaid
interest on such series of Debt Securities in the currency in which such
series of Debt Securities is denominated into Dollars at the Exchange Rate
as of the date of declaration of acceleration of the Maturity of the Debt
Securities; and
FOURTH: The balance, if any, to the Person or Persons entitled
thereto.
SECTION 507. Limitation on Suits.
No Holder of any Debt Security of any series or any related coupons shall
have any right to institute any proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Debt Securities of such
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Debt Securities of such series shall have made written request
to the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Debt Securities of such series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other such
Holders, or to obtain or to seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest and to Exchange Debt Securities for Capital Securities.
Notwithstanding any other provision in this Indenture, the Holder of any
Debt Security or coupon shall have the right which is absolute and unconditional
to receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest on such Debt Security or payment of such coupon on the
respective Stated Maturity or Maturities expressed in such Debt Security or
coupon (or, in the case of redemption or repayment, on
<PAGE>
29
the Redemption Date or the Repayment Date, as the case may be), to have the Debt
Securities exchanged for Capital Securities pursuant to Article Fourteen, if
applicable, and to institute suit for the enforcement of any such payment or
exchange, and such right shall not be impaired without the consent of such
Holder, subject, however, to the provisions of Article Eighteen.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case the Company, the Trustee and the
Holders shall, subject to any determination in such proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided in Section 306, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver
No delay or omission of the Trustee or of any Holder of any Debt Security
or coupon to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
SECTION 512. Control by Holders of Debt Securities.
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the Debt
Securities of such series, provided, that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture;
(2) subject to the provisions of Section 601, the Trustee shall have
the right to decline to follow any such direction if the Trustee in good
faith shall, by a Responsible Officer or Responsible Officers of the
Trustee, determine that the proceeding so directed would be unjustly
prejudicial to the Holders of Debt Securities of such series not joining in
any such direction; and
(3) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series may on behalf of the Holders of all
the Debt Securities of any such series and any related coupons waive any past
default hereunder with respect to such series and its consequences, except a
default
(1) in the payment of the principal of (or premium, if any) or
interest on any Debt Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Debt Security of such series or coupon affected.
<PAGE>
30
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Debt Security
or coupon by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of the Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Debt
Securities of any series, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on any Debt Security or the payment of any coupon on or after the respective
Stated Maturity or Maturities expressed in such Debt Security or coupon (or, in
the case of redemption or repayment, on or after the Redemption Date or
Repayment Date, as the case may be) or for the enforcement of the right to
exchange any Debt Securities for Capital Securities as provided in Article
Fourteen.
SECTION 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law whenever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefits or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
(a) With respect to Debt Securities of any series, except during the
continuance of an Event of Default with respect to the Debt Securities of such
series,
(1) the Trustee undertakes to perform such duties as are specifically
set forth in this Indenture, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provisions
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Event of Default with respect to Debt Securities of any
series has occurred and is continuing, the Trustee shall, with respect to the
Debt Securities of such series or any coupons, as the case may be, exercise such
of the rights and powers vested in it by this Indenture, and use the same degree
of care and skill in their exercise, as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
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(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action taken,
suffered or omitted to be taken by it with respect to Debt Securities of
any series in good faith in accordance with the direction of the Holders of
a majority in principal amount of the Outstanding Debt Securities of such
series relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture with respect to the Debt
Securities of such series.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(e) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder with respect
to Debt Securities of any series the Trustee shall transmit by mail to all
Holders of Debt Securities of such series, entitled to receive reports pursuant
to Section 703(c), notice of such default hereunder known to the Trustee, unless
such default shall have been cured or waived; provided, however, that, except in
the case of a default in the payment of the principal of (or premium, if any) or
interest on any Debt Security of such series or any related coupons or in the
payment of any sinking fund instalment with respect to Debt Securities of such
series or in the exchange of Capital Securities for Debt Securities of such
series, the Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interest of the Holders of Debt
Securities of such series; and provided, further, that in the case of any
default of the character specified in Section 501(3) with respect to Debt
Securities of such series no such notice to Holders shall be given until at
least 30 days after the occurrence thereof. For the purpose of this Section, the
term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to Debt Securities of such
series.
SECTION 603. Certain Rights of Trustee.
Except as otherwise provided in Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders of Debt Securities of such series or any related
coupons pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or
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indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon, other evidence of indebtedness or other
paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see
fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney, other than any
such books or records containing information as to the affairs of the
customers of the Company or any of its subsidiaries; provided that the
Trustee may examine such books and records relating to customers to the
extent that such books and records contain information as to any payments
made to such customers in their capacity as Holders of Debt Securities; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder, no Exchange Rate Agent, Global Exchange Agent, Capital
Exchange Agent, Depositary or Paying Agent shall be deemed an agent of the
Trustee and the Trustee shall not be responsible for any act or omission by
any of them.
SECTION 604. Not Responsible for Recitals or Issuance of Debt Securities.
The recitals contained herein and in the Debt Securities, except the
Trustee's certificates of authentication, and in any coupons, and the
information in any registration statement, including all attachments thereto,
except information provided by the Trustee therein, shall be taken as the
statements of the Company, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Debt Securities of any series or any
coupons or any Capital Securities. The Trustee shall not be accountable for the
use or application by the Company of any Debt Securities or the proceeds
thereof. The Trustee shall not be responsible for and makes no representations
to the Company's ability or authority to issue Bearer Securities or the
lawfulness thereof.
SECTION 605. May Hold Debt Securities or Coupons.
The Trustee, any Paying Agent, the Security Registrar or any other agent of
the Company or the Trustee, in its individual or any other capacity, may become
the owner or pledgee of Debt Securities and coupons, and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Paying Agent, Security Registrar or such agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee or any Paying Agent in trust hereunder need not
be segregated from other funds except to the extent required by law. Neither the
Trustee nor any Paying Agent shall be under any liability for interest on any
money received by it hereunder except as otherwise agreed with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
[ILLEGIBLE] by any provision of law in regard to the compensation of a
trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or
bad faith; and
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33
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration
of this trust or performance of its duties hereunder, including the costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
As security for the performance of the obligations of the Company under
this Section the Trustee shall have a claim prior to the Debt Securities and any
coupons upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the payment of principal of (and premium, if any)
or interest on particular Debt Securities or any coupons. The claims of the
Trustee under this Section shall not be subject to the provisions of Article
Eighteen.
SECTION 608. Disqualification; Conflicting Interests.
(a) If the Trustee has or shall acquire any conflicting interest, as
defined in this Section with respect to the Debt Securities of any series then,
within 90 days after ascertaining that it has such conflicting interest, and if
the default (as defined in this Section) to which such conflicting interest
relates has not been cured or duly waived or otherwise eliminated before the end
of such 90-day period, the Trustee shall either eliminate such conflicting
interest or, except as otherwise provided below in this Section, resign with
respect to the Debt Securities of such series in the manner and with the effect
hereinafter specified in this Article and the Company shall take prompt steps to
have a successor appointed in the manner provided herein.
(b) (1) In the event that the Trustee shall fail to comply with the
provisions of Subsection (a) of this Section with respect to the Debt Securities
of any series, the Trustee shall, within 10 days after the expiration of such
90-day period, transmit, in the manner and to the extent provided in Section
703(c), to all Holders of Debt Securities of such series notice of such failure.
(2) Subject to the provisions of Section 514, unless the Trustee's duty to
resign is stayed as provided in Subsection (f) of this Section, any Holder who
has been a bona fide Holder of Debt Securities of any series referred to in
Subsection (a) of this Section for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of such Trustee, and the appointment of a successor, if such
Trustee fails, after written request thereof by such Holder to comply with the
provisions of Subsection (a) of this Section.
(c) For the purposes of this Section, the Trustee shall be deemed to have a
conflicting interest with respect to the Debt Securities of any series, if a
default (under the terms of this Indenture), but exclusive of any period of
grace or requirement of notice, has occurred with respect to such Debt
Securities and
(1) the Trustee is trustee under this Indenture with respect to the
Outstanding Debt Securities of any series other than that series or is
trustee under another indenture under which any other securities, or
certificates of interest or participation in any other securities, of the
Company are outstanding, unless such other indenture is a collateral trust
indenture under which the only collateral consists of Debt Securities
issued under this Indenture, provided that there shall be excluded from the
operation of this paragraph this Indenture with respect to the Debt
Securities of any series other than that series, the indenture between the
Company and the Trustee dated as of June 15, 1984, as supplemented and
amended from time to time, under which the Company's Floating Rate
Subordinated Capital Notes due August 1, 1996, Floating Rate Subordinated
Capital Notes due July, 1996, Subordinated Auction Rate Capital Notes due
May 1999, Floating Rate Subordinated Capital Notes Due October, 1999, 9.75%
Subordinated Notes due July 1, 2000 and 9.70% Subordinated Notes due August
1, 2000 were issued, and any other indenture or indentures hereafter
qualified under the Trust Indenture Act under which other securities, or
certificates of interest or participation in other securities, of the
Company are outstanding, and
(i) this Indenture and such other indenture or indentures (and
all series of securities issuable thereunder) are wholly unsecured and
rank equally, unless the Commission shall have found and declared by
order pursuant to Section 305(b) or Section 307(c) of the Trust
Indenture Act that differences exist between the provisions of this
Indenture with respect to the Debt Securities of such series and one
or more other series or the provisions of such other indenture or
indentures which are so likely to involve a material conflict of
interest as to make it necessary in the public interest or for the
protection of investors to
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34
disqualify the Trustee from acting as such under this Indenture with
respect to the Debt Securities of such series and such other series or
under such other indenture or indentures, or
(ii) the Company shall have sustained the burden of proving, on
application to the Commission and after opportunity for hearing
thereon, that trusteeship under this Indenture with respect to the
Debt Securities of such series and such other series or such other
indenture or indentures is not so likely to involve a material
conflict of interest as to make it necessary in the public interest or
for the protection of investors to disqualify the Trustee from acting
as such under this Indenture with respect to the Debt Securities of
such series and such other series or under such other indenture or
indentures;
(2) the Trustee or any of its directors or executive officers is an
underwriter for the Company;
(3) the Trustee directly or indirectly controls or is directly or
indirectly controlled by or is under direct or indirect common control with
an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee or representative of the
Company, or of an underwriter (other than the Trustee itself) for the
Company who is currently engaged in the business of underwriting, except
that (i) one individual may be a director or an executive officer, or both,
of the Trustee and a director or an executive officer, or both of the
Company but may not be at the same time an executive officer of both the
Trustee and the Company; (ii) if and so long as the number of directors of
the Trustee in office is more than nine, one additional individual may be a
director or an executive officer, or both, of the Trustee and a director of
the Company; and (iii) the Trustee may be designated by the Company or by
any underwriter for the Company to act in the capacity of transfer agent,
registrar, custodian, paying agent, fiscal agent, escrow agent, or
depositary, or in any other similar capacity, or, subject to the provisions
of paragraph (1) of this Subsection, to act as trustee, whether under an
indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by the Company or by any director, partner, or
executive officer thereof, or 20% or more of such voting securities is
beneficially owned, collectively, by any two or more of such persons; or
10% or more of the voting securities of the Trustee is beneficially owned
either by an underwriter for the Company or by any director, partner or
executive officer thereof, or is beneficially owned, collectively, by any
two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), (i) 5% or more of the voting securities, or 10% or
more of any other class of security, of the Company not including the Debt
Securities issued under this Indenture and securities issued under any
other indenture under which the Trustee is also trustee, or (ii) 10% or
more of any class of security of an underwriter for the Company;
(7) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 5% or more of the voting securities of any person who,
to the knowledge of the Trustee, owns 10% or more of the voting securities
of, or controls directly or indirectly or is under direct or indirect
common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 10% or more of any class of security of any person
who, to the knowledge of the Trustee, owns 50% or more of the voting
securities of the Company;
(9) the Trustee owns, on the date a default under this Indenture (but
exclusive of any period of grace or requirement of notice) has occurred
upon the Debt Securities of any series or any anniversary of such default
while such default upon such Debt Securities remains outstanding, in the
capacity of executor, administrator, testamentary or inter vivos trustee,
guardian, committee or conservator, or in any other similar capacity, an
aggregate of 25% or more of the voting securities, or of any class of
security, of any person, the beneficial ownership of a specified percentage
of which would have constituted a conflicting interest under paragraph (6),
(7) or (8) of this Subsection. As to any such securities of which the
Trustee acquired ownership through becoming executor, administrator, or
testamentary trustee of an estate which included them, the provisions of
the preceding sentence shall not apply, for a period of two years from the
date of such acquisition, to the extent
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that such securities included in such estate do not exceed 25% of such
voting securities or 25% of any such class of security. Promptly after the
dates of any such Event of Default upon the Debt Securities of any series
and annually in each succeeding year that such Event of Default upon such
Debt Securities continues, the Trustee shall make a check of its holdings
of such securities in any of the above-mentioned capacities as of such
dates. If the Company fails to make payments in full of the principal of
(or premium, if any), or interest on, any of the Debt Securities or coupons
when and as the same becomes due and payable, and such failure continues
for 30 days thereafter, the Trustee shall make a prompt check of its
holdings of such securities in any of the above-mentioned capacities as of
the date of the expiration of such 30-day period, and after such date,
notwithstanding the foregoing provisions of this paragraph, all such
securities so held by the Trustee, with sole or joint control over such
securities vested in it, shall, but only so long as such failure shall
continue, be considered as though beneficially owned by the Trustee for the
purposes of paragraphs (6), (7) and (8) of this Subsection; or
(10) except under the circumstances described in paragraphs (1), (3),
(4), (5) or (6) of Section 613(b), the Trustee shall be or shall become a
creditor of the Company.
For purposes of paragraph (1) of this Subsection, and of Sections 512 and
513, the term "series" means a series, class or group of securities issuable
under an indenture or this Indenture pursuant to whose terms holders of one such
series may vote to direct the trustee, or otherwise take action pursuant to a
vote of such holders, separately from holders of another such series; provided,
that "series" shall not include any series of securities issuable under an
indenture (including any series of Debt Securities issuable under this
Indenture) if all such series rank equally and are wholly unsecured.
The specifications of percentages on paragraphs (5) to (9), inclusive, of
this Subsection shall not be construed as indicating that the ownership of such
percentages of the securities of a person is or is not necessary or sufficient
to constitute direct or indirect control for the purpose of paragraph (3) or (7)
of this Subsection.
For the purposes of paragraphs (6), (7), (8) and (9) of this Subsection
only, (i) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not include
any note or other evidence of indebtedness issued to evidence an obligation to
repay moneys lent to a person by one or more banks, trust companies or banking
firms, or any certificate of interest or participation in any such note or
evidence of indebtedness; (ii) an obligation shall be deemed to be "in default"
when a default in payment of principal shall have continued for 30 days or more
and shall not have been cured; and (iii) the Trustee shall not be deemed to be
the owner or holder of (A) any security which it holds as collateral security,
as trustee or otherwise, for an obligation which is not in default as defined in
Clause (ii) above, or (B) any security which it holds as collateral security
under this Indenture, irrespective of any default hereunder, or (C) any security
which it holds as agent for collection, or as custodian, escrow agent or
depositary, or in any similar representative capacity.
(d) For the purposes of this Section:
(1) The term "underwriter" when used with reference to the Company
means every person who, within one year prior to the time as of which the
determination is made, has purchased from the Company with a view to, or
has offered or sold for the Company in connection with, the distribution of
any security of the Company outstanding at such time, or has participated
or has had a direct or indirect participation in any such undertaking, or
has participated or has had a participation in the direct or indirect
underwriting of any such undertaking, but such term shall not include a
person whose interest was limited to a commission from an underwriter or
dealer not in excess of the usual and customary distributors' or sellers'
commission.
(2) The term "director" means any director of a corporation, or any
individual performing similar functions with respect to any organization
whether incorporated or unincorporated.
(3) The term "person" means an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, an
unincorporated organization, or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only a
trust where the interest or interests of the beneficiary or beneficiaries
are evidenced by a security.
(4) The term "voting security" means any security presently entitling
the owner or holder thereof to vote in the direction or management of the
affairs of a person, or any security issued under or pursuant to any trust,
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36
agreement or arrangement whereby a trustee or trustees or agent or agents
for the owner or holder of such security are presently entitled to vote in
the direction of management of the affairs of a person.
(5) The term "Company" means any obligor upon the Debt Securities of
any series or any related coupons.
(6) The term "executive officer" means the president, every vice
president, every trust officer, the cashier, the secretary, and the
treasurer of a corporation, and any individual customarily performing
similar functions with respect to any organization, whether incorporated or
unincorporated, but shall not include the chairman of the board of
directors.
(e) The percentages of voting securities and other securities specified in
this Section shall be calculated in accordance with the following provisions:
(1) A specified percentage of the voting securities of the Trustee,
the Company or any other person referred to in this Section (each of whom
is referred to as a "person" in this paragraph) means such amount of the
outstanding voting securities of such person as entitles the holder or
holders thereof to cast such specified percentage of the aggregate votes
which the holders of all the outstanding voting securities of such person
are entitled to cast in the direction or management of the affairs of such
person.
(2) A specified percentage of a class of securities of a person means
such percentage of the aggregate amount of securities of the class
outstanding.
(3) The term "amount", when used in regard to securities, means the
principal amount if relating to evidences of indebtedness, the number of
shares if relating to capital shares, and the number of units if relating
to any other kind of security.
(4) The term "outstanding" means issued and not held by or for the
account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund relating to
securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating to
another class of securities of the issuer, if the obligation evidenced
by such other class of securities is not in default as to principal or
interest or otherwise;
(iii) securities pledged by the issuer thereof as security for an
obligation of the issuer not in default as to principal or interest or
otherwise; and
(iv) securities held in escrow if placed in escrow by the issuer
thereof;
provided, however, that any voting securities of an issuer shall be deemed
outstanding if any person other than the issuer is entitled to exercise the
voting rights thereof.
(5) A security shall be deemed to be of the same class as another
security if both securities confer upon the holder or holders thereof
substantially the same rights and privileges; provided, however, that in
the case of secured evidences of indebtedness, all of which are issued
under a single indenture, differences in the interest rates or maturity
dates of various series thereof shall not be deemed sufficient to
constitute such series different classes and provided, further, that, in
the case of unsecured evidences of indebtedness, differences in the
interest rates or maturity dates thereof shall not be deemed sufficient to
constitute them securities of different classes, whether or not they are
issued under a single indenture.
(f) Except in the case of a default in the payment of the principal of or
interest on any Debt Securities of any series, or in the payment of any sinking
or purchase fund installment, the Trustee shall not be required to resign as
provided by this Section if the Trustee shall have sustained the burden of
proving, on application to the Commission and after opportunity for hearing
thereon, that (i) the Event of Default under this Indenture may be cured or
waived during a reasonable period and under the procedures described in such
application, and (ii) a stay of the Trustee's duty to resign will not be
inconsistent with the interests of Holders of such Debt Securities. The filing
of such an application shall automatically stay the performance of the duty to
resign until the Commission orders otherwise.
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(g) If Section 310(b) of the Trust Indenture Act is amended at any time
after the date of this Indenture to change the circumstances under which a
Trustee shall be deemed to have a conflicting interest with respect to the Debt
Securities of any series or to change any of the definitions in connection
therewith, this Section 608 shall be automatically amended to incorporate such
changes, unless such changes would cause any Trustee then acting as Trustee
hereunder with respect to any Outstanding Debt Securities to be deemed to have a
conflicting interest, in which case such changes shall be incorporated herein
only to the extent that such changes (i) would not cause the Trustee to be
deemed to have a conflicting interest or (ii) are required by law.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $5,000,000, and subject to supervision or examination by Federal or
State authority; provided, however, that if Section 310(a) of the Trust
Indenture Act or the rules and regulations of the Commission under the Trust
Indenture Act at any time permit a corporation organized and doing business
under the laws of any other jurisdiction to serve as trustee of an indenture
qualified under the Trust Indenture Act, this Section 609 shall be automatically
amended to permit a corporation organized and doing business under the laws of
any such other jurisdiction to serve as Trustee hereunder. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. Neither the Company nor any person
directly or indirectly controlling, controlled by or under common control with
the Company may serve as Trustee. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(b) The Trustee may resign at any time with respect to the Debt Securities
of one or more series by giving written notice thereof to the Company. If an
instrument of acceptance by a successor Trustee shall not have been delivered to
the Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Debt Securities of such
series.
(c) The Trustee may be removed at any time with respect to the Debt
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Debt Securities of such series, delivered to the Trustee and
to the Company.
(d) If at any time;
(1) the Trustee shall fail to comply with Section 608(a) with respect
to the Debt Securities of any series after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a Debt Security
of such series for at least six months, unless the Trustee's duty to resign
has been stayed as provided in Section 608(f) or
(2) the Trustee shall cease to be eligible under Section 609 with
respect to any series of Debt Securities and shall fail to resign after
written request therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting with respect to any
series of Debt Securities or a decree or order for relief by a court having
jurisdiction in the premises shall have been entered in respect of the
Trustee in an involuntary case under the Federal bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal or State bankruptcy,
insolvency or similar law; or a decree or order by a court having
jurisdiction in the premises shall have been entered for the appointment of
a receiver, custodian, liquidator, assignee, trustee, sequestrator or other
similar official of the Trustee or of its property or affairs, or any
public
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officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation, winding up or
liquidation, or
(4) the Trustee shall commence a voluntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or State bankruptcy, insolvency or similar law or shall consent to
the appointment of or taking possession by a receiver, custodian,
liquidator, assignee, trustee, sequestrator or other similar official of
the Trustee or its property or affairs, or shall make an assignment for the
benefit of creditors, or shall admit in writing its inability to pay its
debts generally as they become due, or shall take corporate action in
furtherance of any such action,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to such series or (ii) subject to Section 514, any Holder
who has been a bona fide Holder of a Debt Security of any series for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Trustee for the Debt
Securities of such series and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of acting
with respect to any series of Debt Securities, or if a vacancy shall occur in
the office of Trustee for any cause, with respect to the Debt Securities or one
or more series, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee or Trustees with respect to the Debt Securities of that or
those series (it being understood that any such successor Trustee may be
appointed with respect to the Debt Securities of one or more or all of such
series and that at any time there shall be only one Trustee with respect to the
Debt Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Debt Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Debt Securities of
such series delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Trustee with respect to the Debt Securities of such series
and to that extent supersede the successor Trustee appointed by the Company. If
no successor Trustee with respect to the Debt Securities of any series shall
have been so appointed by the Company or the Holders and accepted appointment in
the manner hereinafter provided, any Holder who has been a bona fide Holder of a
Debt Security of such series for at least six months may, subject to Section
514, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee with
respect to the Debt Securities of such series.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Debt Securities of any series and each
appointment of a successor Trustee with respect to the Debt Securities of any
series by mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of Registered Securities, if any, of such series as
their names and addresses appear in the Security Register and, if Debt
Securities of such series are issuable as Bearer Securities, by publishing
notice of such event once in an Authorized Newspaper in each Place of Payment
located outside the United States. Each notice shall include the name of the
successor Trustee with respect to the Debt Securities of such series and the
address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
(a) In the case of an appointment hereunder of a successor Trustee with
respect to all Debt Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on request of
the Company or the successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder.
<PAGE>
39
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Debt Securities of one or more (but not all) series, the Company,
the retiring Trustee upon payment of its charges and each successor Trustee with
respect to the Debt Securities of one or more series shall execute and deliver
an indenture supplemental hereto wherein each successor Trustee shall accept
such appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Debt Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee is
not retiring with respect to all Debt Securities, shall contain such provisions
as shall be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to the Debt
Securities of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Trustee; and upon the execution and delivery of such supplemental
indenture, the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Debt Securities of that or those series to which the appointment of such
successor Trustee relates; but, on the request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Debt Securities of that or those series to which the
appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in
paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the executing or filing of any paper or any further act on the
part of any of the parties hereto. In case any Debt Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Debt Securities so authenticated with the
same effect as if such successor Trustee had itself authenticated such Debt
Securities. In case any Debt Securities shall not have been authenticated by
such predecessor Trustee, any such successor Trustee may authenticate and
deliver such Debt Securities, in either its own name or that of its predecessor
Trustee, with the full force and effect which this Indenture provides for the
certificate of authentication of the Trustee.
SECTION 613. Preferential Collection of Claims Against Company.
(a) Subject to Subsection (b) of this Section, if the Trustee shall be or
shall become a creditor, directly or indirectly, secured or unsecured, of the
Company within three months prior to a default, as defined in Subsection (c) of
this Section, or subsequent to such a default, then, unless and until such
default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually, the Holders of the Debt
Securities and coupons and the holders of other indenture securities (as defined
in Subsection (c) of this Section):
(1) an amount equal to any and all reductions in the amount due and
owing upon any claim as such creditor in respect of principal or interest,
effected after the beginning of such three-month period and valid as
against the Company and its other creditors, except any such reduction
resulting from the receipt or disposition of any property described in
paragraph (2) of this Subsection, or from the exercise of any right of
set-off which the Trustee could have exercised if a voluntary or
involuntary case had been commenced in respect of the
<PAGE>
40
Company under the Federal bankruptcy laws, as now or hereafter constituted,
or any other applicable Federal or State bankruptcy, insolvency or other
similar law upon the date of such default; and
(2) all property received by the Trustee in respect of any claim as
such creditor, either as security therefor, or in satisfaction or
composition thereof, or otherwise, after the beginning of such three-month
period, or an amount equal to the proceeds of any such property, if
disposed of, subject, however, to the rights, if any, of the Company and
its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account of any
such claim by any Person (other than the Company) who is liable thereon,
and (ii) the proceeds of the bona fide sale of any such claim by the
Trustee to a third Person, and (iii) distributions made in cash, securities
or other property in respect of claims filed against the Company in
bankruptcy or receivership or in proceedings for reorganization pursuant to
the Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency or other similar law;
(B) to realize, for its own account, upon any property held by it as
security for any such claim, if such property was so held prior to the
beginning of such three-month period;
(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned, upon any property held by it as security for
any such claim, if such claim was created after the beginning of such
three-month period and such property was received as security therefor
simultaneously with the creation thereof, and if the Trustee shall sustain
the burden of proving that at the time such property was so received the
Trustee had no reasonable cause to believe that a default as defined in
Subsection (c) of this Section would occur within three months; or
(D) to receive payment on any claim referred to in paragraph (B) or
(C), against the release of any property held as security for such claim as
provided in paragraph (B) or (C), as the case may be, to the extent of the
fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted after
the beginning of such three-month period for property held as security at the
time of such substitution shall, to the extent of the fair value of the property
released, have the same status as the property released, and, to the extent that
any claim referred to in any of such paragraphs is created in renewal of or in
substitution for or for the purpose of repaying or refunding any pre-existing
claim of the Trustee as such creditor, such claim shall have the same status as
such pre-existing claim.
If the Trustee shall be required to account, the funds and property held in
such special account and the proceeds thereof shall be apportioned among the
Trustee, the Holders and the holders of other indenture securities in such
manner that the Trustee, the Holders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or State bankruptcy, insolvency or other similar law, the same
percentage of their respective claims, figured before crediting to the claim of
the Trustee anything on account of the receipt by it from the Company of the
funds and property in such special account and before crediting to the
respective claims of the Trustee and the Holders and the holders of other
indenture securities dividends on claims filed against the Company in bankruptcy
or receivership or in proceedings for reorganization pursuant to the Federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or State bankruptcy, insolvency or other similar law, but after
crediting thereon receipts on account of the indebtedness represented by their
respective claims from all sources other than from such dividends and from the
funds and property so held in such special account. As used in this paragraph,
with respect to any claim, the term "dividends" shall include any distribution
with respect to such claim, in bankruptcy or receivership or proceedings for
reorganization pursuant to the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or State bankruptcy, insolvency or
other similar law, whether such distribution is made in cash, securities, or
other property, but shall not include any such distribution with respect to the
secured portion, if any, of such claim. The court in which such bankruptcy,
receivership or proceedings for reorganization is pending shall have
jurisdiction (i) to apportion among the Trustee and the Holders and the holders
of other indenture securities, in accordance with the provisions of this
paragraph,
<PAGE>
41
the funds and property held in such special account and proceeds thereof, or
(ii) in lieu of such appointment, in whole or in part, to give to the provisions
of this paragraph due consideration in determining the fairness of the
distributions to be made to the Trustee and the Holders and the holders of other
indenture securities with respect to their respective claims, in which event it
shall not be necessary to liquidate or to appraise the value of any securities
or other property held in such special account or as security for any such
claim, or to make a specific allocation of such distributions as between the
secured and unsecured portions of such claims, or otherwise to apply the
provisions of this paragraph as a mathematical formula.
Any Trustee which has resigned or been removed after the beginning of such
three-month period shall be subject to the provisions of this Subsection as
though such resignation or removal had not occurred. If any Trustee has resigned
or been removed prior to the beginning of such three-month period, it shall be
subject to the provisions of this Subsection if and only if the following
conditions exist:
(i) the receipt of property or reduction of claim, which would have
given rise to the obligation to account, if such Trustee had continued as
Trustee, occurred after the beginning of such three-month period; and
(ii) such receipt of property or reduction of claim occurred within
three months after such resignation or removal.
(b) There shall be excluded from the operation of Subsection (a) of this
Section a creditor relationship arising from
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year or
more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction or by this Indenture, for the purpose of preserving
any property which shall at any time be subject to the lien of this
Indenture or of discharging tax liens or other prior liens or encumbrances
thereon, if notice of such advances and of the circumstances surrounding
the making thereof is given to the Holders at the time and in the manner
provided in this Indenture;
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
(4) an indebtedness created as a result of services rendered or
premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction as defined in Subsection (c) of this
Section;
(5) the ownership of stock or of other securities of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve Act,
as amended, which is directly or indirectly a creditor of the Company; or
(6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within the
classification of self-liquidating paper as defined in Subsection (c) of
this Section.
(c) For the purposes of this Section only:
(1) The term "default" means any failure to make payment in full of
the principal of or interest on any of the Debt Securities or upon the
other indenture securities when and as such principal or interest becomes
due and payable.
(2) The term "other indenture securities" means securities upon which
the Company is an obligor outstanding under any other indenture (i) under
which the Trustee is also trustee, (ii) which contains provisions
substantially similar to the provisions of this Section, and (iii) under
which a default exists at the time of the apportionment of the funds and
property held in such special account.
(3) The term "cash transaction" means any transaction in which full
payment for goods or securities sold is made seven days after delivery of
the goods or securities in currency or in checks or other orders drawn upon
banks and payable upon demand.
(4) The term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds
<PAGE>
42
arising from the sale of the goods, wares or merchandise previously
constituting the security, provided the security is received by the Trustee
simultaneously with the creation of the creditor relationship with the
Company arising from the making, drawing, negotiating or incurring of the
draft, bill of exchange, acceptance or obligation.
(5) The term "Company" means any obligor upon the Debt Securities.
SECTION 614. Authenticating Agent.
The Trustee shall upon Company request appoint one or more authenticating
agents (including, without limitation, the Company or any Affiliate thereof)
with respect to one or more series of Debt Securities which shall be authorized
on behalf of the Trustee in authenticating Debt Securities of such series in
connection with the issue, delivery, registration of transfer, exchange, partial
redemption or repayment of such Debt Securities. Wherever reference is made in
this Indenture to the authentication of Debt Securities by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication on behalf of the Trustee by an authenticating agent and a
certificate of authentication executed on behalf of the Trustee by an
authenticating agent. Each authenticating agent must be acceptable to the
Company and must be a corporation organized and doing business under the laws of
the United States of America or of any State, having a principal office in the
State of California or the Borough of Manhattan, The City of New York, having a
combined capital surplus of at least $1,000,000, authorized under such laws to
do a trust business and subject to supervision or examination by Federal or
State authorities or the equivalent foreign authority in the case of an
authenticating agent who is not organized and doing business under the laws of
the United States of America or of any State thereof or the District of
Columbia.
Any corporation succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any paper or any further act on the part of the Trustee
or such authenticating agent.
An authenticating agent may at any time resign with respect to one or more
series of Debt Securities by giving written notice of resignation to the Trustee
and to the Company. The Trustee may at any time terminate the agency of an
authenticating agent with respect to one or more series of Debt Securities by
giving written notice of termination to such authenticating agent and to the
Company. Upon receiving such a notice of resignation or upon such a termination,
or in case at any time an authenticating agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee promptly may appoint
a successor authenticating agent. Any successor authenticating agent upon
acceptance of its appointment hereunder shall become vested with all rights,
powers and duties of its predecessor hereunder, with like effect as if
originally named as an authenticating agent herein. No successor authenticating
agent shall be appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each authenticating agent from time to time
reasonable compensation for its services under this Section, subject to the
provisions of Section 607.
The provisions of Sections 104, 111, 306, 309, 603, 604 and 605 shall be
applicable to any authenticating agent.
Pursuant to each appointment made under this Section, the Debt Securities
of each series covered by such appointment may have endorsed thereon, in lieu of
the Trustee's certificate of authentication, an alternate certificate of
authentication in substantially the following form:
This is one of the Debt Securities, of the series designated herein,
described in the within-mentioned Indenture.
MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA
By
----------------------------------------
As Authenticating Agent for the Trustee,
or
By By
---------------------------------- ----------------------------------------
Authorized Officer Authorized Officer
<PAGE>
43
ARTICLE SEVEN
HOLDERS' LIST AND REFORM BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee with
respect to Debt Securities of each series for which it acts as Trustee:
(1) semi-annually, not more than 15 days after the Regular Record Date
in respect of the Debt Securities of such series or on June 30 and December
31 of each year with respect to each series of Debt Securities for which
there are no Regular Record Dates, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Registered
Securities as of such Regular Record Date or June 15 or December 15, as the
case may be, and
(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Security
Registrar, no such list need be furnished.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders of Registered Securities
contained in the most recent list furnished to the Trustee as provided in
Section 701 and the names and addresses of Holders of Registered Securities
received by the Trustee in its capacity as Paying Agent or Security Registrar,
if so acting. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished. The Trustee shall preserve
for at least two years the names and addresses of Holders of Bearer Securities
filed with the Trustee pursuant to Section 703(c).
(b) If three or more Holders of Debt Securities of any series (hereinafter
referred to as "applicants") apply in writing to the Trustee, and furnish to the
Trustee proof that each such applicant has owned a Debt Security for a period of
at least six months preceding the date of such application, and such application
states that the applicants desire to communicate with other Holders of Debt
Securities of such series (in which case the applicants must hold Debt
Securities of such series) or with all Holders of Debt Securities with respect
to their rights under this Indenture or under the Debt Securities and is
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, at its election, either
(i) afford such applicants access to the information preserved at the
time by the Trustee in accordance with Section 702(a), or
(ii) inform such applicants as to the approximate number of Holders of
Debt Securities of such series or of all Debt Securities, as the case may
be, whose names and addresses appear in the information preserved at the
time by the Trustee in accordance with Section 702(a), and as to the
approximate cost of mailing to such Holders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder whose name and address appear in the information preserved
at the time by the Trustee in accordance with Section 702(a), a copy of the form
of proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five days after such tender, the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the best interests of the Holders
or would be in violation of applicable law. Such written statement shall specify
the basis of such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed, shall enter an
order refusing to sustain any of such objections or if, after the entry of an
order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all the objections so sustained
have been met and shall enter an order so declaring, the Trustee shall
<PAGE>
44
mail copies of such material to all such Holders with reasonable promptness
after the entry of such order and the renewal of such tender; otherwise the
Trustee shall be relieved of any obligation or duty to such applicants
respecting their application.
(c) Every Holder of Debt Securities or coupons, by receiving and holding
the same, agrees with the Company and the Trustee that neither the Company nor
the Trustee shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders in accordance with
Section 702(b), regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under Section 702(b).
SECTION 703. Reports by Trustee.
(a) Within 60 days after May 15 of each year commencing with the year 1991,
the Trustee shall transmit by mail to all Holders of Debt Securities of any
series with respect to which it acts as Trustee, as provided in Subsection (c)
of this Section, a brief report dated as of such May 15 with respect to any of
the following events which may have occurred within the previous twelve months
(but if no such event has occurred within such period, no report need be
transmitted):
(1) any change to its eligibility under Section 609 and its
qualifications under Section 608;
(2) the creation of or any material change to a relationship specified
in paragraphs (1) through (10) of Section 608(c);
(3) the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making thereof) made
by the Trustee (as such) which remain unpaid on the date of such report,
and for the reimbursement of which it claims or may claim a lien or charge,
prior to that of the Debt Securities of such series or any related coupons,
on any property or funds held or collected by it as Trustee, except that
the Trustee shall not be required (but may elect) to report such advances
if such advances so remaining unpaid aggregate not more than 1/2 of 1% of
the principal amount of the Outstanding Debt Securities of such series on
the date of such report;
(4) the amount, interest rate and maturity date of all other
indebtedness owing by the Company (or any other obligor on the Debt
Securities of such series) to the Trustee in its individual capacity, on
the date of such report, with a brief description of any property held as
collateral security therefor, except an indebtedness based upon a creditor
relationship arising in any manner described in Section 613(b) (2), (3),
(4) or (6);
(5) any change to the property and funds, if any, physically in the
possession of the Trustee as such on the date of such report;
(6) any additional issue of Debt Securities which the Trustee has not
previously reported; and
(7) any action taken by the Trustee in the performance of its duties
hereunder which it has not previously reported and which in its opinion
materially affects the Debt Securities, except action in respect of a
default, notice of which has been or is to be withheld by the Trustee in
accordance with Section 602;
provided, however, that if the Trust Indenture Act is amended subsequent to the
date hereof to eliminate the requirement of the Trustee's brief report, the
report required by this Section need not be transmitted to any Holders.
(b) The Trustee shall transmit by mail to all Holders of Debt Securities of
any series for which it acts as the Trustee, as provided in Subsection (c) of
this Section, a brief report with respect to the character and amount of any
advances (and if the Trustee elects so to state, the circumstances surrounding
the making thereof) made by the Trustee (as such) since the date of the last
report transmitted pursuant to Subsection (a) of this Section (or if no such
report has yet been so transmitted, since the date of execution of this
instrument) for the reimbursement of which it claims or may claim a right or
charge, prior to that of the Debt Securities of such series, on property or
funds held or collected by it as Trustee, and which it has not previously
reported pursuant to this Subsection, except that the Trustee for each series
shall not be required (but may elect) to report such advances if such advances
remaining unpaid at any time aggregate 10% or less of the principal amount of
the Debt Securities of such series Outstanding at such time, such report to be
transmitted within 90 days after such time.
<PAGE>
45
(c) Reports pursuant to this Section shall be transmitted by mail
(1) to all Holders of Registered Securities, as the names and
addresses of such Holders appear in the Security Register;
(2) to such Holders of Bearer Securities as have, within the two years
preceding such transmission, filed their names and addresses with the
Trustee for that purpose; and
(3) except in the case of reports pursuant to Subsection (b) of this
Section, to each Holder of a Debt Security whose name and address is
preserved at the time by the Trustee, as provided in Section 702(a).
(d) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any Debt
Securities of such series are listed, with the Commission and also with the
Company. The Company will notify the Trustee when any series of Debt Securities
are listed on any stock exchange.
SECTION 704. Reports by Company.
The Company will:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or, if the Company is not required to file
information, documents or reports pursuant to either of said Sections, then
it will file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a National Securities
Exchange as may be prescribed from time to time in such rules and
regulations:
(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations;
(3) transmit by mail to all Holders of Debt Securities, in the manner
and to the extent provided in Section 703(c) with respect to reports
pursuant to Section 703(a), within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2) of
this Section as may be required by rules and regulations prescribed from
time to time by the Commission; and
(4) furnish to the Trustee, not less often than annually, a brief
certificate from the principal executive officer, principal financial
officer or principal accounting officer as to his or her knowledge of the
Company's compliance with all conditions and covenants under the Indenture.
For purposes of this paragraph, such compliance shall be determined without
regard to any period of grace or requirement of notice provided under the
Indenture.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other corporation
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, unless:
(1) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer,
or which leases, the properties and assets of the Company
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46
substantially as an entirety shall be a corporation organized and existing
under the laws of the United States of America, any political subdivision
thereof or any State thereof and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal
of (and premium, if any) and interest (including all additional amounts, if
any, payable pursuant to Section 1006) on all the Debt Securities and any
related coupons and the performance of every covenant of this Indenture on
the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing;
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that such consolidation, merger,
conveyance, transfer or lease and, such supplemental indenture comply with
this Article and that all conditions precedent herein provided for relating
to such transaction have been met.
SECTION 802. Successor Corporation Substituted.
Upon any consolidation with or merger into any other corporation, or any
conveyance, transfer or lease of the properties and assets of the Company
substantially as an entirety in accordance with Section 801, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor had been named as the
Company herein, and thereafter, except in the case of a lease, the Company
(which term for this purpose shall mean the Person named as the "Company" in the
first paragraph of this instrument or any successor corporation which shall
theretofore have become such in the manner presented in this Article) shall be
relieved of all obligations and covenants under this Indenture and the Debt
Securities and coupons.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to evidence the succession of another corporation to the Company,
and the assumption by such successor of the covenants of the Company herein
and in the Debt Securities contained; or
(2) to add to the covenants of the Company, for the benefit of the
Holders of all or any series of Debt Securities or coupons (and if such
covenants are to be for the benefit of less than all series of Debt
Securities, or coupons stating that such covenants are expressly being
included solely for the benefit of such series), to convey, transfer,
assign, mortgage or pledge any property to or with the Trustee, or to
surrender any right or power herein conferred upon the Company; or
(3) to add to any additional Events of Default (and if such Events of
Default are to be applicable to less than all series of Debt Securities,
stating that such Events of Default are expressly being included solely to
be applicable to such series); or
(4) to add to, change or eliminate any of the provisions of this
Indenture to provide that Bearer Securities may be registrable as to
principal, to change or eliminate any restrictions on the payment of
principal (or premium, if any) on Registered Securities [ILLEGIBLE]
principal (or premium, if any) or any interest on Bearer Securities, to
permit Bearer Securities to be [ILLEGIBLE] in exchange for Registered
Securities, to permit Bearer Securities to be issued in exchange for Bearer
Securities of other authorized denominations or to permit or facilitate the
issuance of Debt Securities in [ILLEGIBLE] form, provided any such action
shall not adversely affect the interests of the Holders of Debt Securities
of any series or any related coupons in any material respect; or
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47
(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination (a) shall become effective
only when there is no Debt Security Outstanding of any series created prior
to the execution of such supplemental indenture which is entitled to the
benefit of such provision or (b) shall not apply to any Debt Security
Outstanding; or
(6) to establish the form or terms of Debt Securities of any series as
permitted by Sections 201 and 301; or
(7) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Debt Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 611(b);
(8) to evidence any changes to Section 608, 609 or 703(a) permitted by
the terms thereof;
(9) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent with
any provision of this Indenture, provided such other provisions shall not
adversely affect the interests of the Holders of Debt Securities of any
series or any related coupons in any material respect; or
(10) to add to or change or eliminate any provision of this Indenture
as shall be necessary or desirable in accordance with any amendments to the
Trust Indenture Act, provided such action shall not adversely affect the
interest of Holders of the Debt Securities of any series or any appurtenant
coupons in any material respect.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than 66-2/3% in principal
amount of the Outstanding Debt Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders under this Indenture of such Debt Securities of such series and any
related coupons; provided, however, that an indenture supplemental hereto which
changes the required ownership set forth in the definition of Controlled
Subsidiary in Section 101 hereof from 80% to a majority but does not change any
other provision of this Indenture or modify in any other manner the rights of
the Holders of all the Debt Securities under this Indenture may be entered into
with the consent of the Holders of at least a majority in principal amount of
the Outstanding Debt Securities of each series; and provided, further, that no
such supplemental indenture shall, without the consent of the Holder of each
Outstanding Debt Security or coupon affected thereby,
(1) change the Stated Maturity of the principal or any instalment of
principal of, or any instalment of interest on any Debt Security, or
reduce the principal amount thereof or the interest thereon or any premium
payable upon redemption or repayment thereof, or change any obligation of
the Company to pay additional amounts pursuant to Section 1006 (except as
contemplated by Section 801(1) and permitted by Section 901(1)), or reduce
the amount of the principal of an Original Issue Discount Security that
would be due and payable upon a declaration of acceleration of the Maturity
thereof pursuant to Section 502, or change any Place of Payment, or the
coin or currency in which any Debt Security or the interest thereon or any
coupon is payable, or impair any right to the delivery of Capital
Securities in exchange for Debt Securities provided for in this Indenture
or the right to institute suit for the enforcement of any such payment or
delivery on or after the Stated Maturity thereof (or, in the case of
redemption, repayment or exchange, on or after the Redemption Date,
Repayment Date or Capital Exchange Date, as the case may be); or
(2) reduce the percentage in principal amount of the Outstanding Debt
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or reduce the requirements of Section 1404 for quorum or voting;
or
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(3) modify any of the provisions of this Section, Section 513 or
Section 1007, except to increase any such percentage or to provide that
certain other provisions of this indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Debt Security
affected thereby; provided, however, that this clause shall not be deemed
to require the consent of any Holder with respect to changes in the
references to "the Trustee" and concomitant changes in this Section and
Section 1007, or the deletion of this proviso, in accordance with the
requirements of Section 611(b) and 901(7); or
(4) adversely affect the right to repayment, if any, of Debt
Securities of any series at the option of the Holders thereof; or
(5) impair the right of any Holder of Debt Securities of any series to
receive Capital Securities on any Capital Exchange Date for Debt Securities
of such series with a Market Value equal to the principal amount of such
Holder's Debt Securities of such series or in an amount sufficient to
provide proceeds upon sale by the Company in the Secondary Offering equal
to the principal amount of such Holder's Debt Securities of such series; or
(6) impair the right of any Holder of Convertible Securities of any
series to convert such Debt Securities pursuant to Article Nineteen;
and provided, further, that no change shall be made in the provisions of Article
Eighteen that will affect adversely the holders of Senior Debt without the
consent of the holders of all Senior Debt Outstanding.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Debt Securities, or which modifies
the rights of the Holders of Debt Securities of such with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Debt Securities of any other series.
It shall not be necessary for any Act of Holders of the Debt Securities
under this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive.
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a pan of this Indenture for all purposes; and every Holder
of Debt Securities theretofore or thereafter authenticated and delivered
hereunder and of any coupons appertaining thereto shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Debt Securities to Supplemental Indentures.
Debt Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Debt Securities of any series and any appurtenant coupons so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated
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and delivered by the Trustee in exchange for Outstanding Debt Securities of such
series and any appurtenant coupons.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of Debt
Securities and any appurtenant coupons that it will duly and punctually pay the
principal of (and premium, if any) and interest on the Debt Securities and any
appurtenant coupons in accordance with the terms, of the Debt Securities, any
appurtenant coupons and this Indenture. Any interest due on Bearer Securities on
or before Maturity, other than additional amounts, if any, payable as provided
in Section 1006 in respect of principal of (or premium, if any, on) such a Debt
Security, shall be payable only upon presentation and surrender of the several
coupons for such interest instalments as are evidenced thereby as they severally
mature. For all purposes of this Indenture, the exchange of Capital Securities
for Debt Securities of any series pursuant to the Indenture shall constitute
full payment of principal of the Debt Securities of such series being exchanged
on any Capital Exchange Date for Debt Securities of such series, without
prejudice to any Holders rights pursuant to Section 1413.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of Debt
Securities an office or agency where Debt Securities (but, except as otherwise
provided below, unless such Place of Payment is located outside the United
States, not Bearer Securities) may be presented or surrendered for payment,
where Debt Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Debt Securities and this Indenture may be served. If Debt Securities of a series
are issuable as Bearer Securities, the Company will maintain, subject to any
laws or regulations applicable thereto, an office or agency in a Place of
Payment for such series which is located outside the United States where Debt
Securities of such series and the related coupons may be presented and
surrendered for payment (including payment of any additional amounts payable on
Debt Securities of such series pursuant to Section 1006); provided, however,
that if the Debt Securities of such series are listed on The Stock Exchange of
the United Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange
or any other stock exchange located outside the United States and such stock
exchange shall so require, the Company will maintain a Paying Agent in London or
Luxembourg or any other required city located outside the United States, as the
case may be, so long as the Debt Securities of such series are listed on such
exchange. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of any such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee its agent to receive all presentations, surrenders, notices and demands,
except that Bearer Securities of that series and the related coupons may be
presented and surrendered for payment (including payment of any additional
amounts payable on Bearer Securities of that series pursuant to Section 1006) at
the place specified for the purpose pursuant to Section 301(5).
No payment of principal of, premium or interest on Bearer Securities shall
be made at any office or agency of the Company in the United States or by check
mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States; provided, however, payment
of principal of and any premium and interest in Dollars (including additional
amounts payable in respect thereof) on any Bearer Security may be made at an
office or agency of, and designated by, the Company located in the United States
if (but only if) payment of the full amount of such principal, premium, interest
or additional amounts in Dollars at all offices outside the United States
maintained for the purpose by the Company in accordance with this Indenture is
illegal or effectively precluded by exchange controls or other similar
restrictions and the Trustee receives an Opinion of Counsel that such payment
within the United States is legal. Unless otherwise provided as contemplated by
Section 301 with respect to any series of Debt Securities, at the option of the
Holder of any Bearer Security or related coupon, payment may be made by check in
the currency designated for such payment pursuant to the terms of the
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Debt Security presented or mailed to an address outside the United States or by
transfer to an account in such currency maintained by the payee with a bank
located outside the United States.
The Company may also from time to time designate one or more other offices
or agencies (in or outside of such Place of Payment) where the Debt Securities
of one or more series and any appurtenant coupons (subject to the preceding
paragraph) may be presented or surrendered for any or all such purposes, and may
from time to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in each Place of Payment for any
series of Debt Securities, for such purposes. The Company will give prompt
written notice to the Trustee of any such designation and any change in the
location of any such other office or agency.
SECTION 1003. Money for Debt Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Debt Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Debt Securities of
such series and any appurtenant coupons, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the principal
(and premium, if any) or interest so becoming due until such sums shall be paid
to such Persons or otherwise disposed of as herein provided, and will promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents with respect to
any series of Debt Securities, it will, prior to each due date of the principal
(and premium, if any) or interest on any Debt Securities of such series and any
appurtenant coupons, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent with respect to any series of Debt
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Debt Securities of such series and any
appurtenant coupons in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Debt Securities of such series or any appurtenant
coupons) in the making of any payment of principal (and premium, if any) or
interest on the Debt Securities of such series or any appurtenant coupons;
and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of terminating its obligations
under this Indenture with respect to Debt Securities of any series or for any
other purpose, pay, or by Company Order direct any Paying Agent to pay, to the
Trustee all sums held in trust by the Company or such Paying Agent, such sums to
be held by the Trustee upon the same trusts as those upon which such sums were
held by the Company or such Paying Agent; and, upon such payment by any Paying
Agent to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any principal and interest received on the Eligible Instruments deposited
with the Trustee or any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of (and
premium, if any) or interest on any Debt Security of any series or any
appurtenant coupons or any money on deposit with the Trustee or any Paying Agent
representing amounts deducted from the Redemption Price or Repayment Price with
respect to unmatured coupons not presented upon redemption or exercise of the
Holder's option for repayment pursuant to Section 1106 or 1303 and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Debt Security or any coupon appertaining thereto shall
thereafter, as an unsecured general creditor, look only to the Company for
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51
payment thereof, and all liability of the Trustee or such paying Agent with
respect to such trust money (including the principal and interest received on
Eligible Instruments deposited with the Trustee), and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in an Authorized
Newspaper of general circulation in each of the City and County of San Francisco
and the Borough of Manhattan, The City of New York, and each Place of Payment or
mailed to each such Holder, or both, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication or mailing, any unclaimed balance of such
money then remaining will be repaid to the Company.
SECTION 1004. Officers' Certificate as to Default.
The Company will deliver to the Trustee, on or before a date not more than
four months after the end of each fiscal year of the Company (which on the date
hereof is the calendar year) ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture, and, if the Company shall be in
default, specifying all such defaults and the nature thereof of which they may
have knowledge.
SECTION 1005. Limitation on Disposition of Voting Stock of, and Merger and
Sale of Assets by, the Bank.
The Company will not:
(1) sell, transfer or otherwise dispose of any shares of Voting Stock
of the Bank or permit the Bank to issue, sell, or otherwise dispose of any
shares of its Voting Stock, unless, after giving effect to any such
transaction, the Bank remains a Controlled Subsidiary; or
(2) permit the Bank to
(a) merge or consolidate, unless the surviving corporation is a
Controlled Subsidiary; or
(b) convey or transfer its properties and assets substantially as
an entirety to any Person, except to a Controlled Subsidiary.
SECTION 1006. Payment of Additional Amounts.
If the Debt Securities of a series provide for the payment of additional
amounts, the Company will pay to the Holder of any Debt Security of any series
or any coupon appertaining thereto additional amounts upon the terms and subject
to the conditions provided therein. Whenever in this Indenture there is
mentioned, in any context, the payment of the principal of (or premium, if any)
or interest on, or in respect of, any Debt Security of any series or any related
coupon or the net proceeds received on the sale or exchange of any Debt Security
of any series, such mention shall be deemed to include mention of the payment of
additional amounts provided for in the terms of such Debt Securities and this
Section to the extent that, in such context, additional amounts are, were or
would be payable in respect thereof pursuant to the provisions of this Section
and express mention of the payment of additional amounts (if applicable) in any
provisions hereof shall not be construed as excluding additional amounts in
those provisions hereof where such express mention is not made.
If the Debt Securities of a series provide for the payment of additional
amounts, at least 10 days prior to the first Interest Payment Date with respect
to that series of Debt Securities (or if the Debt Securities of that series will
not bear interest prior to Maturity, the first day on which a payment of
principal (and premium, if any) is made), and at least 10 days prior to each
date of payment of principal (and premium, if any) or interest if there has been
any change with respect to the matters set forth in the below-mentioned
Officers' Certificate, the Company will furnish the Trustee and the Company's
principal Paying Agent or Paying Agents, if other than the Trustee, with an
Officers' Certificate instructing the Trustee and such Paying Agent or Paying
Agents whether such payment of principal of (and premium, if any) or interest on
the Debt Securities of that series shall be made to Holders of Debt Securities
of that series or the related coupons who are United States Aliens without
withholding for or on account of any tax, assessment or other governmental
charge described in the Debt Securities of that series. If any such withholding
shall be required, then such Officers' Certificate shall specify by country the
amount, if any, required to be withheld on such payments to such Holders of Debt
Securities or coupons and the Company will pay to the
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52
Trustee or such Paying Agent the additional amounts, if any, required by the
terms of such Debt Securities and the first paragraph of this Section. The
Company covenants to indemnify the Trustee and any Paying Agent for, and to hold
them harmless against, any loss, liability or expense reasonably incurred
without 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 Officers'
Certificate furnished pursuant to this Section.
SECTION 1007. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any covenant
or condition set forth in Section 1005, with respect to the Debt Securities of
any series if, before the time for such compliance the Holders of at least
66-2/3% in principal amount of the Debt Securities of such series at the time
Outstanding shall, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such covenant or condition, but no
such waiver shall extend to or affect such covenant or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
covenant or condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF DEBT SECURITIES
SECTION 1101. Applicability of Article.
Debt Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Debt Securities of any
series) in accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Debt Securities shall be
evidenced by an Officers' Certificate authorized by or pursuant to a Board
Resolution. In case of any redemption at the election of the Company of less
than all of the Debt Securities of any series, the Company shall, at least 45
days prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date and of the principal amount and the tenor and terms of the Debt Securities
of any series to be redeemed. In the case of any redemption of Debt Securities
prior to the expiration of any restriction on such redemption provided in the
terms of such Debt Securities or elsewhere in this Indenture, the Company shall
furnish the Trustee with an Officers' Certificate evidencing compliance with
such restriction.
SECTION 1103. Selection by Trustee of Debt Securities to Be Redeemed.
Except as otherwise specified as contemplated by Section 301 for Debt
Securities of any series, if less than all the Debt Securities of any series
with like tenor and terms are to be redeemed, the particular Debt Securities to
be redeemed shall be selected not more than 60 days prior to the Redemption Date
by the Trustee, from the Outstanding Debt Securities of such series with like
tenor and terms not previously called for redemption, by such method as the
Trustee shall deem fair and appropriate and which may provide for the selection
for redemption of portions (equal to the minimum authorized denomination for
Debt Securities of such series or any integral multiple thereof which is also an
authorized denomination) of the principal amount of Registered Securities or
Bearer Securities (if issued in more than one authorized denomination) of such
series of a denomination larger than the minimum authorized denomination for
Debt Securities of such series.
The Trustee shall promptly notify the Company in writing of the Debt
Securities selected for redemption and, in the case of any Debt Securities
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Debt Securities shall relate, in
the case of any Debt Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Debt Security which has been or is to be
redeemed.
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SECTION 1104. Notice of Redemption.
Notice of redemption shall be given in the manner provided in Section 106
not less than 30 nor more than 60 days prior to the Redemption Date, to each
Holder of Debt Securities to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Debt Securities of any series are to
be redeemed, the identification (and, in the case of partial redemption,
the principal amounts) of the particular Debt Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Debt Security to be redeemed, and that interest
thereon shall cease to accrue on and after said date,
(5) the Place or Places of Payment where such Debt Securities,
together in the case of Bearer Securities with all coupons, if any,
appertaining thereto maturing after the Redemption Date, are to be
surrendered for payment of the Redemption Price,
(6) that Bearer Securities may be surrendered for payment only at such
place or places which are outside the United States, except as otherwise
provided in Section 1002,
(7) that the redemption is for a sinking fund, if such is the case,
and
(8) the CUSIP number, if any.
A notice of redemption published as contemplated by Section 106 need not
identify particular Registered Securities to be redeemed.
Notice of redemption of Debt Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money and/or, to the extent such Debt Securities are denominated and payable in
Dollars only, Eligible Instruments the payments of principal and interest on
which when due (and without reinvestment and providing no tax liability will be
imposed upon the Trustee or the Holders of the Debt Securities to be redeemed)
will provide money in such amounts as will (together with any money irrevocably
deposited in trust with the Trustee, without investment) be sufficient to pay
the Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, all the Debt Securities or portions thereof
which are to be redeemed on that date; provided, however, that deposits with
respect to Bearer Securities shall be made with a Paying Agent or Paying Agents
located outside the United States except as otherwise provided in Section 1002,
unless otherwise specified as contemplated by Section 301.
SECTION 1106. Debt Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Debt Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Debt Securities shall cease to bear interest and the coupons for
such interest appertaining to any Bearer Securities so to be redeemed, except to
the extent provided below, shall be void. Upon surrender of any such Debt
Security for redemption in accordance with said notice, such Debt Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Price; provided, however, that instalments of interest on
Bearer Securities whose Stated Maturity is on or prior to the Redemption Date
shall be payable only upon presentation and surrender of coupons for such
interest (at an office or agency located outside the United States except as
otherwise provided in Section 1002), and provided further, that instalments of
interest on Registered Securities whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such
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54
Debt Securities, or one or more Predecessor Securities, registered as such on
the relevant Record Dates according to their terms and the provisions of Section
307.
If any Bearer Security surrendered for redemption shall not be accompanied
by all appurtenant coupons maturing after the Redemption Date, such Bearer
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Bearer
Security shall surrender to the Trustee or any Paying Agent any such missing
coupon in respect of which a deduction shall have been made from the Redemption
Price, such Holder shall be entitled to receive the amount so deducted without
interest thereon; provided, however, that interest represented by coupons shall
be payable only upon presentation and surrender of those coupons at an office or
agency located outside of the United States except as otherwise provided in
Section 1002.
If any Debt Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Debt Security.
SECTION 1107. Debt Securities Redeemed in Part.
Any Registered Security which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company, the Security
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Debt Security without
service charge, a new Registered Security or Registered Securities of the same
series and of like tenor and terms, of any authorized denominations as requested
by such Holder in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Debt Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Debt Securities of a series except as otherwise specified as
contemplated by Section 301 for Debt Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Debt Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
term of Debt Securities of any series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of Debt Securities of any
series, the amount of any sinking fund payment may be subject to reduction as
provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Debt Securities of any series as provided for by the terms of Debt
Securities of such series.
SECTION 1202. Satisfaction of Sinking Fund Payments with Debt Securities.
The Company (1) may deliver Outstanding Debt Securities of a series (other
than any previously called for redemption), together in the case of any Bearer
Securities of such series with all unmatured coupons appertaining thereto, and
(2) may apply as a credit Debt Securities of a series which have been redeemed
either at the election of the Company pursuant to the terms of such Debt
Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Debt Securities, in each case in
satisfaction of all or any part of any sinking fund payment with respect to the
Debt Securities of such series required to be made pursuant to the terms of such
Debt Securities as provided for by the terms of such series; provided that such
Debt Securities have not been previously so credited. Such Debt Securities shall
be received and credited for such purpose by the Trustee at the Redemption Price
specified in such Debt Securities for redemption through operation of the
sinking fund and the amount of such sinking fund payment shall be reduced
accordingly. If as a result of the delivery or credit of Debt
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55
Securities in lieu of cash payments pursuant to this Section 1202, the principal
amount of Debt Securities to be redeemed in order to exhaust the aforesaid cash
payment shall be less than $100,000, the Trustee need not call Debt Securities
for redemption, except upon Company Request, and such cash payment shall be held
by the Trustee or a Paying Agent and applied to the next succeeding sinking fund
payment, provided, however, that the Trustee or such Paying Agent shall at the
request of the Company from time to time pay over and deliver to the Company any
cash payment so being held by the Trustee or such Paying Agent upon delivery by
the Company to the Trustee of Debt Securities purchased by the Company having an
unpaid principal amount equal to the cash payment requested to be released to
the Company.
SECTION 1203. Redemption of Debt Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Debt Securities (unless a shorter period shall be satisfactory to the
Trustee), the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if any, which is to
be satisfied by payment of cash, the portion thereof, if any, which is to be
satisfied by crediting Debt Securities of that series pursuant to Section 1202
and the basis for any such credit and, prior to or concurrently with the
delivery of such Officers' Certificate, will also deliver to the Trustee any
Debt Securities to be so credited and not theretofore delivered to the Trustee.
Not less than 30 days (unless a shorter period shall be satisfactory to the
Trustee) before each such sinking fund payment date the Trustee shall select the
Debt Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 1103 and cause notice of the redemption thereof to be given
in the name of and at the expense of the Company in the manner provided in
Section 1104. Such notice having been duly given, the redemption of such Debt
Securities shall be made upon the terms and in the manner stated in Sections
1105, 1106 and 1107.
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. Applicability of Article. Debt Securities of any series which
are repayable at the option of the Holders thereof before their Stated Maturity
shall be repaid in accordance with their terms and (except as otherwise
specified pursuant to Section 301 for Debt Securities of such series) in
accordance with this Article.
SECTION 1302. Repayment of Debt Securities.
Each Debt Security which is subject to repayment in whole or in part at the
option of the Holder thereof on a Repayment Date shall be repaid at the
applicable Repayment Price together with interest accrued to such Repayment Date
as specified pursuant to Section 301.
SECTION 1303. Exercise of Option; Notice.
Each Holder desiring to exercise his option for repayment shall, as
conditions to such repayment, surrender the Debt Security to be repaid in whole
or in part together with written notice of the exercise of such option at any
office or agency of the Company in a Place of Payment, not less than 30 nor more
than 45 days prior to the Repayment Date; provided, however, that surrender of
Bearer Securities together with written notice of exercise of such option shall
be made at an office or agency located outside the United States except as
otherwise provided in Section 1002. Such notice, which shall be irrevocable,
shall specify the principal amount of such Debt Security to be repaid, which
shall be equal to the minimum authorized denomination for such Debt Security or
an integral multiple thereof, and shall identify the Debt Security to be repaid
and, in the case of a partial repayment of the Debt Security, shall specify the
denomination or denominations of the Debt Security or Debt Securities of the
same series to be issued to the Holder for the portion of the principal of the
Debt Security surrendered which is not to be repaid.
If any Bearer Security surrendered for repayment shall not be accompanied
by all unmatured coupons and all matured coupons in default, such Bearer
Security may be paid after deducting from the Repayment Price an amount equal to
the face amount of all such missing coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Bearer
Security shall surrender to the Trustee or any Paying Agent any such missing
coupon in respect of which a deduction shall
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56
have been made from the Repayment Price, such Holder shall be entitled to
receive the amount so deducted without interest thereon; provided, however, that
interest represented by coupons shall be payable only at an office or agency
located outside the United States except as Otherwise provided in Section 1002.
The Company shall execute and the Trustee shall authenticate and deliver
without service charge to the Holder of any Registered Security so surrendered a
new Registered Security or Securities of the same series, of any authorized
denomination specified in the foregoing notice, in an aggregate principal amount
equal to any portion of the principal of the Registered Security so surrendered
which is not to be repaid.
The Company shall execute and the Trustee shall authenticate and deliver
without service charge to the Holder of any Bearer Security so surrendered a new
Registered Security or Securities or new Bearer Security or Securities (and all
appurtenant unmatured coupons and matured coupons in default) or any combination
thereof of the same series of any authorized denomination or denominations
specified in the foregoing notice, in an aggregate principal amount equal to any
portion of the principal of the Debt Security so surrendered which is not to be
paid; provided, however, that the issuance of a Registered Security therefor
shall be subject to applicable laws and regulations, including provisions of the
United States federal income tax laws and regulations in effect at the time of
the exchange; neither the Company, the Trustee nor the Security Registrar shall
issue Registered Securities for Bearer Securities if it has received an Opinion
of Counsel that as a result of such issuance the Company would suffer adverse
consequences under the United States federal income tax laws then in effect and
the Company has delivered to the Trustee a Company Order directing the Trustee
not to make such issuances thereafter unless and until the Trustee receives a
subsequent Company Order to the contrary. The Company shall deliver copies of
such Company Order to the Security Registrar.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the repayment of Debt Securities shall relate, in the
case of any Debt Security repaid or to be repaid only in part, to the portion of
the principal of such Debt Security which has been or is to be repaid.
SECTION 1304. Election of Repayment by Remarketing Entities.
The Company may elect, with respect to Debt Securities of any series which
are repayable at the option of the Holders thereof before their Stated Maturity,
at any time prior to any Repayment Date to designate one or more Remarketing
Entities to purchase, at a price equal to the Repayment Price, Debt Securities
of such series from the Holders thereof who give notice and surrender their Debt
Securities in accordance with Section 1303.
SECTION 1305. Securities Payable on the Repayment Date.
Notice of exercise of the option of repayment having been given and the
Debt Securities so to be repaid having been surrendered as aforesaid, such Debt
Securities shall, unless purchased in accordance with Section 1304, on the
Repayment Date become due and payable at the price therein specified and from
and after the Repayment Date such Debt Securities shall cease to bear interest
and shall be paid on the Repayment Date, and the coupons for such interest
appertaining to Bearer Securities so to be redeemed, except to the extent
provided above, shall be void, unless the Company shall default in the payment
of such price, in which case the Company shall continue to be obligated for the
principal amount of such Debt Securities and shall be obligated to pay interest
on such principal amount at the rate borne by such Debt Securities from time to
time until payment in full of such principal amount.
ARTICLE FOURTEEN
EXCHANGE OF CAPITAL SECURITIES FOR DEBT SECURITIES
SECTION 1401. Applicability of Article.
If an Officers' Certificate or supplemental indenture pursuant to Section
301 provides for the exchange of Capital Securities for Debt Securities of any
series at the election of the Company or otherwise, Debt Securities of such
series shall be exchanged for Capital Securities in accordance with their terms
and (except as otherwise specified in such Officers' Certificate or supplemental
indenture) in accordance with this Article.
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SECTION 1402. Exchange of Capital Securities for Debt Securities at Stated
Maturity.
At the Stated Maturity of Debt Securities of any series which may be
exchanged, subject to prepayment prior to such Stated Maturity on the Capital
Exchange Date selected by the Company for Debt Securities of such series, as
described below, early exchange pursuant to Section 1403 or payment in cash
pursuant to Section 502, 1416 or 1417, the Company shall exchange Capital
Securities with a Market Value equal to the principal amount of the Outstanding
Debt Securities of such series for the Debt Securities of such series in whole.
The Company shall give notice in the manner provided in Section 106 to
Holders of the Debt Securities of any series to be exchanged, the Trustee and
the Capital Exchange Agent as to the type of Capital Securities to be exchanged
for the Debt Securities of such series on the Capital Exchange Date for Debt
Securities of such series. Such notice shall include a form of Capital Security
Election Form substantially as set forth in Section 1409, shall make the
statements and contain the information included in Section 1404(a), and shall be
given no less than 90 days prior to the Stated Maturity of such Debt Securities.
Notice of such Capital Exchange Date, together with the amount of Capital
Securities being exchanged for each $1,000 principal amount of Debt Securities
of such series, or the minimum denomination of the Debt Securities of such
series, if larger, shall also be given by the Company in the manner required by
Section 1404(b) not less than three Business Days prior to such Capital Exchange
Date.
The Capital Exchange Date for any prepayment of Debt Securities of each
series may be selected by the Company to be any date between a date 60 days
prior to the Stated Maturity of such Debt Securities and such Stated Maturity.
inclusive, and to be the date of the closing of the Secondary Offering for Debt
Securities of such series. In the event the Company fails to effect such
Secondary Offering, the Capital Exchange Date will be the Stated Maturity of the
Debt Securities of such series. Notice of each such Capital Exchange Date,
together with the amount of Capital Securities being exchanged for each $1,000
principal amount of Debt Securities of such series, or the minimum denomination
of the Debt Securities of such series, if larger, shall also be given by the
Company in the manner required by Section 1404(b) not less than three Business
Days prior to such Capital Exchange Date.
The Company will effect each Secondary Offering such that the closing of
the Secondary Offering will occur on the Capital Exchange Date.
SECTION 1403. Right of Early Exchange of Capital Securities for Debt
Securities.
The Debt Securities of any series to be exchanged may be exchanged at the
election of the Company, as a whole or from time to time in part, prior to the
Stated Maturity thereof for Capital Securities with a Market Value equal to the
principal amount of such Debt Securities on any early Capital Exchange Date,
together with accrued interest to such Capital Exchange Date.
The Company shall give notice in the manner provided in Section 106 to
Holders of the Debt Securities of any series to be exchanged, the Trustee and
the Capital Exchange Agent not less than 90 days nor more than 120 days prior to
any early Capital Exchange Date for Debt Securities of such series, which notice
shall include a form of Capital Security Election Form substantially as set
forth in Section 1409 and make the statements and contain the information
included in Section 1404(a). Notice of each such early Capital Exchange Date,
together with the amount of Capital Securities being exchanged for each $1,000
principal amount of Debt Securities of such series, or the minimum denomination
of such series, if larger, shall also be given by the Company in the manner
required by Section 1404(b) not less than three Business Days prior to such
early Capital Exchange Date.
The Company may at its option accelerate any such Capital Exchange Date
within the 60-day period prior to such Capital Exchange Date by giving notice of
such accelerated Capital Exchange Date, together with the amount of Capital
Securities being exchanged for each $1,000 principal amount of Debt Securities
of such series, or the minimum denomination of such series, if larger, in the
manner required by Section 1404(b) not less than three Business Days prior to
such accelerated Capital Exchange Date.
The Company will effect each Secondary Offering such that the closing of
such Secondary Offering will occur on the Capital Exchange Date.
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SECTION 1404. Notices of Exchange.
(a) All notices of exchange subject to this paragraph shall state:
(1) the type of Capital Securities to be exchanged for the Debt
Securities of such series on the Capital Exchange Date for Debt Securities
of such series;
(2) the proposed Capital Exchange Date;
(3) that each Holder of Debt Securities of such series being exchanged
will receive on such Capital Exchange Date accrued and unpaid interest in
cash and may elect to receive on such Capital Exchange Date Capital
Securities with a Market Value equal to the principal amount of the Debt
Securities of such series owned by such Holder and that, in the absence of
any such election by the Holder, such Holder will be deemed to have
received on such Capital Exchange Date Capital Securities having such
Market Value and to have elected to have such Capital Securities sold for
such Holder by the Company in the related Secondary Offering for cash
proceeds to such Holder on such Capital Exchange Date equal to the
aggregate principal amount of all Debt Securities of such series being
exchanged owned by such Holder;
(4) that on such Capital Exchange Date the Capital Exchange Price will
become due and payable upon each such Debt Security to be exchanged and
that interest thereon will cease to accrue on and after said date;
(5) if less than all the Outstanding Debt Securities of any series are
to be exchanged, the identification (and, in the case of partial exchange,
the principal amount) of the particular Debt Securities to be exchanged;
(6) that each Holder for whom Capital Securities are being offered in
the Secondary Offering shall be deemed to have appointed the Company its
attorney-in-fact to execute any and all documents and agreements the
Company deems necessary or appropriate to effect such Secondary Offering;
(7) that the Company will assume, unless advised to the contrary in
writing within 30 days after the date of the notice of exchange, that the
Capital Securities are to be offered for the account of the Holder, that
such Holder has not held any position, office or other material
relationship with the Company within three years preceding the Secondary
Offering, that the Holder owns no other Capital Securities, and that after
completion of the Secondary Offering the Holder will own less than one
percent of the class of such Capital Securities. If any of these
assumptions is not correct, the Holder shall promptly so advise the
Company;
(8) the place or places where such Debt Securities are to be
surrendered for payment or exchange for Capital Securities;
(9) that Bearer Securities may be surrendered for payment or exchange
only at such place or places which are outside the United States, except as
otherwise provided in Section 1002; and
(10) the CUSIP number, if any.
(b) Each notice of exchange subject to this paragraph shall be given in the
manner provided in Section 106 to each Holder of Debt Securities to be
exchanged, and the Company shall forthwith give such notice by telephone to the
Trustee and the Capital Exchange Agent, promptly confirmed in writing.
(c) (1) Except as may otherwise be specified pursuant to Section 301 for
Debt Securities of any series, if less than all the Debt Securities of any
series are to be exchanged, the Company shall at least 135 days prior to the
related Capital Exchange Date (unless a shorter period shall be satisfactory to
the Trustee) notify the Trustee of such Capital Exchange Date and of the
principal amount of Debt Securities of such series to be exchanged and the
particular Debt Securities to be exchanged shall be selected not more than 135
days prior to the related Capital Exchange Date by the Trustee, from the
Outstanding Debt Securities of such series not previously exchanged, by such
method as the Trustee shall deem fair and appropriate and which may provide for
the selection for exchange of portions (equal to the minimum authorized
denomination for Debt Securities of such series or any integral multiple
thereof) of the principal amount of Registered or Bearer Securities of such
series of a denomination larger than the minimum authorized denomination for
Debt Securities of such series.
In any case where Debt Securities of such series are registered in the same
name, the Trustee in its discretion may treat the aggregate principal amount so
registered as if it were represented by one Debt Security of such series.
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(2) The Trustee shall promptly notify the Company in writing of the Debt
Securities selected for exchange and, in the case of any Registered Securities
selected for partial exchange, the principal amount thereof to be exchanged.
(3) For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the exchange of Debt Securities shall
relate, in the case of any Debt Securities exchanged or to be exchanged only in
part, to the portion of the principal amount of such Debt Security which has
been or is to be exchanged.
Section 1405. Rights and Duties of Holders of Debt Securities to be
Exchanged for Capital Securities.
(a) Subject to Section 503, and without prejudice to the rights pursuant to
Section 1413 of Holders of Debt Securities of any series to be exchanged, no
Holder of Debt Securities of such series shall be entitled to receive any cash
from the Company on any Capital Exchange Date or at the Stated Maturity of any
Debt Security of such series except from the proceeds of the sale of such
Holder's Capital Securities in the related Secondary Offering and except as
provided herein with respect to fractional Capital Securities, amounts equal to
expenses of the sale in the related Secondary Offering of such Capital
Securities, accrued and unpaid interest and acceleration upon an Event of
Default. In the event that the Company does not effect such Secondary Offering,
such Holder will receive Capital Securities with a Market Value equal to the
principal amount of Debt Securities of such series owned by such Holder which
are subject to such exchange and not cash other than in lieu of any fractional
Capital Securities and for accrued and unpaid interest, without prejudice to
such Holder's rights pursuant to Section 1413.
(b) Each Holder for whom Capital Securities are being offered in the
Secondary Offering shall be deemed to have appointed the Company its
attorney-in-fact to execute any and all documents and agreements the Company
deems necessary or appropriate to effect such Secondary Offering.
(c) Unless advised to the contrary in writing within 30 days following the
date of the notice described in Section 1404(a) by any Holder for whom Capital
Securities are being offered in the Secondary Offering, the Company shall assume
for the purposes of any Secondary Offering that the Capital Securities are to be
offered for the account of such Holder, that such Holder has not held any
position, office or other material relationship with the Company within three
years preceding the Secondary Offering, that such Holder owns no other Capital
Securities and that after completion of the Secondary Offering such Holder will
own less than one percent of the class of such Capital Securities.
(d) Each Holder for whom Capital Securities are being offered in the
Secondary Offering agrees to indemnify and hold harmless the Company, any other
Holder, and any underwriter, agent or other similar person from and against any
and all losses, claims, damages and liabilities resulting from or based upon any
untrue statement or alleged untrue statement of any material fact contained in
any notice of exchange, any offering memorandum or selling document or
registration statement relating to the Secondary Offering, any preliminary
prospectus or prospectus contained therein, or any amendment thereof or
supplement thereto, or resulting from or based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, which untrue statement,
alleged untrue statement, omission or alleged omission is made therein (i) in
reliance upon and in conformity with any written information furnished to the
Company by or on behalf of any such Holder specifically for use in connection
with the preparation thereof or (ii) because of such Holder's failure to advise
the Company in writing that any of the assumptions described in Section 1404(a)
(7) is incorrect.
(e) In order for any Holder who has duly returned a Capital Security
Election Form to receive Capital Securities on any Capital Exchange Date for any
Debt Security of any series, (1) the Holder of any Registered Security to be
exchanged shall surrender such Debt Security (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the Holder of
any Registered Security or his attorney duly authorized in writing), to the
Capital Exchange Agent on the Capital Exchange Date, and (2) the Holder of any
Bearer Security to be exchanged shall surrender such Debt Security and all
unmatured coupons and all matured coupons in default with the Capital Security
Election Form at a place outside the United States designated pursuant to
Section 1404(a)(8) except as otherwise provided in Section 1002. If the Holder
of a Bearer Debt Security is unable to produce any such Debt Security or
coupons, the surrender of the Debt Security or coupon may be waived by the
Company and the Trustee.
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who may require the Holder to furnish such security or indemnity as they may
require to hold each of them and any Paying Agent harmless in respect of the
Debt Security or coupon. Except as provided in Section 307, no payment or
adjustment shall be made upon any exchange on account of any interest accrued on
any Debt Securities surrendered for exchange or on account of any dividends or
interest on the Capital Securities issued upon exchange.
(f) Debt Securities of any series to be exchanged shall be deemed to have
been exchanged on the Capital Exchange Date therefor in accordance with the
foregoing provisions, and at such time the rights of the Holders of such Debt
Securities as Holders shall cease (subject to the provisions of Section 307 and
without prejudice to the rights of Holders of Debt Securities of such series
pursuant to Section 1413), and the Person or Persons entitled to receive the
Capital Securities issuable upon such exchange shall be treated for all purposes
as the record holder or holders of such Capital Securities at such time.
Section 1406. Election to Exchange.
The election of the Company to exchange Capital Securities for Debt
Securities pursuant to Section 1403 shall be evidenced by a Board Resolution.
Section 1407. Deposit of Capital Exchange Price.
On any Capital Exchange Date for Debt Securities of any series which may be
exchanged, the Company shall deposit with the Trustee or with a Capital Exchange
Agent in the City and County of San Francisco or the Borough of Manhattan. The
City of New York (or, if the Company is acting as Capital Exchange Agent,
segregate and hold in trust as provided in Section 1003) Capital Securities and
an amount of money which together are sufficient to pay the Capital Exchange
Price of, and (except if such Capital Exchange Date shall be an Interest Payment
Date) accrued interest on, all the Debt Securities of such series or portions
thereof which are to be exchanged on that date; provided, however, that deposits
with respect to Bearer Securities shall be made with a Capital Exchange Agent or
Capital Exchange Agents, located outside the United States except as otherwise
provided in Section 1002, unless otherwise specified as contemplated by Section
301.
SECTION 1408. Debt Securities Due on Capital Exchange Date; Debt Securities
Exchanged in Part.
Notice of exchange having been given as aforesaid, the Debt Securities of
any series so to be exchanged shall, on the Capital Exchange Date for such Debt
Securities, become due and payable at the Capital Exchange Price therein
specified, and from and after such date (unless the Company shall default in the
payment of the Capital Exchange Price and accrued interest) Debt Securities of
such series to be exchanged shall cease to bear interest and the coupons for
such interest appertaining to any Bearer Securities so to be exchanged, except
to the extent provided below, shall be void. Upon surrender of any Debt Security
of such series for exchange in accordance with said notice, such Debt Security
shall be paid by the Company at the Capital Exchange Price, together with
accrued interest to the Capital Exchange Date; provided, however, that if such
Capital Exchange Date is an Interest Payment Date, the interest payable on such
date shall be paid to the Holder of Debt Securities of such series according to
the terms of the Debt Securities of such series and the provisions of Section
307; and provided further, that exchanges of Bearer Securities shall be made
only and installments of interest on Bearer Securities whose Stated Maturity is
on or prior to the Capital Exchange Date shall be payable only at an office or
agency located outside the United States except as otherwise provided in Section
1002 and, unless otherwise specified as contemplated by Section 301, only upon
presentation and surrender of those Bearer Securities and coupons.
If any Bearer Security surrendered for exchange shall not be accompanied by
all unmatured coupons and all matured coupons in default such Bearer Security
may be paid after deducting from the Capital Exchange Price an amount equal to
the face amount of all missing coupons, or the surrender of such missing
coupons may be waived by the Company and the Trustee if there be furnished to
them such security or indemnity as they may require to save each of them and any
Capital Exchange Agent harmless. If thereafter the Holder of such Bearer
Security shall surrender to the Trustee or Capital Exchange Agent any such
missing coupon in respect of which a deduction shall have been made from the
Capital Exchange Price, then Holder shall be entitled to receive the amount
so deducted; provided, however, that interest on Bearer Securities shall
be payable only at an office or agency located outside of the United States
except as otherwise provided in Section 1002.
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If any Debt Security of any series called for exchange shall not be so paid
or exchanged upon surrender thereof for exchange, the principal shall, until
paid, bear interest from such Capital Exchange Date at the rate or rates
prescribed therefor in such Debt Security; provided, however, that in the case
of Bearer Securities, any such principal and interest thereon shall be paid at
an office or agency located outside the United States except as otherwise
provided in Section 1002.
Any Registered Security which is to be exchanged only in part shall be
surrendered as provided herein (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder or his attorney duly
authorized in writing) and the Company shall execute, the Trustee shall
authenticate and there shall be delivered to the Holder of such Debt Security
without service charge a new Registered Security or Securities of the same
series, of any authorized denomination as requested by such Holder in aggregate
principal amount equal to and in exchange for the unexchanged portion of
principal of the Debt Security so surrendered.
Any Bearer Security which is to be exchanged only in part shall be
surrendered as provided herein and the Company shall execute, the Trustee shall
authenticate and there shall be delivered to the Holder of such Debt Security
without service charge a new Registered Security or Securities or new Bearer
Security or Securities (and all appurtenant unmatured coupons and coupons in
default) or any combination thereof of the same series, of any authorized
denomination or denominations as requested by such Holder in aggregate principal
amount equal to and in exchange for the unexchanged portion of principal of the
Debt Security so surrendered; provided, however, the issuance of a Registered
Security therefor shall be subject to applicable laws and regulations, including
provisions of the United States federal income tax laws and regulations in
effect at the time of the exchange; neither the Company, the Trustee nor the
Security Registrar shall issue Registered Securities in exchange for Bearer
Securities if it has received an Opinion of Counsel that as a result of such
exchanges the Company would suffer adverse consequences under the United States
federal income tax laws then in effect and the Company has delivered to the
Trustee a Company Order directing the Trustee not to make such exchanges
thereafter unless and until the Company delivers to the Trustee a subsequent
Company Order to the contrary. The Company shall deliver copies of such Company
Orders to the Security Registrar.
Section 1409. Form of Capital Security Election Form.
The form of Capital Security Election Form shall be substantially as
follows with such additions, deletions or changes thereto as may be approved by
the Company:
CAPITAL SECURITY ELECTION FORM
To: [Insert Names and Addresses of
Capital Exchange Agents]
The undersigned Holder of [insert title of Debt Security] ("Debt
Securities") of BankAmerica Corporation hereby elects to receive on the Capital
Exchange Date determined pursuant to the Indenture dated as of September 1, 1990
("Indenture"), between BankAmerica Corporation and Manufacturers Hanover Trust
Company of California, as Trustee, and referred to in the notice of exchange
published or delivered to the undersigned with this Capital Security Election
Form, Capital Securities (as defined in the Indenture) of BankAmerica
Corporation with a Market Value (as defined in the Indenture) equal to the
principal amount of the Debt Securities being exchanged owned by the undersigned
Holder and, in the case of Bearer Securities, delivered herewith together with
all coupons appertaining thereto. Unless this Capital Security Election Form
together with, in the case of Bearer Securities, such Bearer Securities and
coupons, is received by any Capital Exchange Agent named above at an address
shown above on or prior to ________________ the Holder will be deemed to have
elected to participate in the sale of the Holder's Capital Securities in the
Secondary Offering and will receive cash on the Capital Exchange Date in an
amount equal to the principal amount of all Debt Securities being exchanged
owned by the Holder. All terms used herein and not otherwise defined herein
shall have the meanings specified in the Indenture.
Date _________________ __________________________________
Name of Holder
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Section 1410. Fractional Capital Securities.
No fractional Capital Securities shall be issued upon exchange for any Debt
Securities. If more than one Debt Security of any series shall be surrendered
for exchange at one time by the same Holder, the amount of all Capital
Securities which shall be issuable upon exchange thereof shall be computed on
the basis of the aggregate principal amount of Debt Securities of such series so
surrendered. In lieu of issuing any fractional Capital Security, the Company
shall pay a cash adjustment in respect of such fraction in an amount equal to
the same fraction of the Market Value of the Capital Security.
Section 1411. Company to Obtain Governmental and Regulatory Approvals.
The Company covenants that if any Capital Securities required to be
exchanged for Debt Securities hereunder require registration with or approval of
any governmental authority under any federal or state law, or any national
securities exchange, before such Capital Securities may be issued the Company
will in good faith and as expeditiously as possible endeavor to cause such
Capital Securities to be duly registered or approved, as the case may be;
provided, however, that nothing in this Section shall be deemed to affect in any
way the obligation of the Company to exchange Capital Securities for Debt
Securities as provided in this Article.
SECTION 1412. Taxes on Exchange.
The Company will pay any and all transfer, stamp or similar taxes that may
be payable in respect of the issue or delivery of Capital Securities in exchange
for Debt Securities pursuant hereto.
Section 1413. Covenants as to Capital Securities and Secondary Offering.
(a) The Company covenants that it will issue, or cause to be issued,
Capital Securities of the type, in the amounts and at the times required by this
Indenture.
(b) The Company covenants that all Capital Securities which may be issued
in exchange for Debt Securities will upon issuance be duly and validly issued
and, if applicable, fully paid and nonassessable.
(c) The Company unconditionally undertakes to sell Capital Securities in
each Secondary Offering (and to bear all expenses of each Secondary Offering,
including underwriting discounts and commissions) at the times and in the manner
required by this Indenture unless all Holders have duly elected to receive
Capital Securities on the related Capital Exchange Date.
(d) The Company agrees to indemnify and hold harmless in connection with
any Secondary Offering any Holder for the account of whom Capital Securities are
being offered and sold from and against any and all losses, claims, damages and
liabilities resulting from or based upon any untrue statement or alleged untrue
statement of any material fact contained in any notice of exchange, any offering
memorandum or selling document or registration statement relating to the
Secondary Offering, any preliminary prospectus or prospectus contained therein,
or any amendment thereof or supplement thereto, or resulting from or based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading.
or resulting from the Company's failure to comply with Section 1411; provided,
however, the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any
such untrue statement, alleged untrue statement, omission or alleged omission
made therein (i) in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any such Holder specifically for use
in connection with the preparation; thereof or (ii) because of such Holder's
failure to advise the Company in writing that any of the assumptions described
in Section 1404(a)(7) is incorrect. In connection with any Secondary Offering,
the Company agrees to [illegible] appropriate indemnification of any Holder for
the account of whom Capital Securities are being offered and [illegible]
[illegible] Secondary Offering from any underwriter, agent or other similar
person.
SECTION 1414. Provision in Case of Consolidation. Merger or Transfer of
Assets.
In case of any consolidation of the Company [illegible] merger of the
Company into, any other corporation (other than a consolidation or merger in
which the Company is the continuing corporation), or in case of any
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, the corporation formed by such consolidation or the corporation
into which the Company shall have been merged or the corporation which shall
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63
have acquired such assets of the Company, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Debt Security then Outstanding shall have the right thereafter to receive
securities of such successor on the Capital Exchange Date for such Debt Security
with a Market Value equal to the principal amount of such Debt Security. The
above provisions of this Section shall similarly apply to successive
consolidations, mergers, conveyances or transfers.
SECTION 1415. Responsibility of Trustee.
The Trustee shall not at any time be under any duty or responsibility to
any Holder of Debt Securities of any series to be exchanged to determine the
Market Value of any Capital Securities delivered in exchange for Debt Securities
of such series and may rely on and shall be entitled to receive prior to any
Capital Exchange Date for Debt Securities of such series an Officers'
Certificate of the Company as to the Market Value of the Capital Securities
being exchanged for the Debt Securities of such series and the amount of Capital
Securities being exchanged for each $1,000 principal amount of Debt Securities
of such series or the minimum denomination of such series, if larger, and that
such Capital Securities qualify as Capital Securities under the definition
thereof contained herein. The Trustee shall not be accountable with respect to
the validity or value (or the kind or amount) of any Capital Securities which
may at any time be issued or delivered in exchange for any Debt Security; and
the Trustee does not make any representation with respect thereto. The Trustee
shall not be responsible for any failure of the Company to issue, transfer or
deliver any Capital Securities or Capital Security certificates or other
securities or property upon the surrender of any Debt Security for the purpose
of exchange or to comply with any of the covenants of the Company contained in
this Article.
Section 1416. Revocation of Obligation to Exchange Capital Securities for
Debt Securities.
The Company's obligation to exchange Capital Securities for Debt Securities
of any series as provided in Section 1402 is absolute and unconditional;
provided, however that such obligation may be revoked at the option of the
Company at any time on not less than 60 days' prior notice given in the manner
provided in Section 106 to the Holders of Debt Securities of such series, the
Trustee and the Capital Exchange Agent, if the Company shall determine that
under then regulations of the Company's Primary Federal Regulator either the
Debt Securities are no longer includable as capital or it is no longer necessary
for the Company to be obligated to exchange Capital Securities for Debt
Securities in order for the Debt Securities to maintain the same capital
treatment as they are then receiving under such regulations or if approval of
the Primary Federal Regulator is obtained for such revocation.
In the event such obligation is revoked
(a) the Company will pay the Debt Securities of such series in cash at
100% of the principal amount thereof on the Stated Maturity thereof, and
(b) the Company may, at any time on or after a date selected by the
Company, on not less than 60 days' prior notice, redeem the Debt Securities
of such series, in whole or in part, for cash at 100% of the principal
amount thereof, plus accrued interest to the Redemption Date.
SECTION 1417. Optional Securities Funds.
(a) (1) With respect to Debt Securities of any series for which an
Officers' Certificate or supplemental indenture pursuant to Section 301
provides that the Debt Securities of such series are exchangeable for
Capital Securities, the Company may elect to establish a fund (referred to
herein as the "Optional Securities Funds") to which funds may at any time
be designated by the Company as provided in Section 1502 as if such
Optional Securities Funds were Securities Funds (as defined in Article
Fifteen) to be used to pay the principal of the Debt Securities of such
series.
(2) Notwithstanding any provisions to the contrary contained in this
Indenture or in the Debt Securities of any series, neither funds designated
as Optional Securities Funds nor any other property from time to time held
as Optional Securities Funds shall be deemed to be for any purpose property
of the Holders or trust funds for the benefit of the Holders, and the
Optional Securities Funds shall not constitute security for the payment of
the Debt Securities.
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(b) In lieu of, or in addition to, any exchange of Capital Securities for
Debt Securities of any series which may be made in accordance with the
provisions of Sections 1402 and 1403, the Company may elect to redeem the Debt
Securities of such series in accordance with the provisions of Section 1106 and
the terms of the Debt Securities of each series, in whole or in part, by paying
the principal of such Debt Securities with funds designated as Optional
Securities Funds at a price equal to the percentage of the principal amount
established in the terms of the Debt Securities of such series on the Redemption
Date of the Debt Securities to be so redeemed, and (except if such Redemption
Date shall be an Interest Payment Date) by paying accrued interest on such Debt
Securities. If such Redemption Date is an Interest Payment Date, the interest
payable on such date shall be paid to the Holder of Debt Securities of such
series according to the terms of the Debt Securities of such series and the
provisions of Section 307.
(c) The Company shall give notice of such proposed redemption in the manner
provided in Section 106 to the Holders of the Debt Securities of such series
within the time prescribed for the giving of the initial notice in Section 1402
or 1403, depending upon the Redemption Date selected by the Company. Such notice
shall state the Redemption Date and the place or places where the Debt
Securities of the series to be paid are to be surrendered for payment, provided,
however, if such redemption is of less than all of the Debt Securities of such
series and is to be made on a Capital Exchange Date specified in accordance with
Section 1402 or 1403, then such notice may be incorporated into any initial
notice of such Capital Exchange Date and provided that no notice of any
redemption may be given unless there are sufficient Optional Securities Funds to
pay the principal amount of the Debt Securities to be redeemed.
(d) If less than all the Debt Securities of any series are to be so
redeemed, then Sections 1404(c) and 1408 shall apply to the redemption in the
same manner as if such Debt Securities were to be exchanged for Capital
Securities.
(e) Funds designated as Optional Securities Funds shall be released from
such designation under the circumstances described in Section 1503.
ARTICLE FIFTEEN
SECURITIES FUNDS
SECTION 1501. Creation of Securities Funds.
A fund (the "Securities Funds") will be established when specified in an
Officers' Certificate or supplemental indenture pursuant to Section 301 for the
Debt Securities of any series pursuant to which funds may be designated by the
Company as provided in Section 1502, to be used to pay the principal of the Debt
Securities of that series.
Notwithstanding any provision to the contrary contained in this Indenture
or in the Debt Securities of any series, neither funds designated as Securities
Funds nor any other property from time to time held as Securities Funds shall be
deemed to be for any purpose property of the Holders or trust funds for the
benefit of the Holders, and the Securities Funds shall not constitute security
for the payment of the Debt Securities.
SECTION 1502. Designations of Securities Funds.
The Securities Funds will consist of amounts equal to (i) the net proceeds
of the sale of Capital Securities for cash from time to time after the date of
initial issuance of the Debt Securities of any series for which funds may be
designated by the Company as provided in this Section, and (ii) the market
value, as determined by the Company, of Capital Securities sold from time to
time after the date of initial issuance of the Debt Securities of such series in
exchange for other property, less the expenses to effect any such exchanges, and
(iii) other funds which the regulations of the Primary Federal Regulator then
permit for the payment of principal of "mandatory convertible securities (equity
commitment notes)" as defined in such regulations; provided that (x) the Company
has designated such amounts as Securities Funds on its books and records in the
manner required by the Primary Federal Regulator, and (y) there shall be
deducted from the Securities Funds an amount equal to the amount of any funds
used to redeem or repay the Debt Securities of such series for which Securities
Funds are required to be designated or any similar securities.
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SECTION 1503. Covenant of the Company to Obtain Securities Funds.
Notwithstanding anything else contained herein, the Company hereby
covenants and agrees that with regard to the Debt Securities of any series which
by its terms requires the designation of Securities Funds (i) by the Interest
Payment Date which occurs on or next preceding the date when one-third of the
period from the date of issuance of the Debt Securities of such series to their
Stated Maturity has elapsed, it will have obtained Securities Funds in an amount
that will equal at least one-third of the original aggregate principal amount of
the Debt Securities of such series (or such lesser amount as the Primary Federal
Regulator may permit from time to time) and will have prepared and delivered to
the Trustee an Officer's Certificate to the foregoing effect, (ii) by the
Interest Payment Date which occurs on or next preceding the date when two-thirds
of the period from the date of issuance of the Debt Securities of such series to
their Stated Maturity has elapsed, it will have obtained Securities Funds in an
amount that will equal at least two-thirds of the original aggregate principal
amount of the Debt Securities of such series (or such lesser amount as the
Primary Federal Regulator may permit from time to time) and will have prepared
and delivered to the Trustee an Officers' Certificate to the foregoing effect,
and (iii) by 60 days prior to the Stated Maturity of the Debt Securities of such
series, it will have obtained Securities Funds in an amount that will equal not
less than the original aggregate principal amount of the Debt Securities of such
series (or such lesser amount as the Primary Federal Regulator may permit from
time to time) and will have prepared and delivered to the Trustee an Officers'
Certificate to the foregoing effect; provided, however, that such covenant and
agreement of the Company shall be cancelled, and amounts theretofore designated
as Securities Funds will be released from such designation in the event and to
the extent that the Company shall determine that under then regulations of the
Company's Primary Federal Regulator either the Debt Securities are no longer
includable as capital or it is no longer necessary for the Company to be
obligated to pay the principal of the Debt Securities out of Securities Funds in
order for the Debt Securities to maintain the same capital treatment as they are
then receiving under such regulations, in the event and to the extent that
approval of the Primary Federal Regulator is obtained for such cancellation and
release or in the event and to the extent that the Company shall have exchanged
or redeemed such Debt Securities pursuant to the terms of such Debt Securities
of such series from a source other than amounts designated as Securities Funds.
ARTICLE SIXTEEN
MEETINGS OF HOLDERS OF DEBT SECURITIES
SECTION 1601. Purposes for Which Meetings May Be Called.
If Debt Securities of a series are issuable in whole or in part as Bearer
Securities, a meeting of Holders of Debt Securities of such series may be called
at any time and from time to time pursuant to this Article to make, give or take
any request, demand, authorization, direction, notice, consent, waiver or other
Act provided by this Indenture to be made, given or taken by Holders of Debt
Securities of such series.
SECTION 1602. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of Debt
Securities of any series issuable as Bearer Securities for any purpose specified
in Section 1601, to be held at such time and at such place in the City of San
Francisco, Borough of Manhattan, The City of New York, or in London as the
Trustee shall determine. Notice of every meeting of Holders of Debt Securities
of any series, setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be given,
in the manner provided in Section 106, not less than 21 nor more than 180 days
prior to the date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board Resolution, or the
Holders of at least 10% in principal amount of the Outstanding Debt Securities
of any series shall have requested the Trustee to call a meeting of the Holders
of Debt Securities of such series for any purpose specified in Section 1601, by
written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have made the first publication
of the 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 Company or the Holders of Debt Securities of such series in the amount
above specified, as the case may be, may determine the time and the place in the
City of
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San Francisco, Borough of Manhattan, The City of New York, or in London for such
meeting and may call such meeting for such purposes by giving notice thereof as
provided in subsection (a) of this Section.
SECTION 1603. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Debt Securities of any
series, a Person shall be (1) a Holder of one or more Outstanding Debt
Securities of such series, or (2) a Person appointed by an instrument in writing
as proxy for Holder or Holders of one or more Outstanding Debt Securities of
such series by such Holder or Holders. The only Persons who shall be entitled to
be present or to speak at any meeting of Holders of Debt Securities of any
series shall be the Persons entitled to vote at such meeting and their counsel,
any representatives of the Trustee and its counsel and any representatives of
the Company and its counsel.
SECTION 1604. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
Outstanding Debt Securities of a series shall constitute a quorum for a meeting
of Holders of Debt Securities of such series; provided, however, that if any
action is to be taken at such meeting with respect to a consent or waiver which
this Indenture expressly provides may be given by the Holders of not less than
66 2/3% in principal amount of the Outstanding Debt Securities of a series, the
Persons entitled to vote 66 2/3% in principal amount of the Outstanding Debt
Securities of such series shall constitute a quorum. 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 Holders of Debt Securities of such series, be
dissolved. In the absence of a quorum in any other case the meeting may 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 meeting. In the absence of a quorum
at any such adjourned meeting, such adjourned meeting may be further 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
1602(a), except that such notice need be given only once not less than five days
prior to the date on which the meeting is scheduled to be reconvened. Notice of
the reconvening of an adjourned meeting shall state expressly the percentage, as
provided above, of the principal amount of the Outstanding Debt Securities of
such series which shall constitute a quorum.
Except as limited by the proviso to Section 902, any resolution presented
to a meeting or adjourned meeting duly reconvened at which a quorum is present
as aforesaid may be adopted only by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Debt Securities of that series:
provided, however, that, except as limited by the proviso to Section 902, any
resolution with respect to any consent or waiver which this Indenture expressly
provides may be given by the Holders of not less than 66 2/3% in principal
amount of the Outstanding Debt Securities of a series may be adopted at a
meeting or an adjourned meeting duly reconvened and at which a quorum is present
as aforesaid only by the affirmative vote of the Holders of 66 2/3% in principal
amount of the Outstanding Debt Securities of that series; and provided, further,
that, except as limited by the proviso to Section 902, any resolution with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other Act which this Indenture expressly provides may be made, given
or taken by the Holders of a specified percentage, which is less than a
majority, in principal amount of the Outstanding Debt Securities of a series may
be adopted at a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid by the affirmative vote of the Holders of such
specified percentage in principal amount of the Outstanding Debt Securities of
that series.
Any resolution passed or decision taken at any meeting of Holders of Debt
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Debt Securities of such series and the related
coupons, whether or not present or represented at the meeting.
SECTION 1605. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any other provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Holders of Debt Securities of such series in regard to proof of the holding of
Debt Securities of such series 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 otherwise permitted or required by any such regulations,
the holding of Debt Securities shall be proved in the
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manner specified in Section 104 and the appointment of any proxy shall be proved
in the manner specified in Section 104 or, in the case of Bearer Securities, by
having the signature of the person executing the proxy witnessed or guaranteed
by any trust company, bank or banker authorized by Section 104 to certify to the
holding of Bearer Securities. Such regulations may provide that written
instruments appointing proxies, regular on their face, may be presumed valid and
genuine without the proof specified in Section 104 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of Debt Securities as provided in Section 1602(b), in
which case the Company or the Holders of Debt Securities of the series calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the Persons entitled to vote a majority in principal amount
of the Outstanding Debt Securities of such series represented at the meeting.
(c) At any meeting each Holder of a Debt Security of such series or proxy
shall be entitled to one vote for each $1,000 principal amount (or the
equivalent in ECU, any other composite currency or a Foreign Currency) of Debt
Securities of such series held or represented by him; provided, however, that no
vote shall be cast or counted at any meeting in respect of any Debt Security
challenged as not Outstanding and ruled by the chairman of the meeting not to be
Outstanding. The chairman of the meeting shall have no right to vote, except as
a Holder of a Debt Security of such series or proxy.
(d) Any meeting of Holders of Debt Securities of any series duly called
pursuant to Section 1602 at which a quorum is present may be adjourned from time
to time by Persons entitled to vote a majority in principal amount of the
Outstanding Debt Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.
SECTION 1606. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of Debt
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Debt Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Debt Securities of such series held or represented by them. The
permanent chairman 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 Debt Securities of
any series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors 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 given as provided in Section 1602 and, if
applicable, Section 1604. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter 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.
ARTICLE SEVENTEEN
DEFEASANCE
SECTION 1701. Termination of Company's Obligations.
With respect to any series of Debt Securities, if the Company deposits
irrevocably in trust with the Trustee money and/or, to the extent such Debt
Securities are denominated and payable in Dollars only, Eligible Instruments the
payments of principal and interest on which when due (and without reinvestment
and providing no tax liability will be imposed upon the Trustee or the Holders
of such Debt Securities) will provide money in such amounts as will (together
with any money irrevocably deposited in trust with the Trustee, without
investment) be sufficient to pay principal (and premium, if any) and interest
when due on the Debt Securities of such series and any coupons appertaining
thereto and any mandatory sinking fund, repayment or analogous payments thereon
on the scheduled due dates therefor at the Stated Maturity thereof, the
Company's obligations under Section 1005 shall
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terminate with respect to the Debt Securities of the series for which such
deposit was made; provided, however, that (i) no Event of Default with respect
to the Debt Securities of such series under Section 501(1) or 501(2) or event
that with notice or lapse of time or both would constitute such an Event of
Default shall have occurred and be continuing on such date and (ii) such
termination shall not relieve the Company of its obligations under the Debt
Securities of such series and this Indenture to pay when due the principal of
(and premium, if any) and interest and additional amounts on such Debt
Securities and any coupons appertaining thereto if such Debt Securities or
coupons are not paid (or payment is not provided for) when due from the money
and Eligible Instruments (and the proceeds thereof) so deposited.
It shall be a condition to the deposit of cash and/or Eligible Instruments
and the termination of the Company's obligations with respect to the Debt
Securities of any series under Section 1005 pursuant to the provisions of this
Section that the Company deliver to the Trustee (i) an opinion of nationally
recognized independent tax counsel to the effect that: (a) Holders of Debt
Securities of such series and any coupons appertaining thereto will not
recognize income, gain or loss for Federal income tax purposes as a result of
such deposit and termination and (b) such Holders (and future Holders) will be
subject to tax in the same amount, manner and timing as if such deposit and
termination has not occurred and (ii) an Officers' Certificate to the effect
that under the laws in effect on the date such money and/or Eligible Instruments
are deposited with the Trustee, the amount thereof will be sufficient, after
payment of all Federal, state and local taxes in respect thereof payable by the
Trustee, to pay principal (and premium, if any) and interest when due on the
Debt Securities of such series and any coupons appertaining thereto.
It shall be an additional condition to the deposit of cash and/or Eligible
Instruments and the termination of the Company's obligations under Section 1005
pursuant to the provisions of this Section, with respect to the Debt Securities
of any series then listed on the New York Stock Exchange, that the Company
deliver an Opinion of Counsel that the Debt Securities of such series will not
be delisted from the New York Stock Exchange as a result of such deposit and
termination.
After a deposit as provided herein, the Trustee shall, upon Company
Request, acknowledge in writing the discharge of the Company's obligations with
respect to the Debt Securities of such series under Section 1005 pursuant to the
provisions of this Section.
SECTION 1702. Repayment to Company.
The Trustee and any Paying Agent shall promptly pay to the Company upon
Company Request any money or Eligible Instruments not required for the payment
of the principal of (and premium, if any) and interest on the Debt Securities of
any series and any related coupons for which money or Eligible Instruments have
been deposited pursuant to Section 1701 held by them at any time.
The Trustee and any Paying Agent shall pay to the Company upon Company
Request any money held by them for the payment of principal (and premium, if
any) and interest that remains unclaimed for two years after the Maturity of the
Debt Securities for which a deposit has been made pursuant to Section 1301.
After such payment to the Company, the Holders of the Debt Securities of such
series and any related coupons shall thereafter, as unsecured general creditors,
look only to the Company for the payment thereof.
SECTION 1703. Indemnity for Eligible Instruments.
The Company shall pay and shall indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the deposited Eligible
Instruments or the principal or interest received on such Eligible Instruments.
ARTICLE EIGHTEEN
SUBORDINATION OF DEBT SECURITIES
SECTION 1801. Debt Securities Subordinate to Senior Debt.
The Company covenants and agrees that anything in this Indenture or the
Debt Securities of any series to the contrary notwithstanding, the indebtedness
evidenced by the Debt Securities of each series and any coupons
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appurtenant thereto is subordinate and junior in right of payment to all Senior
Debt to the extent provided herein, and each Holder of Debt Securities of each
series and coupons appurtenant thereto, by his acceptance thereof, likewise
covenants and agrees to the subordination herein provided and shall be bound by
the provisions hereof. Senior Debt shall continue to be Senior Debt and entitled
to the benefits of these subordination provisions irrespective of any amendment,
modification or waiver of any term of the Senior Debt or extension or renewal of
the Senior Debt.
In the event that the Company shall default in the payment of any principal
of (or premium, if any) or interest on any Senior Debt when the same become due
and payable, whether at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, upon written notice of such
default to the Company by the Holders of Senior Debt or any trustee therefor,
unless and until such default shall have been cured or waived or shall have
ceased to exist, no direct or indirect payment (in cash, property, securities,
by set-off or otherwise) shall be made or agreed to be made on account of the
principal of (or premium, if any) or interest on any of the Debt Securities, or
in respect of any redemption, repayment, retirement, purchase or other
acquisition of any of the Debt Securities.
In the event of
(a) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding
relating to the Company, its creditors or its property,
(b) any proceeding for the liquidation, dissolution or other winding
up of the Company, voluntary or involuntary, whether or not involving
insolvency or bankruptcy proceedings,
(c) any assignment by the Company for the benefit of creditors, or
(d) any other marshalling of the assets of the Company,
all Senior Debt (including any interest thereon accruing after the commencement
of any such proceedings) shall first be paid in full before any payment or
distribution, whether in cash, securities or other property, shall be made to
any Holder of any of the Debt Securities or coupons appurtenant thereto on
account thereof. Any payment or distribution, whether in cash, securities or
other property (other than securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in these subordination provisions
with respect to the indebtedness evidenced by the Debt Securities, to the
payment of all Senior Debt at the time outstanding and to any securities issued
in respect thereof under any such plan of reorganization or readjustment), which
would otherwise (but for these subordination provisions) be payable or
deliverable in respect of the Debt Securities of any series or coupons
appurtenant thereto shall be paid or delivered directly to the Holders of Senior
Debt in accordance with the priorities then existing among such Holders until
all Senior Debt (including any interest thereon accruing after the commencement
of any such proceedings) shall have been paid in full. In the event of any such
proceeding, after payment in full of all sums owing with respect to Senior Debt,
the Holders of the Debt Securities and coupons appurtenant thereto, together
with the Holders of any obligations of the Company ranking on a parity with the
Debt Securities, shall be entitled to be paid from the remaining assets of the
Company the amounts at the time due and owing on account of unpaid principal of
(and premium, if any) and interest on the Debt Securities and such other
obligations before any payment or other distribution, whether in cash, property
or otherwise, shall be made on account of any capital stock or any obligations
of the Company ranking junior to the Debt Securities and such other obligations.
In the event that, notwithstanding the foregoing, any payment or
distribution of any character or any security, whether in cash, securities or
other property (other than securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in these subordination provisions
with respect to the indebtedness evidenced by the Debt Securities, to the
payment of all Senior Debt at the time outstanding and to any securities issued
in respect thereof under any such plan of reorganization or readjustment), shall
be received by the Trustee or any Holder in contravention of any of the terms
hereof such payment or distribution or security shall be received in trust for
the benefit of, and shall be paid over or delivered and transferred to, the
holders of the Senior Debt at the time outstanding in accordance with the
priorities then existing among such holders for application to the payment of
all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior
Debt in full. In the event of the failure of the Trustee or any Holder to
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endorse or assign any such payment, distribution or security, each holder of
Senior Debt is hereby irrevocably authorized to endorse or assign the same.
No present or future holder of any Senior Debt shall be prejudiced in the
right to enforce subordination of the indebtedness evidenced by the Debt
Securities by any act or failure to act on the part of the Company. Nothing
contained herein shall impair, as between the Company and the Holders of Debt
Securities of each series, the obligation of the Company to pay to such Holders
the principal of (and premium, if any) and interest on such Debt Securities and
coupons appurtenant thereto or prevent the Trustee or the Holder from exercising
all rights, powers and remedies otherwise permitted by applicable law or
hereunder upon a default or Event of Default hereunder, all subject to the
rights of the holders of the Senior Debt to receive cash, securities or other
property otherwise payable or deliverable to the Holders.
Senior Debt shall not be deemed to have been paid in full unless the
holders thereof shall have received cash, securities or other property equal to
the amount of such Senior Debt then outstanding. Upon the payment in full of all
Senior Debt, the Holders of Debt Securities of each series and coupons
appurtenant thereto, if any, shall be subrogated to all rights of any holders of
Senior Debt to receive any further payments or distributions applicable to the
Senior Debt until the indebtedness evidenced by the Debt Securities of such
series and coupons appertaining thereto, if any, shall have been paid in full,
and such payments or distributions received by such Holders, by reason of such
subrogation, of cash, securities or other property which otherwise would be paid
or distributed to the holders of Senior Debt, shall, as between the Company and
its creditors other than the holders of Senior Debt, on the one hand, and such
Holders, on the other hand, be deemed to be a payment by the Company on account
of Senior Debt, and not on account of the Debt Securities of such series.
The Trustee and Holders will take such action (including, without
limitation, the delivery of this Indenture to an agent for the holders of Senior
Debt or consent to the filing of a financing statement with respect thereto) as
may, in the opinion of counsel designated by the holders of a majority in
principal amount of the Senior Debt at the time outstanding, be necessary or
appropriate to assure the effectiveness of the subordination effected by these
provisions.
The provisions of this Section 1801 shall not impair any rights, interests,
remedies or powers of any secured creditor of the Company in respect of any
security interest the creation of which is not prohibited by the provisions of
this Indenture.
The securing of any obligations of the Company, otherwise ranking on a
parity with the Debt Securities or ranking junior to the Debt Securities, shall
not be deemed to prevent such obligations from constituting, respectively,
obligations ranking on a parity with the Debt Securities or ranking junior to
the Debt Securities.
SECTION 1802. Trustee and Holders of Debt Securities May Rely on
Certificate of Liquidating Agent; Trustee May Require Further Evidence as to
Ownership of Senior Debt. Trustee Not Fiduciary to Holders of Senior Debt.
Upon any payment or distribution of assets of the Company referred to in
this Article Eighteen, the Trustee and the Holders shall be entitled to rely
upon an order or decree made by any court of competent jurisdiction in which
such dissolution or winding up or liquidation or reorganization or arrangement
proceedings are pending or upon a certificate of the trustee in bankruptcy,
receiver, assignee for the benefit of creditors or other Person making such
payment or distribution, delivered to the Trustee or to the Holders, for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Debt and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Eighteen. In the absence of any such bankruptcy trustee, receiver, assignee or
other Person, the Trustee shall be entitled to rely upon a written notice by a
Person representing himself to be a holder of Senior Debt (or a trustee or
representative on behalf of such holder) as evidence that such Person is a
holder of such Senior Debt (or is such a trustee or representative). In the
event that the Trustee determines, in good faith, that further evidence is
required with respect to the right of any Person as a holder of Senior Debt to
participate in any payments or distributions pursuant to this Article Eighteen,
the Trustee may request such person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Debt held by such Person,
as to the extent to which such Person is entitled to participate in such payment
or distribution, and as to other facts pertinent to the rights of such Person
under this Article Eighteen, and if such evidence is not furnished, the Trustee
may offer any payment to such Person pending judicial determination as to the
right of such Person to
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receive payment. The Trustee, however, shall not be deemed to owe any fiduciary
duty to the holders of Senior Debt.
SECTION 1803. Payment Permitted If No Default
Nothing contained in this Article Eighteen or elsewhere in this Indenture,
or in any of the Debt Securities, shall prevent (a) the Company any time, except
during the pendency of any dissolution, winding up, liquidation or
reorganization proceedings referred to in, or under the conditions described in,
Section 1801, from making payments of the principal of (or premium, if any) or
interest on the Debt Securities or (b) the application by the Trustee or any
Paying Agent of any moneys deposited with it hereunder to payments of the
principal of or interest on the Debt Securities, if, at the time of such
deposit, the Trustee or such Paying Agent, as the case may be, did not have the
written notice provided for in Section 1804 of any event prohibiting the making
of such deposit, or if, at the time of such deposit (whether or not in trust) by
the Company with the Trustee or any Paying Agent (other than the Company) such
payment would not have been prohibited by the provisions of this Article, and
the Trustee or any Paying Agent shall not be affected by any notice to the
contrary received by it on or after such date.
SECTION 1804. Trustee Not Charged with Knowledge of Prohibition.
Anything in this Article Eighteen or elsewhere in this Indenture contained
to the contrary notwithstanding, the Trustee shall not at any time be charged
with knowledge of the existence of any facts which would prohibit the making of
any payment of money to or by the Trustee and shall be entitled conclusively to
assume that no such facts exist and that no event specified in Section 1801 has
happened, until the Trustee shall have received an Officers' Certificate to that
effect or notice in writing to that effect signed by or on behalf of the holder
or holders, or their representatives, of Senior Debt who shall have been
certified by the Company or otherwise established to the reasonable satisfaction
of the Trustee to be such holder or holders or representatives or from any
trustee under any indenture pursuant to which such Senior Debt shall be
outstanding. The Company shall give prompt written notice to the Trustee and to
the Paying Agent of any facts which would prohibit the payment of money to or by
the Trustee or any Paying Agent.
SECTION 1805. Trustee to Effectuate Subordination.
Each Holder of Debt Securities or coupons by his acceptance thereof
authorizes and directs the Trustee in his behalf to take such action as may be
necessary or appropriate to effectuate the subordination as between such Holder
and holders of Senior Debt as provided in this Article and appoints the Trustee
its attorney-in-fact for any and all such purposes.
SECTION 1806. Rights of Trustee as Holder of Senior Debt.
The Trustee shall be entitled to all the rights set forth in this Article
with respect to any Senior Debt which may at the time be held by it, to the same
extent as any other holder of Senior Debt; provided that nothing in this Article
shall deprive the Trustee of any rights as such holder and provided further that
nothing in this Article shall apply to claims of, or payments to, the Trustee
under or pursuant to Section 607.
SECTION 1807. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall in such case (unless the context shall otherwise
require) be construed as extending to and including such Paying Agent within its
meaning as fully for all intents and purposes as if the Paying Agent were named
in this Article in addition to or in place of the Trustee; provided, however,
that Sections 1804 and 1806 shall not apply to the Company or any Affiliate of
the Company if the Company or such Affiliate acts as Paying Agent.
SECTION 1808. Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Debt.
No right of any present or future holders of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof which any such holder may have or
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be otherwise charged with. The holders of Senior Debt may, at any time or from
time to time and in their absolute discretion, change the manner, place or terms
of payment, change or extend the time of payment of, or renew or alter, any such
Senior Debt, or amend or supplement any instrument pursuant to which any such
Senior Debt is issued or by which it may be secured, or release any security
therefor, or exercise or refrain from exercising any other of their rights
unders the Senior Debt including, without limitation, the waiver of default
thereunder, all without notice to or assent from the Holders of the Debt
Securities or the Trustee and without affecting the obligations of the Company,
the Trustee or the Holders of the Debt Securities under this Article.
ARTICLE NINETEEN
CONVERSION OF CONVERTIBLE SECURITIES
SECTION 1901. Applicability of Article.
If an Officers' Certificate or supplemental indenture pursuant to Section
301 provides that the Debt Securities of a series shall be Convertible
Securities, such series shall be convertible in accordance with their terms and
(except as otherwise specified in such Officers' Certificate or supplemental
indenture) in accordance with this Article.
SECTION 1902. Right to Convert.
Subject to and upon compliance with the provisions of this Article, the
Holder of any Convertible Security shall have the right, at his option, at any
time prior to the close of business on the date set forth in the Officers'
Certificate delivered pursuant to Section 301 hereof (or if such Convertible
Security is called for redemption or submitted for repayment, then in respect of
such Convertible Security to and including but not after the close of business
on the Redemption or Repayment Date, as the case may be, unless the Company
shall default in the payment due) to convert the principal amount of any such
Convertible Security, or, in the case of any Convertible Security of a
denomination greater than $1,000, any portion of such principal which is $1,000
or an integral multiple thereof, into that number of fully paid and
nonassessable shares of Common Stock (as such shares shall then be constituted)
obtained by dividing the principal amount of the Convertible Security or portion
thereof surrendered for conversion by the Conversion Price, by surrender of the
Convertible Security so to be converted in whole or in part in the manner
provided in Section 1903. Such conversion shall be effected by the Company.
SECTION 1903. Exercise of Conversion Privilege; Delivery of Common Stock on
Conversion: No Adjustment for Interest or Dividends.
In order to exercise the conversion privilege, the Holder of any
Convertible Security to be converted in whole or in part shall surrender such
Convertible Security at an office or agency maintained by the Company pursuant
to Section 1002, accompanied by the funds, if any, required by the last
paragraph of this Section, and shall give written notice of conversion in the
form provided on the Convertible Securities to the Company at such office or
agency that the Holder elects to convert such Convertible Security or the
portion thereof specified in said notice. Such notice shall also state the name
or names (with address) in which the certificate or certificates for shares of
Common Stock which shall be deliverable on such conversion shall be registered,
and shall be accompanied by transfer taxes, if required pursuant to Section
1908. Each Convertible Security surrendered for conversion shall, unless the
shares deliverable on conversion are to be registered in the same name as the
registration of such Convertible Security, be duly endorsed by, or be
accompanied by instruments of transfer in form satisfactory to the Company duly
executed by, the Holder or his duly authorized attorney.
As promptly as practicable after the surrender of such Convertible Security
and the receipt of such notice and funds, if any, as aforesaid, the Company
shall deliver at such office or agency to such Holder, or on his written order,
a certificate or certificates for the number of full shares deliverable upon the
conversion of such Convertible Security or portion thereof in accordance with
the provisions of this Article and a check or cash in respect of any fractional
interest in respect of a share of Common Stock arising upon such conversion as
provided in Section 1904. In case any Convertible Security of a denomination
greater than $1,000 shall be surrendered for partial conversion and subject to
Section 302, the Company shall execute and the Trustee shall authenticate and
deliver to or upon the written order of the Holder of the Convertible Security
so surrendered, without charge to him, a new Convertible
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Security or Convertible Securities in authorized denominations in an aggregate
principal amount equal to the unconverted portion of the surrendered Convertible
Security.
Each conversion shall be deemed to have been effected on the date on which
such Convertible Security shall have been surrendered (accompanied by the funds,
if any, required by the last paragraph of this Section) and such notice shall
have been received by the Company, as aforesaid, and the person in whose name
any certificate or certificates for shares of Common Stock shall be registrable
upon such conversion shall be deemed to have become on said date the holder of
record of the shares represented thereby; provided however, that any such
surrender on any date when the stock transfer books of the Company shall be
closed shall constitute the person in whose name the certificates are to be
registered as the record holder thereof for all purposes on the next succeeding
day on which stock transfer books are open, but such conversion shall be at the
Conversion Price in effect on the date upon which such Convertible Security
shall have been surrendered.
Any Convertible Security or portion thereof surrendered for conversion
during the period from the close of business on the Regular Record Date for any
Interest Payment Date to the opening of business on such Interest Payment Date
shall (unless such Convertible Security or portion thereof being converted shall
have been called for redemption or submitted for repayment on a date in such
period) be accompanied by payment, in legal tender or other funds acceptable to
the Company, of an amount equal to the interest otherwise payable on such
Interest Payment Date on the principal amount being converted; provided,
however, that no such payment need be made if there shall exist at the time of
conversion a default in the payment of interest on the Convertible Securities.
An amount equal to such payment shall be paid by the Company on such Interest
Payment Date to the Holder of such Convertible Security on such Regular Record
Date, provided, however, that if the Company shall default in the payment of
interest on such Interest Payment Date, such amount shall be paid to the person
who made such required payment. Except as provided above in this Section, no
adjustment shall be made for interest accrued on any Convertible Security
converted or for dividends on any shares issued upon the conversion of such
Convertible Security as provided in this Article.
SECTION 1904. Cash Payments in Lieu of Fractional Shares.
No fractional shares of Common Stock or scrip representing fractional
shares shall be delivered upon conversion of Convertible Securities. If more
than one Convertible Security shall be surrendered for conversion at one time by
the same Holder, the number of full shares which shall be deliverable upon
conversion shall be computed on the basis of the aggregate principal amount of
the Convertible Securities (or specified portions thereof to the extent
permitted hereby) so surrendered. If any fractional share of stock would be
deliverable upon the conversion of any Convertible Security or Convertible
Securities, the Company shall make an adjustment therefor in cash at the current
market value thereof. The market value of a share of Common Stock shall be the
Closing Price on the Business Day immediately preceding the day on which the
Convertible Securities (or specified portions thereof) are deemed to have been
converted.
SECTION 1905. Conversion Price.
The Conversion Price shall be as specified in the form of Convertible
Security hereinabove set forth, subject to adjustment as provided in this
Article.
SECTION 1906. Adjustment to Conversion Price.
The Conversion Price shall be adjusted from time to time as follows:
(a) In case the Company shall (i) pay a dividend or make a
distribution on the Common Stock in shares of its capital stock (whether
shares of Common Stock or of capital stock of any other class), (ii)
subdivide or reclassify its outstanding Common Stock into a greater number
of securities (including Common Stock), or (iii) combine or reclassify its
outstanding Common Stock into a smaller number of securities (including
Common Stock), the Conversion Price in effect immediately prior thereto
shall be adjusted so that the Holder of any Convertible Security thereafter
surrendered for conversion shall be entitled to receive the number of
shares of capital stock of the Company which he would have owned or have
been entitled to receive after the happening of any of the events described
above had such Convertible Security been converted immediately prior to the
happening of such event. An adjustment made pursuant to this subsection (a)
shall become
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effective immediately after the record date in the case of a dividend and
shall become effective immediately after the effective date in the case of
a subdivision or combination. If, as a result of an adjustment made
pursuant to this subsection (a), the Holder of any Convertible Security
thereafter surrendered for conversion shall become entitled to receive
shares of two or more classes of capital stock of the Company, the Board of
Directors of the Company (whose determination shall be conclusive and shall
be described in a written statement filed with the Trustee and any
conversion agent) shall determine the allocation of the adjusted Conversion
Price between or among shares of such classes of capital stock.
In the event that at any time, as a result of an adjustment made
pursuant to this subsection (a) of this Section 1906, the Holder of any
Convertible Security thereafter converted shall become entitled to receive
any shares or other securities of the Company other than shares of Common
Stock, thereafter the number of such other shares so received upon
conversion of any Convertible Security shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the shares of Common Stock contained in
this Section 1906, and other provisions of this Article Nineteen with
respect to the shares of Common Stock shall apply on like terms to any such
other shares or other securities.
(b) In case the Company shall fix a record date for the issuance of
rights or warrants to all holders of its Common Stock (or securities
convertible into Common Stock) entitling them (for a period expiring within
45 days after such record date) to subscribe for or purchase Common Stock
at a price per share (or a conversion price per share) less than the
current market price per share of Common Stock (as defined in subsection
(d) below) at such record date, the Conversion Price in effect immediately
prior thereto shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to such record date by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding on such record date plus the
number of shares which the aggregate offering price of the total number of
shares so offered (or the aggregate initial conversion price of the
convertible securities so offered) would purchase at such current market
price, and of which the denominator shall be the number of shares of Common
Stock outstanding on such record date plus the number of additional shares
of Common Stock offered for subscription or purchase (or into which the
convertible securities so offered are initially convertible). Such
adjustment shall be made successively whenever such a record date is fixed,
and shall become effective immediately after such record date. In
determining whether any rights or warrants entitle the holders to subscribe
for or purchase shares of Common Stock at less than such current market
price, and in determining the aggregate offering price of such shares,
there shall be taken into account any consideration received by the Company
for such rights or warrants, the value of such consideration, if other than
cash, to be determined by the Board of Directors of the Company. Common
Stock owned by or held for the account of the Company or any majority owned
subsidiary shall not be deemed outstanding for the purpose of any
adjustment required under this subsection (b).
(c) In case the Company shall fix a record date for making a
distribution to all holders of its Common Stock evidences of its
indebtedness or assets (excluding regular quarterly or other periodic or
recurring cash dividends or distributions and cash dividends or
distributions paid from retained earnings of the Company or dividends or
distributions referred to in subsection (a) above) or rights or warrants to
subscribe or purchase (excluding those referred to in subsection ((b)
above), then in each such case the Conversion Price shall be adjusted so
that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to such record date by a
fraction of which the numerator shall be the current market price per share
(as defined in subsection (d) below) of the Common Stock on such record
date less the then fair market value (as determined by the Board of
Directors of the Company whose determination shall be conclusive, and
described in a certificate filed with the Trustee) of the portion of the
assets or evidences of indebtedness so distributed or of such rights or
warrants applicable to one share of Common Stock, and the denominator shall
be the current market price per share (as defined in subsection (d) below)
of the Common Stock. Such adjustment shall be made successively whenever
such a record date is fixed and shall become effective immediately after
such record date notwithstanding the foregoing, in the event that the
Company shall distribute any rights or warrants to acquire capital stock
("Rights") pursuant to this subparagraph (c), the distribution of separate
certificates representing such Rights subsequent to their initial
distribution (whether or not such distribution shall have occurred prior to
the date of the issuance of such Subordinated
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Capital Securities) shall be deemed to be the distribution of such Rights
for purposes of this subsection (b); provided that the Company may, in lieu
of making any adjustment pursuant to this subsection (b) upon a
distribution of separate certificates representing such Rights, make proper
provision so that each Holder of such Convertible Security who converts
such Convertible Security (or any portion thereof) (i) before the record
date for such distribution of separate certificates shall be entitled to
receive upon such conversion shares of Common Stock issued with Rights and
(ii) after such record date and prior to the expiration, redemption or
termination of such Rights shall be entitled to receive upon such
conversion, in addition to the shares of Common Stock issuable upon such
conversion, the same number of such Rights as would a holder of the number
of shares of Common Stock that such Convertible Security so converted would
have entitled the holder thereof to purchase in accordance with the terms
and provisions of and applicable to the rights if such Convertible Security
were converted immediately prior to the record date for such distribution.
Common Stock owned by or held for the account of the Company or any
majority owned subsidiary shall not be deemed outstanding for the purpose
of any adjustment required under this subsection (c).
(d) For the purpose of any computation under subsection (b) and (c)
above, the current market price per share of Common Stock at any date shall
be deemed to be the average of the daily Closing Prices for the thirty
consecutive days (which are not legal holidays as defined in Section 113)
commencing forty-five days (which are not legal holidays as defined in
Section 113) before the day in question. The Closing Price for any day
shall be (i) if the Common Stock is listed or admitted for trading on any
national securities exchange, the last sale price (regular way), or the
average of the closing bid and ask prices if no sale occurred, of Common
Stock on the principal securities exchange on which the Common Stock is
listed, (ii) if not listed as described in (i), the mean between the
closing high bid and low asked quotations of Common Stock in the National
Association of Securities Dealers, Inc., Automated Quotation System, or any
similar system or automated dissemination of quotations of securities
prices then in common use, if so quoted, or (iii) if not quoted as
described in clause (ii), the mean between the high bid and low asked
quotations for Common Stock as reported by the National Quotation Bureau
Incorporated if at least two securities dealers have inserted both bid and
asked quotations for Common Stock on at least 5 of the 10 preceding days.
If none of the conditions set forth above is met, the Closing Price of
Common Stock on any day or the average of such Closing Prices for any
period shall be the fair market value of Common Stock as determined by a
member firm of the New York Stock Exchange, Inc. selected by the Company.
(e)(i) Nothing contained herein shall be construed to require an
adjustment in the Conversion Price as a result of the issuance of Common
Stock pursuant to, or the granting or exercise of any rights under, the
Company's Shareholder Investment Plan or any successor plans providing for
the purchase of shares of Common Stock by the Company's shareholders or
employes at a price not less than 90% of the "average market price" during
the "pricing period" as such terms, or equivalent terms, are defined in,
and as calculated pursuant to, such plans from time to time.
(ii) In addition, no adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or decrease of at
least 1% in such price; provided, however, that any adjustments which by
reason of this subsection (e)(ii) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment,
further provided, however, that any adjustments which by reason of this
subsection (e)(ii) are not otherwise required to be made shall be made no
later than 3 years after the date on which occurs an event that requires an
adjustment to be made or carried forward.
(iii) All calculations under this Article Nineteen shall be made to
the nearest cent or to the nearest one-hundredth of a share, as the case
may be. Anything in this Section 1906 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Conversion Price,
in addition to those required by this Section 1906, as it in its discretion
shall determine to be advisable in order that any stock dividends,
subdivision of shares, distribution of rights to purchase stock or
securities, or distribution of securities convertible into or exchangeable
for stock hereafter made by the Company to its shareholders shall not be
taxable.
(f) Whenever the Conversion Price is adjusted, as herein provided, the
Company shall promptly file with the Trustee and any conversion agent other
than the Trustee an Officers' Certificate setting forth the
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Conversion Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment. Promptly after delivery of such
certificate, the Company shall prepare a notice of such adjustment of the
Conversion Price setting forth the adjusted Conversion Price and the date
on which such adjustment becomes effective and shall mail such notice of
such adjustment of the Conversion Price to the Holder of each Convertible
Security at his last address appearing on the Security Register provided
for in Section 305 of this Indenture.
(g) In any case in which this Section 1906 provides that an adjustment
shall become effective immediately after a record date for an event, the
Company may defer until the occurrence of such event (i) delivering to the
Holder of any Convertible Security converted after such record date and
before the occurrence of such event the additional shares of Common Stock
deliverable upon such conversion by reason of the adjustment required by
such event over and above the Common Stock deliverable upon such conversion
before giving effect to such adjustment and (ii) paying to such Holder any
amount in cash in lieu of any fraction pursuant to Section 1904, provided,
however, that the Company shall deliver to such Holder a due bill or other
appropriate instrument evidencing such Holder's rights to receive such
additional shares, and such cash, upon the occurrence of the event
requiring such adjustment. If such event does not occur, no adjustments
shall be made pursuant to this Section 1906.
Section 1907. Effect of Reclassification, Consolidation, Merger or Sale.
If any of the following events occur, namely (i) any reclassification or
change of outstanding shares of Common Stock deliverable upon conversion of the
Convertible Securities (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination, but including any change in the shares of Common Stock into two
or more classes or series of securities), (ii) any consolidation or merger to
which the Company is a party (other than a consolidation or merger in which the
Company is the continuing corporation and which does not result in any
reclassification of, or change (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination) in, outstanding shares of its Common Stock) or (iii)
any sale or conveyance of the properties and assets of the Company as, or
substantially as, an entirety to any other corporation; then the Company, or
such successor or purchasing corporation, as the case may be, shall execute with
the Trustee a supplemental indenture (which shall conform to the Trust Indenture
Act as in force at the date of execution of such supplemental indenture and
comply with the provisions of Article Nine) providing that each Convertible
Security shall be convertible into the kind and amount of shares of stock and
other securities or property, including cash, receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of a number of shares of Common Stock deliverable upon conversion of such
Convertible Securities immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. Such supplemental indenture shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article. The Company shall
cause notice of the execution of such supplemental indenture to be mailed to
each holder of Convertible Securities, at his address appearing on the
Security Register provided for in Section 305 of this Indenture.
The above provisions of this Section shall similarly apply to successive
reclassifications, consolidations, mergers and sales.
SECTION 1908. Taxes on Shares Issued.
The delivery of stock certificates or conversion of Convertible Securities
shall be made without charge to the Holder converting a Convertible Security for
any [illegible] respect of the issue thereof. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer
involved in the delivery of stock registered in any name other than of the
Holder of the Convertible Security converted, and the Company shall not
be required to deliver any such stock certificate unless and until the
person or persons requesting the delivery thereof shall have paid to the Company
the amount of such [illegible] shall have established to the satisfaction of the
Company that such tax has been paid.
<PAGE>
77
SECTION 1909. Shares to be Fully Paid; Compliance with Governmental
Requirements; Listing of Common Stock.
The Company covenants that all shares of Common Stock which may be
delivered upon conversion of Convertible Securities will upon delivery be fully
paid and nonassessable by the Company and free from all taxes, liens and charges
with respect to the issue thereof.
The Company covenants that if any shares of Common Stock to be provided for
the purpose of conversion of Convertible Securities hereunder require
registration with or approval of any governmental authority under any Federal or
state law before such shares may be validly delivered upon conversion, the
Company will in good faith and as expeditiously as possible endeavor to secure
such registration or approval, as the case may be.
The Company further covenants that it will, if permitted by the rules of
the New York Stock Exchange, list and keep listed for so long as the Common
Stock shall be so listed on such exchange, upon official notice of issuance, all
Common Stock deliverable upon conversion of the Convertible Securities.
SECTION 1910. Responsibility of Trustee.
Neither the Trustee nor any authenticating agent nor any conversion agent
shall at any time be under any duty or responsibility to any Holder of
Convertible Securities to determine whether any facts exist which may require
any adjustment of the Conversion Price, or with respect to the nature or extent
of any such adjustment when made, or with respect to the method employed, or
herein or in any supplemental indenture provided to be employed, in making the
same. Neither the Trustee nor any authenticating agent nor any conversion agent
shall be accountable with respect to the validity or value (or the kind or
amount) of any shares of Common Stock, or of any securities or property, which
may at any time be delivered upon the conversion of any Convertible Security;
and neither the Trustee nor any authenticating agent nor any conversion agent
makes any representation with respect thereto. Subject to the provisions of
Section 601, neither the Trustee nor any authenticating agent nor any conversion
agent shall be responsible for any failure of the Company to deliver any shares
of Common Stock or stock certificates or other securities or property or cash
upon the surrender of any Convertible Security for the purpose of conversion or
for any failure of the Company to comply with any of the covenants of the
Company contained in this Article,
Section 1911. Notice to Holders Prior to Certain Actions.
In case:
(a) the Company shall declare a dividend (or any other distribution)
on the Common Stock (other than in cash out of its current or retained
earnings); or
(b) the Company shall authorize the granting to the holders of the
Common Stock of rights or warrants to subscribe for or purchase any share
of any class or any other rights or warrants; or
(c) of any reclassification or change of the Common Stock (other than
a subdivision or combination of its outstanding Common Stock, or a change
in par value, or from par value to no par value, or from no par value to
par value) or, of any consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Corporation is
required or of the sale or transfer of all or substantially all of the
assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; the Company shall cause to be filed with the
Trustee and the Company shall cause to be mailed to each holder of
Convertible Securities at his address appearing on the Security Register,
provided for in Section 305 of this Indenture, as promptly as possible but
in any event at least fifteen days prior to the applicable date hereinafter
specified, a notice stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution or rights or warrants, or,
if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution or rights are
to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding
up is expected to become effective, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up. Failure to give such notice, or any
<PAGE>
78
defect therein, shall not affect the legality or validity of such dividend,
distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up or any adjustment in the Conversion
Price required by this Article Nineteen.
SECTION 1912. Covenant to Reserve Shares.
The Company covenants that it will at all times reserve and keep available,
free from pre-emptive rights, out of its authorized but unissued Common Stock
such number of shares of Common Stock as shall then be deliverable upon the
conversion of all outstanding Convertible Securities.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
BankAmerica Corporation
By RICHARD LAIDERMAN
-----------------------------------
[CORPORATE SEAL]
Attest:
CHERYL A. KNOWLES-SOROKIN
- -------------------------
Secretary
MANUFACTURERS HANOVER TRUST COMPANY OF
CALIFORNIA
By R.C. HYMAN
-----------------------------------
[CORPORATE SEAL]
Attest:
JAMES NAGY
- -------------------
Assistant Secretary
<PAGE>
79
STATE OF CALIFORNIA }
} ss.
City AND COUNTY OF SAN FRANCISCO }
On this 30th day of November, 1990 before me, a notary public in and for
said State, personally appeared RICHARD LAIDERMAN, known to me to be a vice
president of BANKAMERICA CORPORATION, one of the corporations that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
[NOTARIAL SEAL] JAMES McGRAW
----------------------
NOTARY PUBLIC
In and for the State of California with principal office in the City and
County of San Francisco.
My Commission Expires
May 11, 1994
<PAGE>
80
STATE OF CALIFORNIA }
} ss.
CITY AND COUNTY OF SAN FRANCISCO }
On this 30th day of November, 1990 before me, a notary public in and for
said State, personally appeared ROBERT C. HYMAN, known to me to be an assistant
vice president of MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA, one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed- my official
seal the day and year in this certificate first above written.
[NOTARIAL SEAL] LISA M. DOUCETTE
-------------------------------
NOTARY PUBLIC
In and for the State of California with principal office in the City and
County of San Francisco.
My Commission Expires
Commission Expires July 13, 1993
<PAGE>
A-1
EXHIBIT A-l
[Form of Certificate of Beneficial Ownership by a United States Person
or by Certain Other Persons]
Certificate
BANKAMERICA CORPORATION
[Insert title or sufficient description of
Debt Securities to be delivered]
Reference is hereby made to the Indenture dated as of September 1, 1990
(the "Indenture") between BankAmerica Corporation and Manufacturers Hanover
Trust Company of California, as trustee (the "Trustee") covering the
above-captioned Debt Securities. This is to certify that as of the date hereof,
_______________ principal amount of Debt Securities credited to you for our
account (i) is owned by persons that are not United States Persons, as defined
below; (ii) is owned by United States Persons that are (a) foreign branches of
United States financial institutions (as defined in U.S. Treasury Regulations
Section 1.165-12(c)(1)(v)) ("financial institutions") purchasing for their own
wccount or for resale, or (b) United States Persons who acquired the Notes
through foreign branches of United States financial institutions and who hold
the Notes through such United States financial institutions on the date hereof
(and in either case (a) or (b), each such United States financial institution
encloses herewith a certificate in the form of Exhibit A-2 to the Indenture); or
(iii) is owned by United States or foreign financial institutions for purposes
of resale during the restricted period (as defined in U.S. Treasury Regulations
Section 1.163-5(c)(2)(i)(D)(7)), which United States or foreign financial
institutions described in clause (iii) above (whether or not also described in
clause (i) or (ii)) certify that they have not acquired the Notes for purposes
of resale directly or indirectly to a United States Person or to a person within
the United States or its possessions.
[Insert if certificate does not relate to an interest payment--We undertake
to advise you by tested telex followed by written confirmation if the above
statement as to beneficial ownership is not correct on the date of delivery of
the above-captioned Debt Securities in bearer form as to all of such Debt
Securities with respect to such of said Debt Securities as then appear in your
books as being held for our account.] We understand that this certificate is
required in connection with United States tax laws. We irrevocably authorize you
to produce this certificate or a copy hereof to any interested party in any
administrative or legal proceedings with respect to the matters covered by this
certificate. "United States Person" shall mean a citizen or resident of the
United States of America (including the District of Columbia) or its possessions
(the "United States"), a corporation, partnership or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof or an estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
<PAGE>
A-2
(This certificate excepts and does not relate to __________ principal
amount of Debt Securities credited to you for our account and to which we are
not now able to make the certification set forth above. We understand that
definitive Debt Securities cannot be delivered until we are able to so certify
with respect to such principal amount of Debt Securities.] *
Dated:_____________________
[To be dated on or after
_______________________(the
date determined as provided in the
Indenture)]
[Name of Person Entitled to Receive Bearer Security]
____________________________________________________
(Authorized Signatory)
Name:_______________________________________________
Title:______________________________________________
<PAGE>
A-3
EXHIBIT A-2
[Form of Certificate of Status as a
Foreign Branch of a United States Financial Institution]
Certificate
BANKAMERICA CORPORATION
[Insert title or sufficient description of Debt Securities to be delivered]
Reference is hereby made to the Indenture dated as of September 1, 1990,
(the "Indenture"), between BankAmerica Corporation and Manufacturers Hanover
Trust Company of California, as trustee, relating to the offering of the
above-captioned Debt Securities (the "Debt Securities"). Unless herein defined,
terms used herein have the same meaning as given to them in the Indenture.
The undersigned represents that it is a branch located outside the United
States of a United States securities clearing organization, bank or other
financial institution (as defined in U.S. Treasury Regulations Section
1.65-12(c)(1)(v)) that holds customers' securities in the ordinary course of its
trade or business and agrees that it will comply with the requirements of
Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986 and the
regulations thereunder and is not purchasing for resale directly or indirectly
to a United States Person or to a person within the United States or its
possessions. We undertake to advise you by tested telex followed by written
confirmation if the statement in the immediately preceding sentence is not
correct on the date of delivery of the above-captioned Debt Securities in bearer
form.
We understand that this certificate is required in connection with the
United States tax laws. We irrevocably authorize you to produce this certificate
or a copy hereof to any interested party in any administrative or legal
proceedings with respect to the matters covered by this certificate.
Dated:_____________________________
[To be dated on or after
____________________________ (the
date determined as provided in the
Indenture)
[Name of Person Entitled to Receive Bearer Security
___________________________________________________
(Authorized Signatory)
Name:______________________________________________
Title:_____________________________________________
<PAGE>
B-1
EXHIBIT B
[Form of Certificate to be Given by Euro-clear and Cedel S.A.
in Connection with the Exchange of All or a Portion of
a Temporary Global Security or to Obtain Interest Prior to Exchange]
Certificate
BANKAMERICA CORPORATION
[Insert title or sufficient description of Debt Securities to be delivered]
We refer to that portion,___________ of the Global Security representing
the above-captioned issue [which is herewith submitted to be exchanged for
definitive Debt Securities] * [for which we are seeking to obtain payment of
interest]* (the "Submitted Portion"), This is to certify, pursuant to the
Indenture dated as of September 1, 1990 (the "Indenture") between BankAmerica
Corporation and Manufacturers Hanover Trust Company of California, as trustee
(the "Trustee"), that we have received in writing, by tested telex or by
electronic transmission from member organizations with respect to each of the
persons appearing in our records as being entitled to a beneficial interest in
the Submitted Portion a Certificate of Beneficial Ownership by a Non-United
States Person or by Certain Other Persons, [and, in some cases, a Certificate of
Status as a Foreign Branch of a United States Financial Institution]*
substantially in the form of Exhibit A-1 [and A-2]* to the Indenture.
We hereby request that you deliver to the office of ____________________ in
______________ definitive Bearer Securities in the denominations on the attached
Schedule A.
We further certify that as of the date hereof we have not received any
notification from any of the persons giving such certificates to the effect that
the statements made by them with respect to any part of the Submitted Portion
are no longer true and cannot be relied on as of the date hereof.
Dated:_______________________
[MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, BRUSSELS OFFICE, as
Operator of the Euro-clear System]
[CEDEL S.A.]
By _______________________________
- ----------
* Delete if inappropriate.
<PAGE>
- --------------------------------------------------------------------------------
BankAmerica Corporation
NationsBank (DE) Corporation
- --------------------------------------------------------------------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of September 15, 1998
Supplementing the Indenture, dated
as of September 1, 1990, between
BankAmerica Corporation and
Chase Manhattan Bank and Trust Company,
National Association (successor to Manufacturers
Hanover Trust Company of California), as Trustee
- --------------------------------------------------------------------------------
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of September 15, 1998 (the "First
Supplemental Indenture"), among NationsBank (DE) Corporation, a Delaware
corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of
NationsBank Corporation, a North Carolina corporation ("NationsBank"),
BankAmerica Corporation, a Delaware corporation ("BankAmerica"), and Chase
Manhattan Bank and Trust Company, National Association (successor to
Manufacturers Hanover Trust Company of California), as Trustee (the "Trustee")
under the Indenture referred to herein;
WHEREAS, BankAmerica and the Trustee heretofore executed and delivered
an Indenture, dated as of September 1, 1990 (the "Indenture"); and
WHEREAS, pursuant to the Indenture BankAmerica issued and the Trustee
authenticated and delivered one or more series of BankAmerica's Notes (the
"Securities"); and
WHEREAS, NationsBank and BankAmerica have entered into the Agreement and
Plan of Reorganization, dated as of April 10, 1998, pursuant to which (i)
NationsBank will merge (the "Reincorporation Merger") with and into NationsBank
(DE), in accordance with the terms and conditions of the Plan of Reincorporation
Merger by and between NationsBank and NationsBank (DE), dated as of August 3,
1998, with NationsBank (DE) as the surviving corporation in the Reincorporation
Merger, and (ii) BankAmerica will thereafter merge (the "Merger," and together
with the Reincorporation Merger, the "Reorganization")with and into NationsBank
(DE), with NationsBank (DE) as the surviving corporation in the Merger; and
WHEREAS, the Reorganization is expected to be consummated on September
30, 1998; and
WHEREAS, Section 801 of the Indenture provides that in the case of the
Reorganization, NationsBank (DE) shall expressly assume by supplemental
indenture all the obligations under the Securities and the Indenture on the part
of BankAmerica to be performed or observed; and
WHEREAS, Section 1414 of the Indenture requires that, as a result of the
Reorganization, a supplemental indenture be entered into providing that the
Holder of each Security then Outstanding shall have the right thereafter to
receive securities of NationsBank (DE) on the Capital Exchange Date for such
Security with a Market Value equal to the principal amount of such Security; and
WHEREAS, Section 901(1) of the Indenture provides that BankAmerica and
the Trustee may amend the Indenture and the Securities without notice to or
consent of any Holders of the Securities in order to comply with Article Eight
of the Indenture; and
WHEREAS, Section 901(9) of the Indenture provides that BankAmerica and
the Trustee may amend the Indenture and the Securities without notice to or
consent of any
2
<PAGE>
Holders of the Securities in order to make provisions with respect to matters
arising under the Indenture which shall not be inconsistent with any provision
of the Indenture, provided such provisions shall not adversely affect the
interests of the Holders of Securities of any series or any related coupons in
any material respect; and
WHEREAS, this First Supplemental Indenture has been duly authorized by
all necessary corporate action on the part of each of NationsBank (DE) and
BankAmerica.
NOW, THEREFORE, NationsBank (DE), BankAmerica and the Trustee agree as
follows for the equal and ratable benefit of the Holders of the Securities:
ARTICLE I
ASSUMPTION BY SUCCESSOR CORPORATION
SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby
expressly assumes the due and punctual payment of the principal of (and premium,
if any) and interest (including all additional amounts, if any, payable pursuant
to Section 1006) on all the Securities and any related coupons and the
performance of every covenant of the Indenture on the part of BankAmerica to be
performed or observed.
SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this First
Supplemental Indenture and agrees to perform the same under the terms and
conditions set forth in the Indenture.
SECTION 1.3. Rights of Certain Holders in the Event of a Capital
Exchange Date. The Holder of each Security Outstanding on the date of the
consummation of the Merger shall have the right thereafter to receive securities
of NationsBank (DE) on the Capital Exchange Date for such Security with a Market
Value equal to the principal amount of such Security.
ARTICLE II
MISCELLANEOUS
SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur
of (i) the execution and delivery of this First Supplemental Indenture by
NationsBank (DE), BankAmerica and the Trustee and (ii) the consummation of the
Reorganization, the Indenture shall be supplemented in accordance herewith, and
this First Supplemental Indenture shall form a part of the Indenture for all
purposes, and every Holder of Securities heretofore or hereafter authenticated
and delivered under the Indenture shall be bound thereby.
SECTION 2.2. Indenture Remains in Full Force and Effect. Except as
supplemented hereby, all provisions in the Indenture shall remain in full force
and effect.
3
<PAGE>
SECTION 2.3. Indenture and Supplemental Indenture Construed Together.
This First Supplemental Indenture is an indenture supplemental to and in
implementation of the Indenture, and the Indenture and this First Supplemental
Indenture shall henceforth be read and construed together.
SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture
as supplemented by this First Supplemental Indenture is in all respects
confirmed and preserved.
SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this
First Supplemental Indenture limits, qualifies or conflicts with any provision
of the Trust Indenture Act ("TIA") that is required under the TIA to be part of
and govern any provision of this First Supplemental Indenture, the provision of
the TIA shall control. If any provision of this First Supplemental Indenture
modifies or excludes any provision of the TIA that may be so modified or
excluded, the provision of the TIA shall be deemed to apply to the Indenture as
so modified or to be excluded by this First Supplemental Indenture, as the case
may be.
SECTION 2.6. Severability. In case any provision in this First
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Indenture.
SECTION 2.8. Headings. The Article and Section headings of this First
Supplemental Indenture have been inserted for convenience of reference only, are
not to be considered part of this Supplemental Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 2.9. Benefits of First Supplemental Indenture, etc. Nothing in
this First Supplemental Indenture or the Securities, express or implied, shall
give to any Person, other than the parties hereto and thereto and their
successors hereunder and thereunder and the Holders of the Securities, any
benefit of any legal or equitable right, remedy or claim under the Indenture,
this First Supplemental Indenture or the Securities.
SECTION 2.10. Successors. All agreements of NationsBank (DE) in this
First Supplemental Indenture shall bind its successors. All agreements of the
Trustee in this First Supplemental Indenture shall bind its successors.
SECTION 2.11. Trustee Not Responsible for Recitals. The recitals
contained herein shall be taken as the statements of BankAmerica and NationsBank
(DE), and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to, and shall not be responsible for, the
validity or sufficiency of this First Supplemental Indenture.
4
<PAGE>
SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In
entering into this First Supplemental Indenture, the Trustee shall be entitled
to the benefit of every provision of the Indenture relating to the conduct or
affecting the liability or affording protection to the Trustee, whether or not
elsewhere herein so provided.
SECTION 2.13. Governing Law. This First Supplemental Indenture shall be
governed by, and construed in accordance with, the laws of the jurisdiction
which govern the Indenture and its construction.
SECTION 2.14. Counterpart originals. The parties may sign any number of
copies of this First Supplemental Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement.
5
<PAGE>
IN WITNESS WHEREOF, the parties have caused this First Supplemental
Indenture to be duly executed as of the date first written above.
NationsBank (DE) Corporation
By: /s/ John E. Mack
---------------------------------
Name: John E. Mack
Title: Senior Vice President
Attest:
/s/ James W. Kiser
- -----------------------------
Secretary
BankAmerica Corporation
By: /s/ S.M. Maguire
---------------------------------
Name: S.M. Maguire
Title: Senior Vice President and
Assistant Treasurer
Attest:
/s/ Cheryl Sorokin
- -----------------------------
Secretary
Chase Manhattan Bank and Trust Company,
National Association, as Trustee
By: /s/ James Nagy
---------------------------------
Name: James Nagy
Title: Assistant Vice President
Attest:
[illegible signature]
- -----------------------------
Assistant Vice President
6
================================================================================
BANKAMERICA CORPORATION
TO
MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA,
Trustee
------------------
Indenture
Dated as of November 1, 1991
------------------
Subordinated Debt Securities
================================================================================
<PAGE>
BANKAMERICA CORPORATION
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of November 1, 1991
Trust Indenture Act Section Indenture Section
ss. 310(a)(1) ............................................... 609
(a)(2) ............................................... 609
(a)(3) ............................................... Not Applicable
(a)(4) ............................................... Not Applicable
(a)(5) ............................................... 609
(b) .................................................. 608
610
(c) .................................................. Not Applicable
ss. 311(a) .................................................. 613(a)
(b) .................................................. 613(b)
(b)(2) ............................................... 703(a)(3)
703(b)
ss. 312(a) .................................................. 701
702(a)
(b) .................................................. 702(b)
(c) .................................................. 702(c)
ss. 313(a) .................................................. 703(a)
(b) .................................................. 703(b)
(c) .................................................. 703(c)
(d) .................................................. 703(d)
ss. 314(a) .................................................. 704, 1004
(b) .................................................. Not Applicable
(c)(1) ............................................... 102
(c)(2) ............................................... 102
(c)(3) ............................................... Not Applicable
(d) .................................................. Not Applicable
(e) .................................................. 102
ss. 315(a) .................................................. 601(a)
601(c)
(b) .................................................. 602
703(a)(7)
(c) .................................................. 601(b)
(d) .................................................. 601(c)
(d)(1) ............................................... 601(a)
(d)(2) ............................................... 601(c)(2)
(d)(3) ............................................... 601(c)(3)
(e) .................................................. 514
ss. 316(a) .................................................. 101
(a)(1)(A) ............................................ 104(h),502
512
(a)(1)(B) ............................................ 104(h),513
(a)(2) ............................................... Not Applicable
(b) .................................................. 508
(c) .................................................. 104(h)
ss. 317(a)(1) ............................................... 503
(a)(2) ............................................... 504
(b) .................................................. 1003
ss. 318(a) .................................................. 107
(c) .................................................. 107
- ----------
Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.
<PAGE>
i
TABLE OF CONTENTS
Page
----
PARTIES ................................................................. 1
RECITALS ................................................................ 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions:
Act......................................................... 1
Affiliate; control; controlling; controlled ................ 1
Authorized Newspaper ....................................... 2
Bank ....................................................... 2
Bearer Security ............................................ 2
Board of Directors ......................................... 2
Board Resolution ........................................... 2
Business Day ............................................... 2
Capital Exchange Agent ..................................... 2
Capital Exchange Date ...................................... 2
Capital Exchange Price ..................................... 2
Capital Securities ......................................... 2
Capital Security Election Form ............................. 2
CEDEL; CEDEL S.A ........................................... 2
Closing Price .............................................. 2
Commission ................................................. 2
Common Stock ............................................... 2
Company .................................................... 3
Company Request; Company Order ............................. 3
Controlled Subsidiary ...................................... 3
Conversion Price ........................................... 3
Convertible Securities ..................................... 3
Corporate Trust Office ..................................... 3
Corporation ................................................ 3
Coupon ..................................................... 3
Debt Securities ............................................ 3
Defaulted Interest ......................................... 3
Depositary ................................................. 3
Designated Currency ........................................ 3
Dollar ..................................................... 3
ECU ........................................................ 3
Eligible Instruments ....................................... 3
Euroclear .................................................. 3
European Communities ....................................... 3
Event of Default ........................................... 3
Exchange Rate .............................................. 4
Exchange Rate Agent ........................................ 4
Exchange Rate Officer's Certificate ........................ 4
Foreign Currency ........................................... 4
Global Exchange Agent ...................................... 4
Global Exchange Date ....................................... 4
Global Security ............................................ 4
Holder ..................................................... 4
- ----------
Note: This table of contents shall not, for any purpose, be deemed to be
a part of the Indenture.
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Indenture .................................................. 4
Interest ................................................... 4
Interest Payment Date ...................................... 4
Market Value ............................................... 4
Maturity ................................................... 4
Officers' Certificate ...................................... 4
Opinion of Counsel ......................................... 4
Optional Securities Fund ................................... 4
Original Issue Discount Security ........................... 5
Outstanding ................................................ 5
Paying Agent ............................................... 5
Perpetual Preferred Stock .................................. 5
Person ..................................................... 5
Place of Capital Exchange .................................. 5
Place of Payment ........................................... 5
Predecessor Security ....................................... 5
Primary Federal Regulator .................................. 5
Redemption Date ............................................ 6
Redemption Price ........................................... 6
Registered Security ........................................ 6
Regular Record Date ........................................ 6
Remarketing Entity ......................................... 6
Repayment Date ............................................. 6
Repayment Price ............................................ 6
Responsible Officer ........................................ 6
Rights ..................................................... 6
Secondary Offering ......................................... 6
Securities Fund ............................................ 6
Security Register, Security Registrar ...................... 6
Senior Debt ................................................ 6
Special Record Date ........................................ 6
Stated Maturity ............................................ 6
Trust Indenture Act ........................................ 6
Trustee .................................................... 6
United States .............................................. 7
United States Alien ........................................ 7
U.S. Government Obligations ................................ 7
Voting Stock ............................................... 7
SECTION 102. Compliance Certificates and Opinions ....................... 7
SECTION 103. Form of Documents Delivered to Trustee ..................... 7
SECTION 104. Acts of Holders ............................................ 8
SECTION 105. Notices, etc., to Trustee and Company ...................... 9
SECTION 106. Notice to Holders; Waiver .................................. 9
SECTION 107. Conflict with Trust Indenture Act .......................... 10
SECTION 108. Effect of Headings and Table of Contents ................... 10
SECTION 109. Successors and Assigns ..................................... 10
SECTION 110. Separability Clause ........................................ 10
SECTION 111. Benefits of Indenture ...................................... 10
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SECTION 112. Governing Law .............................................. 10
SECTION 113. Legal Holidays ............................................. 10
SECTION 114. Counterparts ............................................... 10
ARTICLE TWO
DEBT SECURITY FORMS
SECTION 201. Forms Generally ............................................ 11
SECTION 202. Form of Trustee's Certificate of Authentication ............ 11
SECTION 203. Debt Securities in Global Form ............................. 11
ARTICLE THREE
THE DEBT SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series ....................... 12
SECTION 302. Denominations .............................................. 14
SECTION 303. Execution, Authentication, Delivery and Dating ............. 14
SECTION 304. Temporary Debt Securities .................................. 16
SECTION 305. Registration; Registration of Transfer and Exchange ........ 18
SECTION 306. Mutilated, Destroyed, Lost and Stolen Debt Securities ...... 20
SECTION 307. Payment of Interest; Interest Rights Preserved ............. 21
SECTION 308. Persons Deemed Owners ...................................... 22
SECTION 309. Cancellation ............................................... 23
SECTION 310. Computation of Interest .................................... 23
SECTION 311. Certification by a Person Entitled to Delivery of a
Bearer Security .......................................... 23
SECTION 312. Judgments .................................................. 23
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture .................... 24
SECTION 402. Application of Trust Money and Eligible Instruments ........ 25
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default .......................................... 25
SECTION 502. Acceleration of Maturity; Rescission and Annulment ......... 25
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee ............................................... 26
SECTION 504. Trustee May File Proofs of Claim ........................... 27
SECTION 505. Trustee May Enforce Claims without Possession of Debt
Securities or Coupons .................................... 27
SECTION 506. Application of Money Collected ............................. 28
SECTiON 507. Limitation on Suits ........................................ 28
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest and To Exchange Debt
Securities for Capital Securities ........................ 29
SECTION 509. Restoration of Rights and Remedies ......................... 29
SECTION 510. Rights and Remedies Cumulative ............................. 29
SECTION 511. Delay or Omission Not Waiver ............................... 29
SECTION 512. Control by Holders of Debt Securities ...................... 29
SECTION 513. Waiver of Past Defaults .................................... 29
SECTION 514. Undertaking for Costs ...................................... 30
SECTION 515. Waiver of Stay or Extension Laws ........................... 30
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ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities ........................ 30
SECTION 602. Notice of Defaults ......................................... 31
SECTION 603. Certain Rights of Trustee .................................. 31
SECTION 604. Not Responsible for Recitals or Issuance of Debt Securities 32
SECTION 605. May Hold Debt Securities or Coupons ........................ 32
SECTION 606. Money Held in Trust ........................................ 32
SECTION 607. Compensation and Reimbursement ............................. 32
SECTION 608. Disqualification; Conflicting Interests .................... 33
(a) Elimination of Conflicting Interest or Resignation .... 33
(b) Notice of Failure to Eliminate Conflicting Interest
or Resign ........................................... 33
(c) "Conflicting Interest" Defined ........................ 33
(d) Definitions of Certain Terms Used in this Section ..... 35
(e) Calculation of Percentages of Securities .............. 36
(f) Stay of Trustee's Duty to Resign ...................... 37
(g) Amendments to Trust Indenture Act ..................... 37
SECTION 609. Corporate Trustee Required; Eligibility .................... 37
SECTION 610. Resignation and Removal; Appointment of Successor .......... 37
SECTION 611. Acceptance of Appointment by Successor ..................... 38
SECTION 612. Merger, Conversion, Consolidation or Succession to Business 39
SECTION 613. Preferential Collection of Claims Against Company .......... 39
(a) Segregation and Apportionment of Certain Collections
by Trustee; Certain Exceptions ...................... 39
(b) Certain Creditor Relationships Excluded from
Segregation and Apportionment ....................... 41
(c) Definitions of Certain Terms Used in this Section ..... 41
SECTION 614. Authenticating Agent ....................................... 42
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders .. 43
SECTION 702. Preservation of Information; Communications to Holders ..... 43
SECTION 703. Reports by Trustee ......................................... 44
SECTION 704. Reports by Company ......................................... 45
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, etc., Only on Certain Terms ....... 46
SECTION 802. Successor Corporation Substituted .......................... 46
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures without Consent of Holders ......... 46
SECTION 902. Supplemental Indentures with Consent of Holders ............ 47
SECTION 903. Execution of Supplemental Indentures ....................... 48
SECTION 904. Effect of Supplemental Indentures .......................... 48
SECTION 905. Conformity with Trust Indenture Act ........................ 49
SECTION 906. Reference in Debt Securities to Supplemental Indentures .... 49
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ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest ................ 49
SECTION 1002. Maintenance of Office or Agency ........................... 49
SECTION 1003. Money for Debt Securities Payments to Be Held in Trust .... 50
SECTION 1004. Officers' Certificate as to Default ....................... 51
SECTION 1005. Limitation on Disposition of Voting Stock of, and Merger
and Sale of Assets by, the Bank ........................ 51
SECTION 1006. Payment of Additional Amounts ............................. 51
SECTION 1007. Waiver of Certain Covenants ............................... 52
ARTICLE ELEVEN
REDEMPTION OF DEBT SECURITIES
SECTION 1101. Applicability of Article .................................. 52
SECTION 1102. Election to Redeem; Notice to Trustee ..................... 52
SECTION 1103. Selection by Trustee of Debt Securities to Be Redeemed .... 52
SECTION 1104. Notice of Redemption ...................................... 53
SECTION 1105. Deposit of Redemption Price ............................... 53
SECTION 1106. Debt Securities Payable on Redemption Date ................ 53
SECTION 1107. Debt Securities Redeemed in Part .......................... 54
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article .................................. 54
SECTION 1202. Satisfaction of Sinking Fund Payments with Debt Securities 54
SECTION 1203. Redemption of Debt Securities for Sinking Fund ............ 55
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. Applicability of Article .................................. 55
SECTION 1302. Repayment of Debt Securities .............................. 55
SECTION 1303. Exercise of Option; Notice ................................ 55
SECTION 1304. Election of Repayment by Remarketing Entities ............. 56
SECTION 1305. Debt Securities Payable on the Repayment Date ............. 56
ARTICLE FOURTEEN
EXCHANGE OF CAPITAL SECURITIES FOR DEBT SECURITIES
SECTION 1401. Applicability of Article .................................. 57
SECTION 1402. Exchange of Capital Securities for Debt Securities at
Stated Maturity ....................................... 57
SECTION 1403. Right of Early Exchange of Capital Securities for Debt
Securities ............................................ 57
SECTION 1404. Notices of Exchange ....................................... 58
SECTION 1405. Rights and Duties of Holders of Debt Securities to be
Exchanged for Capital Securities ...................... 59
SECTION 1406. Election to Exchange ...................................... 60
SECTION 1407. Deposit of Capital Exchange Price ......................... 60
SECTION 1408. Debt Securities Due on Capital Exchange Date; Debt
Securities Exchanged in Part .......................... 60
SECTION 1409. Form of Capital Security Election Form .................... 61
SECTION 1410. Fractional Capital Securities ............................. 62
SECTION 1411. Company to Obtain Govcrnmental and Regulatory Approvals ... 62
SECTION 1412. Taxes on Exchange ......................................... 62
SECTION 1413. Covenants as to Capital Securities and Secondary Offering . 62
SECTION 1414. Provision in Case of Consolidation, Merger or Transfer
of Assets ............................................. 63
SECTION 1415. Responsibility of Trustee ................................. 63
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SECTION 1416. Revocation of Obligation to Exchange Capital
Securities for Debt Securities ......................... 63
SECTION 1417. Optional Securities Funds ................................. 63
ARTICLE FIFTEEN
SECURITIES FUNDS
SECTION 1501. Creation of Securities Funds .............................. 64
SECTION 1502. Designations of Securities Funds .......................... 64
SECTION 1503. Covenant of the Company to Obtain Securities Funds ........ 65
ARTICLE SIXTEEN
MEETINGS OF HOLDERS OF DEBT SECURITIES
SECTION 1601. Purposes for Which Meetings May Be Called ................. 65
SECTION 1602. Call, Notice and Place of Meetings ........................ 65
SECTION 1603. Persons Entitled to Vote at Meetings ...................... 66
SECTION 1604. Quorum; Action ............................................ 66
SECTION 1605. Determination of Voting Rights; Conduct and Adjournment
of Meetings ............................................ 67
SECTION 1606. Counting Votes and Recording Action of Meetings ........... 67
ARTICLE SEVENTEEN
DEFEASANCE
SECTION 1701. Termination of Company's Obligations ...................... 68
SECTION 1702. Repayment to Company ...................................... 68
SECTION 1703. Indemnity for Eligible Instruments ........................ 69
ARTICLE EIGHTEEN
SUBORDINATION OF DEBT SECURITIES
SECTION 1801. Debt Securities Subordinate to Senior Debt ................ 69
SECTION 1802. Trustee and Holders of Debt Securities May Rely on
Certificate of Liquidating Agent; Trustee May Require
Further Evidence as to Ownership of Senior Debt;
Trustee Not Fiduciary to Holders of Senior Debt ....... 70
SECTION 1803. Payment Permitted If No Default ........................... 71
SECTION 1804. Trustee Not Charged With Knowledge of Prohibition ......... 71
SECTION 1805. Trustee to Effectuate Subordination ....................... 71
SECTION 1806. Rights of Trustee as Holder of Senior Debt ................ 71
SECTION 1807. Article Applicable to Paying Agents ....................... 72
SECTION 1808. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Debt .............. 72
ARTICLE NINETEEN
CONVERSION OF CONVERTIBLE SECURITIES
SECTION 1901. Applicability of Article .................................. 72
SECTION 1902. Right to Convert .......................................... 72
SECTION 1903. Exercise of Conversion Privilege; Delivery of Common
Stock on Conversion; No Adjustment for Interest
or Dividends ......................................... 72
SECTION 1904. Cash Payments in Lieu of Fractional Shares ................ 73
SECTION 1905. Conversion Price .......................................... 74
SECTION 1906. Adjustment to Conversion Price ............................ 74
SECTION 1907. Effect of Reclassification, Consolidation, Merger or Sale . 76
SECTION 1908. Taxes on Shares Issued 77
SECTION 1909. Shares to be Fully Paid; Compliance with Governmental
Requirements; Listing of Common Stock ................. 77
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SECTION 1910. Responsibility of Trustee ................................. 77
SECTION 1911. Notice to Holders Prior to Certain Actions ................ 77
SECTION 1912. Covenant to Reserve Shares ................................ 78
TESTIMONIUM ............................................................. 78
SIGNATURES AND SEALS .................................................... 78
ACKNOWLEDGEMENTS ........................................................ 79
EXHIBIT A ............................................................... A-1
EXHIBIT B ............................................................... B-1
<PAGE>
INDENTURE (the "Indenture") dated as of November 1, 1991, between
BANKAMERICA CORPORATION, a Delaware corporation (hereinafter called the
"Company"), having its principal place of business at Bank of America Center,
555 California Street, San Francisco, California 94104 and Manufacturers Hanover
Trust Company of California, a California corporation (hereinafter called the
"Trustee"), having its Corporate Trust Office at 50 California Street, San
Francisco, California 94111.
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its subordinated
debentures, notes, bonds or other evidences of indebtedness (herein called the
"Debt Securities"), to be issued in one or more series.
All things necessary have been done to make this Indenture a valid
agreement of the Company, in accordance with its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Debt
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Debt Securities or of any
series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in
this Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust Indenture
Act or by Commission rule or regulation under the Trust Indenture Act, either
directly or by reference therein, as in force at the date as of which this
instrument was executed, except as provided in Section 905, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and, except as otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally accepted in the
United States at the date of such computation; and
(4) the words "herein", "hereof' and "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act" when used with respect to any Holder has the meaning specified in
Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
<PAGE>
2
"Authorized Newspaper" means a newspaper in an official language of the
country of publication or in the English language customarily published on each
Business Day, whether or not published on Saturdays, Sundays or holidays, and of
general circulation in the place in connection with which the term is used or in
the financial community of such place. Where successive publications are
required to be made in Authorized Newspapers, the successive publications may be
made in the same or in different newspapers in the same city meeting the
foregoing requirements and in each case on any Business Day.
"Bank" means Bank of America National Trust and Savings Association, a
national banking association, and any successors to any substantial part of the
present business thereof.
"Bearer Security" means any Debt Security established pursuant to Section
201 which is payable to bearer including, without limitation, unless the context
otherwise indicates, a Debt Security in global bearer form.
"Board of Directors" means either the board of directors of the Company, or
the executive or any other committee of that board duly authorized to act in
respect hereof.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment or Place of
Capital Exchange, means any day which is not a Saturday or Sunday and which is
not a legal holiday or a day on which banking institutions or trust companies in
that Place of Payment or Place of Capital Exchange are authorized or obligated
by law or executive order to close.
"Capital Exchange Agent" means the Person or Persons appointed by the
Company to give notices and to exchange Debt Securities of any series for
Capital Securities as specified in Article Fourteen.
"Capital Exchange Date", when used with respect to the Debt Securities of
any series, means any date on which such Debt Securities are to be exchanged for
Capital Securities pursuant to this Indenture.
"Capital Exchange Price", when used with respect to any Debt Security of
any series to be exchanged for Capital Securities, means the amount of Capital
Securities for which such Debt Security is to be exchanged pursuant to this
Indenture or the aggregate sale price of such Capital Securities in the
Secondary Offering for such Debt Security, as the case may be.
"Capital Securities" means any securities issued by the Company which
consist of any of the following: (i) Common Stock (ii) Perpetual Preferred Stock
or (iii) securities which at the date of issuance may be issued in exchange for,
or the proceeds from the sale of which may be designated as Securities Funds or
Optional Securities Funds for the payment of the principal of, "mandatory
convertible securities" under applicable regulations of the Primary Federal
Regulator. Capital Securities may have such terms, rights and preferences as may
be determined by the Company.
"Capital Security Election Form" means a form substantially in the form
included in Section 1409.
"CEDEL" or "CEDEL S.A." means Centrale de Livraison de Valeurs Mobilieres
S.A.
"Closing Price" has the meaning specified in Section 1906(d).
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties on such date.
"Common Stock" means when used with reference to the capital stock of the
Company, the class of stock which, at the date of execution of this Indenture,
is designated as common stock of the Company and stock of any class or classes
into which such common stock or any such other class may thereafter be changed
or reclassified. In case by reason of the operation of Article Nineteen, the
Convertible Securities shall be convertible into any other shares or other
securities or property of the Company or any other corporation, any reference in
this Indenture to the
<PAGE>
3
conversion of Convertible Securities pursuant to Article Nineteen shall be
deemed to refer to and include conversion of Convertible Securities into such
other shares or other securities or property.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" and "Company Order" mean, respectively, a written request
or order signed in the name of the Company by the Chairman of the Board, the
Chairman of the Executive Committee of the Board, a Vice Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, a Vice
Chairman or a Vice President (any reference to a Vice President of the Company
herein shall be deemed to include any Vice President of the Company whether or
not designated by a number or word or words added before or after the title
"Vice President"), and by the Treasurer, an Assistant Treasurer, Secretary or an
Assistant Secretary of the Company, and delivered to the Trustee.
"Controlled Subsidiary" means any corporation more than 80% of the
outstanding shares of Voting Stock, except for directors' qualifying shares, of
which shall at the time be owned directly by the Company.
"Conversion Price" has the meaning specified in Section 1904.
"Convertible Securities" means any series of Debt Securities that are
designated as such pursuant to Section 301.
"Corporate Trust Office" means the principal corporate trust office of the
Trustee at which at any particular time its corporate trust business shall be
administered.
The term "corporation" includes corporations, associations, companies and
business trusts.
The term "coupon" means any interest coupon appertaining to a Bearer
Security.
"Debt Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Debt Securities authenticated and
delivered under this Indenture.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means, with respect to the Debt Securities of any series
issuable or issued in the form of a Global Security, the Person designated as
Depositary by the Company pursuant to Section 301 until a successor Depositary
shall have become such pursuant to the applicable provisions of this Indenture,
and thereafter "Depositary" shall mean or include each Person who is then a
Depositary hereunder, and if at any time there is more than one such Person,
"Depositary" as used with respect to the Debt Securities of any such series
shall mean the Depositary with respect to the Debt Securities of that series.
"Designated Currency" has the meaning specified in Section 312.
"Dollar" or "$" means the 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.
"ECU" means the European Currency Unit as defined and revised from time to
time by the Council of the European Communities.
"Eligible Instruments" means monetary assets, money market instruments and
securities that are payable in Dollars only and essentially risk free as to
collection of principal and interest, including U.S. Government Obligations.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
Office, as operator of the Euroclear System.
"European Communities" means the European Economic Community, the European
Coal and Steel Community and the European Atomic Energy Community.
"Event of Default" has the meaning specified in Section 501.
<PAGE>
4
"Exchange Rate" shall have the meaning specified as contemplated in Section
301.
"Exchange Rate Agent" shall have the meaning specified as contemplated in
Section 301.
"Exchange Rate Officer's Certificate", with respect to any date for the
payment of principal of (and premium, if any) and interest on any series of Debt
Securities, means a certificate setting forth the applicable Exchange Rate and
the amounts payable in Dollars and Foreign Currencies in respect of the
principal of (and premium, if any) and interest on Debt Securities denominated
in ECU, and other composite currency or Foreign Currency, and signed by the
Chairman of the Board, the Chairman of the Executive Committee of the Board, a
Vice Chairman of the Board, the President, the Treasurer or any Assistant
Treasurer of the Company or the Exchange Rate Agent appointed pursuant to
Section 301 and delivered to the Trustee.
"Foreign Currency" means a currency issued by the government of any country
other than the United States of America.
"Global Exchange Agent" has the meaning specified in Section 304.
"Global Exchange Date" has the meaning specified in Section 304.
"Global Security" means a Debt Security issued to evidence all or a part of
a series of Debt Securities in accordance with Section 303.
"Holder", with respect to a Registered Security, means a Person in whose
name such Registered Security is registered in the Security Register and, with
respect to a Bearer Security or a coupon, means the bearer thereof.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented, amended or restated by or pursuant to one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof and, unless the context otherwise requires, shall include the
terms of a particular series of Debt Securities established as contemplated by
Section 301.
The term "interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.
"Interest Payment Date", with respect to any Debt Security, means the
Stated Maturity of an instalment of interest on such Debt Security.
"Market Value" of any Capital Securities issued on any Capital Exchange
Date for Debt Securities of any series shall be the sale price of such Capital
Securities which are sold in the Secondary Offering for the Debt Securities of
such series. In the event no such Secondary Offering takes place, the Market
Value of such Capital Securities shall be the fair value of such Capital
Securities on such Capital Exchange Date for Debt Securities of such series as
determined by three independent nationally recognized investment banking firms
selected by the Company.
"Maturity", when used with respect to any Debt Security, means the date on
which the principal of such Debt Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or exchange, repayment at the option of the
Holder or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the Chairman of the Executive Committee of the Board, a Vice Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, a Vice Chairman or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered
to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may (except as
otherwise expressly provided in this Indenture) be counsel for the Company, or
who may be other counsel acceptable to the Trustee, which is delivered to the
Trustee.
"Optional Securities Fund" means a fund pursuant to which the proceeds of
sales of Capital Securities may be designated on the books of the Company for
the payment of any of the principal of any Debt Security pursuant to Section
1417 of this Indenture.
<PAGE>
5
"Original Issue Discount Security" means any Debt Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Debt Securities means, as of the
date of determination, all Debt Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Debt Securities theretofore cancelled by the Trustee or delivered
to the Trustee for cancellation;
(ii) Debt Securities or portions thereof for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Company) in trust or
set aside and segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of such Debt Securities and any
coupons appertaining thereto; provided, however, that if such Debt
Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made; and
(iii) Debt Securities in exchange for or in lieu of which other Debt
Securities have been authenticated and delivered, or which have been paid,
pursuant to this Indenture;
provided, however, that in determining whether the Holders of the requisite
principal amount of Debt Securities Outstanding have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Debt Securities
owned by the Company or any other obligor upon the Debt Securities or any
Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon such request, demand, authorization,
direction, notice, consent or waiver, only Debt Securities which the Trustee
knows to be so owned shall be so disregarded. Debt Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Debt Securities and that the pledgee is not the Company or
any other obligor upon the Debt Securities or any Affiliate of the Company or of
such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Debt Securities on behalf
of the Company.
"Perpetual Preferred Stock" means any stock of any class of the Company
which has a preference over Common Stock in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which is not mandatorily redeemable or repayable,
or redeemable or repayable at the option of the Holder, otherwise than in shares
of Common Stock or Perpetual Preferred Stock of another class or series or with
the proceeds of the sale of Common Stock or Perpetual Preferred Stock.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Capital Exchange", when used with respect to Debt Securities of
any series, means any place where the Debt Securities of such series are
exchangeable for Capital Securities as specified pursuant to Section 301.
"Place of Payment", when used with respect to the Debt Securities of any
series means any place where the principal of (and premium, if any) and interest
on the Debt Securities of that series are payable as specified as contemplated
by Section 301.
"Predecessor Security" of any particular Debt Security means every previous
Debt Security evidencing all or a portion of the same debt as that evidenced by
such particular Debt Security, and, for the purposes of this definition, any
Debt Security authenticated and delivered under Section 306 in lieu of a lost,
destroyed or stolen Debt Security shall be deemed to evidence the same debt as
the lost, destroyed or stolen Debt Security.
"Primary Federal Regulator" means the primary United States federal
regulator of the Company (which at the date of this Indenture is the Board of
Governors of the Federal Reserve System), or any successor body or institution.
<PAGE>
6
"Redemption Date", when used with respect to any Debt Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Debt Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registered Security" means any Debt Security in the form of Registered
Securities established pursuant to Section 201 which is registered in the
Security Register.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Registered Securities of any series means the date specified for that
purpose as contemplated by Section 301.
"Remarketing Entity", when used with respect to Debt Securities of any
series which are repayable at the option of the Holders thereof before their
Stated Maturity, means any person designated by the Company to purchase any such
Debt Securities.
"Repayment Date", when used with respect to any Debt Security to be repaid
upon exercise of option for repayment by the Holder, means the date fixed for
such repayment pursuant to this Indenture.
"Repayment Price", when used with respect to any Debt Security to be repaid
upon exercise of option for repayment by the Holder, means the price at which it
is to be repaid pursuant to this Indenture.
"Responsible Officer" when used with respect to the Trustee, means any
officer within the Corporate Trust Department (or any successor group) of the
Trustee, including any vice president, assistant vice president, trust officer,
assistant secretary or any other officer or assistant officer of the Trustee
customarily performing functions similar to those performed by the persons who
at the time shall be such officers, or to whom any corporate trust matter is
referred at the Trustee's Corporate Trust Office because of such officer's
knowledge of and familiarity with the particular subject.
"Rights" has the meaning specified in Section 1906(c).
"Secondary Offering", when used with respect to the Debt Securities of any
series, means the offering and sale by the Company of Capital Securities for the
account of Holders of Debt Securities of such series who elect to receive cash
and not Capital Securities on the Capital Exchange Date for such series.
"Securities Fund" means a fund pursuant to which the proceeds of sales of
Capital Securities are designated on the books of the Company for the payment of
any principal of any Debt Security pursuant to the provisions of Section 1501.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Senior Debt" means any obligation of the Company to its creditors whether
now outstanding or subsequently incurred other than (i) any obligation as to
which, in the instrument creating or evidencing the same or pursuant to which
the same is outstanding, it is provided that such obligation is not Senior Debt
and (ii) obligations evidenced by the Debt Securities.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Debt Security or any
installment of interest thereon, means the date specified in such Debt Security
or a coupon representing such installment of interest as the fixed date on which
the principal of such Debt Security or such installment of interest is due and
payable.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed, except as provided in Section
905.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Debt Securities
of any series shall mean the Trustee with respect to Debt Securities of that
series.
<PAGE>
7
"United States" means the United States of America (including the District
of Columbia) and its possessions.
"United States Alien" means any Person who, for United States Federal
income tax purposes, is a foreign corporation, a non-resident alien individual,
a non-resident alien fiduciary of a foreign estate or trust, or a foreign
partnership one or more of the members of which is, for United States Federal
income tax purposes, a foreign corporation, a non-resident alien individual or a
non-resident alien fiduciary of a foreign estate or trust.
"U.S. Government Obligations" means direct obligations of the United States
for the payment of which its full faith and credit is pledged, or obligations of
a person controlled or supervised by and acting as an agency or instrumentality
of the United States the timely payment of which is unconditionally guaranteed
as a full faith and credit obligation by the United States.
"Voting Stock", as applied to the stock (or the equivalent thereof) of any
corporation, means stock (or the equivalent thereof) of any class or classes,
however designated, having ordinary voting power for the election of a majority
of the directors of such corporation, other than stock (or such equivalent)
having such power only by reason of the happening of a contingency.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture (other than the delivery of any
Debt Security to the Trustee for authentication pursuant to Section 303), the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than certificates provided
pursuant to Section 704(4)) shall include
(1) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he or she has
made such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his or her certificate or opinion is
based is erroneous. Any such certificate or Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such
<PAGE>
8
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters is
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing.
If Debt Securities of a series are issuable in whole or in part as Bearer
Securities, any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may, alternatively, be embodied in and evidenced by the record of
Holders of Debt Securities voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Debt Securities
duly called and held in accordance with the provisions of Article Sixteen, or a
combination of such instruments and any such record. Except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments or record or both are delivered to the Trustee, and, where it is
hereby expressly required, to the Company. Such instrument or instruments and
any such record (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "Act" of the Holders signing such instrument
or instruments and so voting at any such meeting. Proof of execution of any such
instrument or of a writing appointing any such agent, or of the holding by any
Person of a Debt Security shall be sufficient for any purpose of this Indenture
and (subject to Section 601) conclusive in favor of the Trustee and the Company,
if made in the manner provided in this Section. The record of any meeting of
Holders of Debt Securities shall be proved in the manner provided in Section
1606.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved in any manner which the Trustee deems sufficient.
(c) The ownership of Registered Securities shall be proved by the Security
Register.
(d) The principal amount and serial numbers of Bearer Securities held by
any Person, and the date of holding the same, may be proved by the production of
such Bearer Securities or by a certificate executed, as depositary, by any trust
company, bank, banker or other depositary, wherever situated, if such
certificate shall be deemed by the Trustee to be satisfactory, showing that at
the date therein mentioned such Person had on deposit with such depositary, or
exhibited to it, the Bearer Securities in the amount and with the serial numbers
therein described; or such facts may be proved by the certificate or affidavit
of the Person holding such Bearer Securities, if such certificate or affidavit
is deemed by the Trustee to be satisfactory. The Trustee and the Company may
assume that such ownership of any Bearer Security continues until (1) another
certificate or affidavit bearing a later date issued in respect of the same
Bearer Security is produced, or (2) such Bearer Security is produced to the
Trustee by some other Person, or (3) such Bearer Security is surrendered in
exchange for a Registered Security, or (4) such Bearer Security is no longer
Outstanding.
(e) The fact and date of execution of any such instrument or writing, the
authority of the Person executing the same and the principal amount and serial
numbers of Bearer Securities held by the Person so executing such instrument or
writing and the date of holding the same may also be proved in any other manner
which the Trustee deems sufficient; and the Trustee may in any instance require
further proof with respect to any of the matters referred to in this Section.
(f) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Debt Security shall bind every future holder
of the same Debt Security and the Holder of every Debt Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, suffered or omitted by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such Debt
Security.
(g) For purposes of determining the principal amount of Outstanding Debt
Securities of any series the Holders of which are required, requested or
permitted to give any request, demand, authorization, direction, notice,
consent, waiver or take any other Act under this Indenture, (i) each Original
Issue Discount Security shall be deemed to have the principal amount determined
by the Trustee that could be declared to be due and payable pursuant to the
<PAGE>
9
terms of such Original Issue Discount Security as of the date there is delivered
to the Trustee and, where it is hereby expressly required, to the Company, such
Act by Holders of the required aggregate principal amount of the Outstanding
Debt Securities of such series and (ii) each Debt Security denominated in a
Foreign Currency or composite currency shall be deemed to have the principal
amount determined by the Exchange Rate Agent by converting the principal amount
of such Debt Security in the currency in which such Debt Security is denominated
into Dollars at the Exchange Rate as of the date such Act is delivered to the
Trustee and, where it is hereby expressly required, to the Company by Holders of
the required aggregate principal amount of the Outstanding Debt Securities of
such series (or, if there is no such rate on such date, such rate on the date
determined as specified as contemplated in Section 301).
(h) The Company may set a record date for purposes of determining the
identity of Holders of Debt Securities of any series entitled to vote or consent
to any action by vote or consent authorized or permitted by Section 512 or
Section 513. Such record date shall be the later of 30 days prior to the first
solicitation of such consent or the date of the most recent list of Holders of
such Debt Securities furnished to the Trustee pursuant to Section 701 prior to
such solicitation.
SECTION 105. Notices, etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of Holders or other document provided or permitted by this Indenture
to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided), if made,
given, furnished or filed in writing to or with the Trustee at its Corporate
Trust Office, Attention: Corporate Trust Department, or
(2) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to the
attention of its Secretary at the address of its principal office specified in
the first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of any event, (1) such notice shall be
sufficiently given to Holders of Registered Securities if in writing and mailed,
first-class postage prepaid, to each Holder of a Registered Security affected by
such event, at such Holder's address as it appears in the Security Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice; and (2) such notice shall be sufficiently given
to Holders of Bearer Securities by publication thereof in an Authorized
Newspaper in The City of New York and, if the Debt Securities of such series are
then listed on The International Stock Exchange of the United Kingdom and the
Republic of Ireland and such stock exchange shall so require, in London, and, if
the Debt Securities of such series are then listed on the Luxembourg Stock
Exchange and such stock exchange shall so require, in Luxembourg and, if the
Debt Securities of such series are then listed on any other stock exchange
outside the United States and such stock exchange shall so require, in any other
required city outside the United States or, if not practicable, in Europe on a
Business Day at least twice, the first such publication to be not earlier than
the earliest date and not later than the latest date prescribed for the giving
of such notice.
In case, by reason of the suspension of or irregularities in regular mail
service or for any other reason, it shall be impossible or impracticable to mail
notice of any event to Holders when said notice is required to be given pursuant
to any provision of this Indenture or of the Debt Securities, then any manner of
giving such notice as shall be satisfactory to the Trustee shall be deemed to be
a sufficient giving of such notice. In any case where notice to Holders of
Registered Securities is to be given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder of a
~Registered Security shall affect the sufficiency of such notice with respect to
other Holders of Registered Securities or the sufficiency of any notice by
publication to Holders of Bearer Securities given as provided above.
In case, by reason of the suspension of publication of any Authorized
Newspaper, or by reason of any other cause, it shall be impossible or
impracticable to make publication of any notice to Holders of Bearer Securities
as
<PAGE>
10
provided above, then such method of publication or notification as shall be made
with the approval of the Trustee shall constitute a sufficient publication of
such notice. Neither failure to give notice by publication to Holders of Bearer
Securities as provided above, nor any defect in any notice so published, shall
affect the sufficiency of any notice mailed to Holders of Registered Securities
as provided above.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
Any request, demand, authorization, direction, notice, consent, election,
waiver or other Act required or permitted under this Indenture shall be in the
English language, except that any published notice may be in an official
language of the country of publication.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the Trust Indenture Act, such required provision shall
control.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Debt Securities or
coupons shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Debt Securities or coupons, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, any Paying Agent and the Holders, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Debt Securities and coupons shall be governed by and
construed in accordance with the laws of the State of California.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, Repayment
Date, Capital Exchange Date or Stated Maturity of any Debt Security shall not be
a Business Day at any Place of Payment or Place of Capital Exchange, then
(notwithstanding any other provision of this Indenture or of the Debt Securities
or coupons) payment of interest or principal (and premium, if any) or exchange
of Debt Securities for Capital Securities or cash need not be made at such Place
of Payment or Place of Capital Exchange on such date, but may be made on the
next succeeding Business Day at such Place of Payment or Place of Capital
Exchange with the same force and effect as if made on the Interest Payment Date,
Redemption Date, Repayment Date, Capital Exchange Date or Stated Maturity, and
no interest shall accrue for the period from and after such Interest Payment
Date, Redemption Date, Repayment Date, Capital Exchange Date or Stated Maturity,
as the case may be.
SECTION 114. Counterparts.
This Indenture may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same Indenture.
<PAGE>
11
ARTICLE TWO
DEBT SECURITY FORMS
SECTION 201. Forms Generally.
The Registered Securities, if any, and the Bearer Securities and related
coupons, if any, of each series shall be in substantially the form (including
temporary or permanent global form) as shall be established in or pursuant to a
Board Resolution or in one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon, as may be required to comply with the rules of any securities exchange,
or as may, consistently herewith, be determined by the officers executing such
Debt Securities or coupons, as evidenced by their signatures on the Debt
Securities or coupons. If the form of Debt Securities of any series or coupons
(including any such Global Security) is established by action taken pursuant to
a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 303 or the authentication and delivery of such Debt
Securities or coupons.
Unless otherwise specified as contemplated by Section 301, Debt Securities
in bearer form, other than Debt Securities in temporary or permanent global
form, shall have coupons attached.
The definitive Debt Securities and coupons, if any, shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Debt Securities,
as evidenced by the execution of such Debt Securities and coupons.
SECTION 202. Form of Trustee's Certificate of Authentication.
This is one of the Debt Securities, of the series designated herein,
described in the within-mentioned Indenture.
MANUFACTURERS HANOVER TRUST COMPANY OF
CALIFORNIA
as Trustee
By
-------------------------------------
Authorized Officer
SECTION 203. Debt Securities in Global Form.
If Debt Securities of a series are issuable in whole or in part in global
form, as specified as contemplated by Section 301, then, notwithstanding clause
(12) of Section 301 and the provisions of Section 302, such Global Security
shall represent such of the outstanding Debt Securities of such series as shall
be specified therein and may provide that it shall represent the aggregate
amount of Outstanding Debt Securities from time to time endorsed thereon and
that the aggregate amount of Outstanding Debt Securities represented thereby may
from time to time be reduced to reflect exchanges. Any endorsement of a Global
Security to reflect the amount, or any increase or decrease in the amount, of
Outstanding Debt Securities represented thereby shall be made in such manner and
upon instructions given by such Person or Persons as shall be specified therein
or in the Company Order to be delivered to the Trustee pursuant to Section 303
or Section 304.
The provisions of the last sentence of Section 303(g) shall apply to any
Debt Securities represented by a Debt Security in global form if such Debt
Security was never issued and sold by the Company and the Company delivers to
the Trustee the Debt Security in global form together with written instructions
(which need not comply with Section 102 and need not be accompanied by an
Opinion of Counsel) with regard to the reduction in the principal amount of Debt
Securities represented thereby, together with the written statement contemplated
by the last sentence of Section 303(g).
Global Securities may be issued in either registered or bearer form and in
either temporary or permanent form.
<PAGE>
12
ARTICLE THREE
THE DEBT SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Debt Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Debt Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of Debt Securities of any series:
(1) the title of the Debt Securities of the series (which shall distinguish
the Debt Securities of the series from all other Debt Securities);
(2) the limit, if any, upon the aggregate principal amount of the Debt
Securities of the series which may be authenticated and delivered under this
Indenture (except for Debt Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Debt
Securities of the series pursuant to Section 304, 305, 306, 906, 1107, 1303,
1408 or 1903 and except for any Debt Securities which, pursuant to Section 303,
are deemed never to have been authenticated and delivered hereunder);
(3) the date or dates on which the principal and premium, if any, of the
Debt Securities of the series are payable;
(4) the rate or rates, if any, at which the Debt Securities of the series
shall bear interest, or the method or methods by which such rate or rates may be
determined, the date or dates from which such interest shall accrue, the
Interest Payment Dates on which such interest shall be payable, the Regular
Record Date for the interest payable on any Registered Security on any Interest
Payment Date and the circumstances, if any, in which the Company may defer
interest payments;
(5) the place or places where, subject to the provisions of Section 1002,
the principal of (and premium, if any) and interest on Debt Securities of the
series shall be payable, any Registered Securities of the series may be
surrendered for registration of transfer, Debt Securities of the series may be
surrendered for exchange and notices and demands to or upon the Company in
respect of the Debt Securities of the series and this Indenture may be served
and where notices to Holders pursuant to Section 106 will be published;
(6) if applicable, the period or periods within which or the date or dates
on which, the price or prices at which and the terms and conditions upon which
Debt Securities of the series may be redeemed, in whole or in part, at the
option of the Company;
(7) if applicable, the place or places at which, the period or periods
within which, the price or prices at which and the terms and conditions upon
which Debt Securities shall be exchangeable for Capital Securities of the
Company, which terms and conditions shall not be inconsistent with Article
Fourteen;
(8) any covenant or option of the Company to create a Securities Fund for
the repayment of the Debt Securities and the terms and conditions of such
Securities Fund, which terms and conditions shall not be inconsistent with
Article Fifteen;
(9) the obligation, if any, of the Company to redeem, repay or purchase
Debt Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the period or periods within
which, the price or prices at which and the terms and conditions upon which Debt
Securities of the series shall be redeemed, repaid or purchased, in whole or in
part, pursuant to such obligation;
(10) whether Debt Securities of the series are to be issuable as Registered
Securities, Bearer Securities or both, whether Debt Securities of the series are
to be issuable with or without coupons or both and, in the case of Bearer
Securities, the date as of which such Bearer Securities shall be dated if other
than the date of original issuance of the first Debt Security of such series of
like tenor and term to be issued;
(11) whether the Debt Securities of the series shall be issued in whole or
in part in the form of a Global Security or Securities and, in such case, the
Depositary and Global Exchange Agent for such Global Security
<PAGE>
13
or Securities, whether such global form shall be permanent or temporary and, if
applicable, the Global Exchange Date;
(12) if Debt Securities of the series are to be issuable initially in the
form of a temporary Global Security, the circumstances under which the temporary
Global Security can be exchanged for definitive Debt Securities and whether the
definitive Debt Securities will be Registered and/or Bearer Securities and will
be in global form and whether interest in respect of any portion of such Global
Security payable in respect of an Interest Payment Date prior to the Global
Exchange Date shall be paid to any clearing organization with respect to a
portion of such Global Security held for its account and, in such event, the
terms and conditions (including any certification requirements) upon which any
such interest payment received by a clearing organization will be credited to
the Persons entitled to interest payable on such Interest Payment Date if other
than as provided in this Article Three;
(13) whether, and under what conditions, additional amounts will be payable
to Holders of Debt Securities of the series pursuant to Section 1006;
(14) the denominations in which any Registered Securities of the series
shall be issuable, if other than denominations of $1,000 and any integral
multiple thereof, and the denominations in which any Bearer Securities of such
series, shall be issuable, if other than the denomination of $5,000;
(15) if other than the principal amount thereof, the portion of the
principal amount of Debt Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502;
(16) the currency or currencies of denomination of the Debt Securities of
any series, which may be in Dollars, any Foreign Currency or any composite
currency, including but not limited to the ECU, and, if any such currency of
denomination is a composite currency other than the ECU, the agency or
organization, if any, responsible for overseeing such composite currency;
(17) the currency or currencies in which payment of the principal of (and
premium, if any) and interest on the Debt Securities will be made, the currency
or currencies, if any, in which payment of the principal of (and premium, if
any) or the interest on Registered Securities, at the election of each of the
Holders thereof, may also be payable and the periods within which and the terms
and conditions upon which such election is to be made and the Exchange Rate and
Exchange Rate Agent;
(18) if the amount of payments of principal of (and premium, if any) or
interest on the Debt Securities of the series may be determined with reference
to an index based on a currency or currencies other than that in which the Debt
Securities are denominated or designated to be payable, the manner in which such
amounts shall be determined;
(19) if payments of principal of (and premium, if any) or interest on the
Debt Securities of the series are to be made in a Foreign Currency other than
the currency in which such Debt Securities are denominated, the manner in which
the Exchange Rate with respect to such payments shall be determined or if the
Exchange Rate is to be determined otherwise than as provided in Section 101;
(20) any Events of Default with respect to Debt Securities of such series,
if not set forth herein;
(21) the terms and conditions, if any, pursuant to which the Company's
obligations under this Indenture may be terminated through the deposit of money
or Eligible Instruments as provided in Articles Four or Seventeen;
(22) the Person or Persons who shall be Security Registrar for the Debt
Securities of such series if other than the Trustee, and the place or places
where the Security Register for such series shall be maintained and the Person
or Persons who will be the initial Paying Agent or Agents, if other than the
Trustee;
(23) whether the Debt Securities of the series are Convertible Securities
and the terms related thereto including the Conversion Price and the date on
which the right to convert expires; and
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14
(24) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Debt Securities of any one series and the coupons appertaining to
Bearer Securities of such series, if any, shall be substantially identical
except, in the case of Registered Securities, as to denomination and except as
may otherwise be provided in or pursuant to such Board Resolution and set forth
in such Officers' Certificate or in any such indenture supplemental hereto.
Debt Securities of any particular series may be issued at various times,
with different dates on which the principal or any instalment of principal is
payable, with different rates of interest, if any, or different methods by which
rates of interest may be determined, with different dates on which such interest
may be payable and with different Redemption or Repayment Dates and may be
denominated in different currencies or payable in different currencies.
If any of the terms of a series of Debt Securities are established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the series.
SECTION 302. Denominations.
Debt Securities of each series shall be issuable in such form and
denominations as shall be specified in the form of Debt Security for such series
approved or established pursuant to Section 201 or in the Officers' Certificate
delivered pursuant to Section 301. In the absence of any specification with
respect to the Debt Securities of any series, the Registered Securities of such
series, if any, shall be issuable in denominations of $1,000 and any integral
multiple thereof and the Bearer Securities of such series, if any, shall be
issuable in the denomination of $5,000.
SECTION 303. Execution, Authentication, Delivery and Dating.
(a) The Debt Securities shall be executed on behalf of the Company by its
Chairman of the Board, the Chairman of the Executive Committee of the Board, a
Vice Chairman of the Board, the Chief Executive Officer, the President, the
Chief Operating Officer, a Vice Chairman or a Vice President, and by its
Treasurer or one of its Assistant Treasurers or its Secretary or one of its
Assistant Secretaries under its corporate seal reproduced thereon. The signature
of any of these officers on the Debt Securities may be manual or facsimile.
Coupons shall bear the facsimile signature of the Treasurer or any Assistant
Treasurer of the Company.
Debt Securities and coupons bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Debt
Securities or coupons of any series or did not hold such offices at the date of
such Debt Securities or coupons.
(b) At any time and from time to time after the execution and delivery of
this Indenture, Debt Securities of any series may be executed by the Company and
delivered to the Trustee for authentication, and, except as otherwise provided
in this Article Three, shall thereupon be authenticated and delivered by the
Trustee upon Company Order, without any further action by the Company provided
however, that, in connection with its original issuance, a Bearer Security may
be delivered only outside the United States and, except in the case of a
temporary Global Security, only if the Company or its agent shall have received
the certification required pursuant to Sections 304(b) (iii) and (iv), unless
such certification shall have been provided earlier pursuant to Section 304(b)
(v) hereof, and only if the Company has no reason to know that such
certification is false.
To the extent authorized in or pursuant to a Board Resolution and set forth
in an Officers' Certificate, or established in one or more indentures
supplemental hereto, such written Company Order may be given by any one officer
of the Company, may be electronically transmitted, and may provide instructions
as to registration of holders, principal amounts, rates of interest, maturity
dates and other matters contemplated by such Board Resolution and Officers'
Certificate or supplemental indenture to be so instructed in respect thereof.
Before authorizing and delivering the first Debt Securities of any series (and
upon request of the Trustee thereafter), the Company shall deliver to the
Trustee (i) the certificates called for under Sections 201 and 301 hereof and
(ii) an Opinion of Counsel described in the next sentence.
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15
In authenticating such Debt Securities, and accepting the additional
responsibilities under this Indenture in relation to any Debt Securities, the
Trustee shall be entitled to receive, prior to the initial authentication of
such Debt Securities, and (subject to Section 601) shall be fully protected in
relying upon:
(i) a Board Resolution relating thereto and, if applicable, an
appropriate record of any action taken pursuant to such resolution
certified by the Secretary or an Assistant Secretary of the Company;
(ii) an executed supplemental indenture, if any, relating thereto;
(iii) an Officers' Certificate setting forth the form and terms of the
Debt Securities of such series and coupons, if any, pursuant to Sections
201 and 301 and stating that all conditions precedent provided for in this
Indenture relating to the issuance of such Debt Securities have been
complied with, that no Event of Default with respect to any series of Debt
Securities has occurred and is continuing and that the issuance of such
Debt Securities is not and will not result in an Event of Default or an
event or condition which, upon the giving of notice (or the acquisition of
knowledge) or the lapse of time or both, would become an Event of Default,
and
(iv) an Opinion of Counsel stating
(A) that the form of such Debt Securities and coupons, if any,
has been established in or pursuant to a Board Resolution or by a
supplemental indenture as permitted by Section 201 in conformity with
the provisions of this Indenture;
(B) that the terms of such Debt Securities and coupons, if any,
have been established in or pursuant to a Board Resolution or by a
supplemental indenture as permitted by Section 301 in conformity with
the provisions of this Indenture:
(C) that such Debt Securities and coupons, if any, when
authenticated and delivered by the Trustee and issued by the Company
in the manner and subject to any conditions specified in such Opinion
of Counsel, will constitute valid and binding obligations of the
Company, enforceable in accordance with their terms, subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights
generally and the application of general principles of equity, except
that where the Debt Securities of any series are to be exchanged for
Capital Securities or paid from the Securities Fund, the issuance of
Capital Securities will require further action by the Board of
Directors;
(D) that the Company has the corporate power to issue such Debt
Securities and coupons, if any, and has duly taken all necessary
corporate action with respect to such issuance;
(E) that the issuance of such Debt Securities and coupons, if
any, will not contravene the charter or by-laws of the Company or
result in any violation of any of the terms or provisions of any law
or regulation or of any indenture, mortgage or other agreement known
to such counsel by which the Company or any of its subsidiaries is
bound;
(F) that all laws and requirements in respect of the execution
and delivery by the Company of such Debt Securities and coupons, if
any, have been complied with and that authentication and delivery of
such Debt Securities by the Trustee will not violate the terms of the
Indenture; and
(G) such other matters as the Trustee may reasonably request.
(c) If the Company shall establish pursuant to Section 301 that the Debt
Securities of a series are to be issued in whole or in part in the form of one
or more Global Securities, then the Company shall execute and the Trustee shall,
in accordance with this Section and the Company Order with respect to such
series, authenticate and deliver, one or more Global Securities in permanent or
temporary form that (i) shall represent and shall be denominated in an aggregate
amount equal to the aggregate principal amount of the Outstanding Debt
Securities of such series to be represented by one or more Global Securities,
(ii) shall be registered in the name of the Depositary for such Global Security
or Securities or the nominee of such Depositary and (iii) shall be delivered by
the Trustee to such Depositary or pursuant to such Depositary's instruction.
<PAGE>
16
(d) The Trustee shall have the right to decline to authenticate and deliver
any Debt Securities under this Section 303 if (i) the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or (ii) the
Trustee in good faith by a committee of Responsible Officers shall determine
that such action would be unjustly prejudicial to Holders of Outstanding Debt
Securities or (iii) the issuance of such Debt Securities will adversely affect
the Trustee's own rights, duties or immunities under the Debt Securities and
this Indenture or otherwise in a manner which is not reasonably acceptable to
the Trustee.
(e) If all the Debt Securities of any series are not to be issued at one
time, it shall not be necessary to deliver an Opinion of Counsel at the time of
issuance of each Debt Security, but such Opinion of Counsel, with appropriate
modifications, may instead be delivered at or prior to the time of the first
issuance of Debt Securities of such series.
(f) Each Registered Security shall be dated the date of its authentication.
Each Bearer Security shall be dated as of the date specified as contemplated by
Section 301.
(g) No Debt Security or coupon attached thereto shall be entitled to any
benefit under this Indenture or be valid or obligatory for any purpose, unless
there appears on such Debt Security a certificate of authentication
substantially in the form provided for herein executed by the Trustee, and such
certificate upon any Debt Security shall be conclusive evidence, and the only
evidence, that such Debt Security has been duly authenticated and delivered
hereunder. Except as permitted by Section 306, the Trustee shall not
authenticate and deliver any Bearer Security unless all appurtenant coupons for
interest then matured have been detached and cancelled. Notwithstanding the
foregoing, if any Debt Security or portion thereof shall have been duly
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Debt Security to the Trustee for cancellation
as provided in Section 309 together with a written statement (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
stating that such Debt Security or portion thereof has never been issued and
sold by the Company, for all purposes of this Indenture such Debt Security shall
be deemed never to have been authenticated and delivered hereunder and shall
never be entitled to the benefits of this Indenture.
(h) Each Depositary designated pursuant to Section 301 for a Global
Security in registered form must, at the time of its designation and at all
times while it serves as Depositary, be a clearing agency registered under the
Securities Exchange Act of 1934 and any other applicable statute or regulation.
SECTION 304. Temporary Debt Securities.
(a) Pending the preparation of definitive Debt Securities of any series,
the Company may execute, and upon receipt of documents required by Sections 301
and 303, together with a Company Order, the Trustee shall authenticate and
deliver, temporary Debt Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any denomination, substantially of the
tenor and terms of the definitive Debt Securities in lieu of which they are
issued in registered form or, if authorized, in bearer form with one or more
coupons or without coupons, and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Debt
Securities may determine, as evidenced by their signatures on such Debt
Securities. In the case of Debt Securities of any series issuable as Bearer
Securities, such temporary Debt Securities may be in global form, representing
all or any part of the Outstanding Debt Securities of such series.
(b) Unless otherwise provided pursuant to Section 301:
(i) Except in the case of temporary Debt Securities in global form, if
temporary Debt Securities of any series are issued, the Company will cause
definitive Debt Securities of such series to be prepared without
unreasonable delay. After the preparation of definitive Debt Securities of
such series, the related temporary Debt Securities shall be exchangeable
for such definitive Debt Securities upon surrender of the temporary Debt
Securities of such series at the office or agency of the Company in a Place
of Payment for such series, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Debt Securities of any series
(accompanied, if applicable, by all unmatured coupons and all matured
coupons in default appertaining thereto), the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Debt Securities of the same series of like
tenor and terms and of authorized denominations; provided, however, that no
Bearer Security shall be delivered in exchange for a Registered
<PAGE>
17
Security; and provided, further, that a Bearer Security shall be delivered
in exchange for a Bearer Security only in compliance with the conditions
set forth in Section 305.
(ii) If Debt Securities of any series are issued in temporary global
form, any such temporary Global Security shall, unless otherwise provided
pursuant to Section 301, be delivered to the Depositary for the benefit of
Euroclear and CEDEL S.A., for credit to the respective accounts of the
beneficial owners of such Debt Securities (or to such other accounts as
they may direct).
(iii) Without unnecessary delay but in any event not later than the
date specified in, or determined pursuant to the terms of, any such
temporary Global Security (the "Global Exchange Date"), the Company shall
deliver definitive Debt Securities to the Trustee or the agent appointed by
the Company pursuant to Section 301 to effect the exchange of the temporary
Global Security for definitive Debt Securities (the "Global Exchange
Agent"), in an aggregate principal amount equal to the principal amount of
such temporary Global Security, executed by the Company. On or after the
Global Exchange Date, such temporary Global Security shall be surrendered
by the Depositary to the Global Exchange Agent, to be exchanged, in whole
or from time to time in part, for definitive Debt Securities without charge
and the Trustee or the Global Exchange Agent, if authorized by the Trustee
pursuant to Section 614, shall authenticate and deliver, in exchange for
each portion of such temporary Global Security, an equal aggregate
principal amount of definitive Debt Securities of the same series of
authorized denominations and of like tenor and terms as the portion of such
temporary Global Security to be exchanged. Upon any exchange of a part of
such temporary Global Security for definitive Debt Securities, the portion
of the principal amount and any interest thereon so exchanged shall be
endorsed by the Global Exchange Agent on a schedule to such temporary
Global Security, whereupon the principal amount and interest payable with
respect to such temporary Global Security shall be reduced for all purposes
by the amount so exchanged and endorsed. The definitive Debt Securities to
be delivered in exchange for any such temporary Global Security shall be in
bearer form, registered form, global registered form or global bearer form,
or any combination thereof, as specified as contemplated by Section 301,
and, if any combination thereof is so specified, as requested by the
beneficial owner thereof; provided, however, that, in the case of the
exchange of the temporary Global Security for definitive Bearer Securities
(including a definitive Global Bearer Security), upon such presentation by
the Depositary, such temporary Global Security shall be accompanied by a
certificate signed by Euroclear as to the portion of such temporary Global
Security held for its account then to be exchanged and a certificate signed
by CEDEL S.A. as to the portion of such temporary Global Security held for
its account then to be exchanged, each in the form set forth in Exhibit B
to this Indenture, unless such certificate(s) shall have been provided
earlier pursuant to Section 304(b)(v) hereof; and provided, further, that
definitive Bearer Securities (including a definitive global Bearer
Security) shall be delivered in exchange for a portion of a temporary
Global Security only in compliance with the requirements of Section 303.
(iv) The interest of a beneficial owner of Debt Securities of a series
in a temporary Global Security shall be exchanged for definitive Debt
Securities of the same series and of like tenor and terms following the
Global Exchange Date when the account holder instructs Euroclear or CEDEL
S.A., as the case may be, to request such exchange on such account holder's
behalf and in the case of the exchange of the temporary Global Security for
definitive Bearer Securities (including a definitive Global Bearer
Security), unless such certificate(s) shall have been earlier provided
pursuant to Section 304(b)(v) hereof, the account holder delivers to
Euroclear or CEDEL S.A., as the case may be, a certificate in the form set
forth in Exhibit A-l and, if applicable, A-2 to this Indenture, dated no
earlier than 15 days prior to the Global Exchange Date, copies of which
certificate shall be available from the offices of Euroclear and CEDEL
S.A., the Global Exchange Agent, any authenticating agent appointed for
such series of Debt Securities and each Paying Agent. Unless otherwise
specified in such temporary Global Security, any such exchange shall be
made free of charge to the beneficial owners of such temporary Global
Security, except that a Person receiving definitive Debt Securities must
bear the cost of insurance, postage, transportation and the like in the
event that such Person does not take delivery of such definitive Debt
Securities in person at the offices of Euroclear and CEDEL S.A. Definitive
Debt Securities in bearer form to be delivered in exchange for any portion
of a temporary Global Security shall be delivered only outside the United
States.
(v) Until exchanged in full as hereinabove provided, the temporary
Debt Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as definitive Debt Securities of the same
series
<PAGE>
18
and of like tenor and terms authenticated and delivered hereunder, except
that interest payable on a temporary Global Security on an Interest Payment
Date shall be payable to Euroclear and CEDEL S.A. on such Interest Payment
Date only if there has been delivery by Euroclear and CEDEL S.A., to the
Global Exchange Agent of a certificate or certificates in the form set
forth in Exhibit B to this Indenture dated no earlier than the first
Interest Payment Date, for credit without further interest on or after such
Interest Payment Date to the respective accounts of the Persons who are the
beneficial owners of such temporary Global Security on such Interest
Payment Date and who have each delivered to Euroclear or CEDEL S.A., as the
case may be, a certificate in the form set forth in Exhibit A-1 and, if
applicable, A-2 to this Indenture dated no earlier than the first Interest
Payment Date. Any interest so received by Euroclear and CEDEL S.A., and not
paid as herein provided prior to the Global Exchange Date shall be returned
to the Global Exchange Agent which, upon expiration of two years after such
Interest Payment Date shall repay such interest to the Company in
accordance with Section 1003.
SECTION 305. Registration; Registration of Transfer and Exchange.
The Company shall cause to be kept at one of the offices or agencies to be
maintained by the Company in accordance with the provisions of this Section 305
and Section 1002, with respect to the Debt Securities of each series which are
Registered Securities, a register (herein sometimes referred to as the "Security
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Registered Securities and of
transfers of Registered Securities. Pursuant to Section 301, the Company shall
appoint, with respect to Debt Securities of each series which are Registered
Securities, a "Security Registrar" for the purpose of registering such Debt
Securities and transfers and exchanges of such Debt Securities as herein
provided.
Upon surrender for registration of transfer of any Registered Security of
any series at the office or agency of the Company maintained for such purpose,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Registered
Securities of the same series of any authorized denomination or denominations,
of like tenor and terms and aggregate principal amount.
At the option of the Holder, Registered Securities of any series may be
exchanged for other Registered Securities of the same series of any authorized
denomination or denominations, of like tenor and terms and aggregate principal
amount, upon surrender of the Registered Securities to be exchanged at such
office or agency. Bearer Securities may not be delivered in exchange for
Registered Securities.
At the option of the Holder, Registered Securities or Bearer Securities of
any series may be issued in exchange for Bearer Securities (except as otherwise
specified as contemplated by Section 301 with respect to a Bearer Security in
global form) of the same series, of any authorized denominations and of like
tenor and terms and aggregate principal amount, upon surrender of the Bearer
Securities to be exchanged at any such office or agency, with all unmatured
coupons and all matured coupons in default thereto appertaining. If the Holder
of a Bearer Security is unable to produce any such unmatured coupon or coupons
or matured coupon or coupons in default, such exchange may be effected if the
Bearer Securities are accompanied by payment in funds acceptable to the Company
and the Trustee in an amount equal to the face amount of such missing coupon or
coupons, or the surrender of such missing coupon or coupons may be waived by the
Company and the Trustee if there be furnished to them such security or indemnity
as they may require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Security shall surrender to any Paying Agent any
such missing coupon in respect of which such a payment shall have been made,
such Holder shall be entitled to receive the amount of such payment, provided,
however, that, except as otherwise provided in Section 1002, interest
represented by coupons shall be payable only upon presentation and surrender of
those coupons at an office or agency located outside the United States.
Notwithstanding the foregoing, in case a Bearer Security of any series is
surrendered at any such office or agency in exchange for a Registered Security
of the same series and like tenor and terms after the close of business at such
office or agency on (i) any Regular Record Date and before the opening of
business at such office or agency on the relevant Interest Payment Date, or (ii)
any Special Record Date and before the opening of business at such office or
agency on the related date for payment of Defaulted Interest, such Bearer
Security shall be surrendered without the coupon relating to such Interest
Payment Date or proposed date of payment, as the case may be.
Whenever any Debt Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Debt
Securities which the Holder making the exchange is entitled to receive.
<PAGE>
19
If at any time the Depositary for the Debt Securities of a series notifies
the Company that it is unwilling or unable to continue as Depositary for the
Debt Securities of such series or if at any time the Depositary for the Debt
Securities of such series shall no longer be eligible under Section 303(h), the
Company shall appoint a successor Depositary with respect to the Debt Securities
of such series. If a successor Depositary for the Debt Securities of such series
is not appointed by the Company within 90 days after the Company receives such
notice or becomes aware of such ineligibility, the Company's election pursuant
to Section 301(11) shall no longer be effective with respect to the Debt
Securities of such series and the Company will execute, and the Trustee, upon
receipt of a Company Order for the authentication and delivery of definitive
Debt Securities of such series, will authenticate and deliver, Debt Securities
of such series in definitive form in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing such series
in exchange for such Global Security or Securities.
The Company may at any time and in its sole discretion determine that the
Debt Securities of any series issued in the form of one or more Global
Securities shall no longer be represented by such Global Security or Securities.
In such event the Company will execute, and the Trustee, upon receipt of a
Company Order for the authentication and delivery of definitive Debt Securities
of such series, will authenticate and deliver, Debt Securities of such series in
definitive form and in an aggregate principal amount equal to the principal
amount of the Global Security or Securities representing such series in exchange
for such Global Security or Securities.
If specified by the Company pursuant to Section 301 with respect to a
series of Debt Securities, the Depositary for such series of Debt Securities may
surrender a Global Security for such series of Debt Securities in exchange in
whole or in part for Debt Securities of such series of like tenor and terms and
in definitive form on such terms as are acceptable to the Company and such
Depositary. Thereupon, the Company shall execute, and the Trustee shall
authenticate and deliver, without service charge,
(a) to each Person specified by such Depositary a new Debt Security or
Securities of the same series, of like tenor and terms and of any
authorized denomination as requested by such Person in aggregate principal
amount equal to and in exchange for such Person's beneficial interest in
the Global Security; and
(b) to such Depositary a new Global Security of like tenor and terms
and in a denomination equal to the difference, if any, between the
principal amount of the surrendered Global Security and the aggregate
principal amount of Debt Securities delivered to Holders thereof.
In any exchange provided for in any of the preceding three paragraphs, the
Company will execute and the Trustee will authenticate and deliver Debt
Securities (a) in definitive registered form in authorized denominations, if the
Debt Securities of such series are issuable as Registered Securities, (b) in
definitive bearer form in authorized denominations, with coupons attached, if
the Debt Securities of such series are issuable as Bearer Securities or (c) as
either Registered or Bearer Securities, as shall be specified by the beneficial
owner thereof, if the Debt Securities of such series are issuable in either
form; provided, however, that no definitive Bearer Security shall be delivered
in exchange for a temporary Global Security unless the Company or its agent
shall have received from the person entitled to receive the definitive Bearer
Security a certificate substantially in the form set forth in Exhibit A-1 and,
if applicable, A-2 hereto; and provided further that delivery of a Bearer
Security shall occur only outside the United States; and provided further that
no definitive Bearer Security will be issued if the Company has reason to know
that any such certificate is false.
Upon the exchange of a Global Security for Debt Securities in definitive
form, such Global Security shall be cancelled by the Trustee. Registered
Securities issued in exchange for a Global Security pursuant to this Section
shall be registered in such names and in such authorized denominations as the
Depositary for such Global Security, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Registered Securities to the persons in whose names such Debt
Securities are so registered. The Trustee shall deliver Bearer Securities issued
in exchange for a Global Security pursuant to this Section to the persons, and
in such authorized denominations, as the Depositary for such Global Security,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee; provided, however, that no definitive Bearer
Security shall be delivered in exchange for a temporary Global Security unless
the Company or its agent shall have received from the person entitled to receive
the definitive Bearer Security a certificate substantially in the form set forth
in Exhibit A-1 and, if applicable, A-2 hereto and provided further that delivery
of a Bearer Security
<PAGE>
20
shall occur only outside the United States; and provided further that no
definitive Bearer Security will be issued if the Company has reason to know that
any such certificate is false.
All Debt Securities issued upon any registration of transfer or exchange of
Debt Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the Debt
Securities surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company, the Security
Registrar or the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed, by the Holder thereof or such Holder's
attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer, registration of transfer or exchange of Debt
Securities, other than exchanges expressly provided in this Indenture to be made
at the Company's own expense or without expense or without charge to the
Holders.
The Company shall not be required (i) to issue, register the transfer of or
exchange Debt Securities of any particular series to be redeemed or exchanged
for Capital Securities for a period of fifteen days preceding the first
publication of the relevant notice of redemption or, if Registered Securities
are outstanding and there is no publication, the mailing of the relevant notice
of redemption or exchange, or (ii) to register the transfer of or exchange any
Registered Security so selected for redemption or exchange in whole or in part,
except the unredeemed or unexchanged portion of such Registered Security being
redeemed or exchanged in part, or (iii) to exchange any Bearer Security so
selected for redemption or exchange except that such a Bearer Security may be
exchanged for a Registered Security of like tenor and terms of that series,
provided that such Registered Security shall be simultaneously surrendered for
redemption or exchange.
Notwithstanding anything herein to the contrary, the exchange of Bearer
Securities into Registered Securities shall be subject to applicable laws and
regulations in effect at the time of exchange; neither the Company, the Trustee
nor the Security Registrar shall exchange any Bearer Securities into Registered
Securities if it has received an Opinion of Counsel that as a result of such
exchanges the Company would suffer adverse consequences under the United States
federal income tax laws and regulations then in effect and the Company has
delivered to the Trustee a Company Order directing the Trustee not to make such
exchanges thereafter unless and until the Trustee receives a subsequent Company
Order to the contrary. The Company shall deliver copies of such Company Orders
to the Security Registrar.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Debt Securities.
If (i) any mutilated Debt Security or a Bearer Security with a mutilated
coupon appertaining to it is surrendered to a Paying Agent outside the United
States designated by the Company, or, in the case of any Registered Security, to
the Trustee, or (ii) the Company and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Debt Security or coupon,
and there is delivered to the Company and the Trustee such security or indemnity
as may be required by them to save each of them harmless, then, in the absence
of notice to the Company and the Trustee that such Debt Security or coupon has
been acquired by a bona fide purchaser, the Company shall execute and upon its
written request the Trustee shall authenticate and deliver, in exchange for any
such mutilated Debt Security or Bearer Security with a mutilated coupon
appertaining to it or to which a destroyed, lost or stolen coupon appertains
(with all appurtenant coupons not destroyed, lost or stolen) or in lieu of any
such destroyed, lost or stolen Debt Security, a new Debt Security of like tenor
and terms and principal amount, bearing a number not contemporaneously
outstanding, with coupons corresponding to the coupons, if any, appertaining to
such destroyed, lost or stolen Security or to the Security to which such
destroyed, lost or stolen coupon appertains; provided, however, that any such
new Bearer Security will be delivered only in compliance with the conditions set
forth in Section 305.
In case any such mutilated, destroyed, lost or stolen Debt Security or
coupon has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Debt Security, pay such Debt Security
or coupon provided; however, that payment of principal of (and premium, if any)
and any interest on Bearer
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21
Securities shall, except as otherwise provided in Section 1002, be payable only
at an office or agency located outside the United States; and provided, further,
that, with respect to any such coupons, interest represented thereby (but not
any additional amounts payable as provided in Section 1006), shall be payable
only upon presentation and surrender of the coupons appertaining thereto.
Upon the issuance of any new Debt Security or coupon under this Section,
the Company 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 Trustee and printing expenses)
connected therewith.
Every new Debt Security of any series, with its coupons, if any, issued
pursuant to this Section in lieu of any destroyed, lost or stolen Debt Security,
or in exchange for a Bearer Security to which a destroyed, lost or stolen coupon
appertains, shall constitute an original additional contractual obligation of
the Company, whether or not the destroyed, lost or stolen Debt Security and its
coupons, if any, or the destroyed, lost or stolen coupon shall be at any time
enforceable by anyone, and any such new Debt Security and coupons, if any, shall
be entitled to all the benefits of this Indenture equally and proportionately
with any and all other Debt Securities of that series and their coupons, if any,
duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debt Securities or coupons.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Registered Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Registered Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest. In case a Bearer Security of any series is surrendered in
exchange for a Registered Security of such series after the close of business
(at an office or agency in a Place of Payment for such series) on any Regular
Record Date and before the opening of business (at such office or agency) on the
next succeeding Interest Payment Date, such Bearer Security shall be surrendered
without the coupon relating to such Interest Payment Date and interest will not
be payable on such Interest Payment Date in respect of the Registered Security
issued in exchange for such Bearer Security, but will be payable only to the
Holder of such coupon when due in accordance with the provisions of this
Indenture. At the option of the Company, payment of interest on any Registered
Security may be made by check in the currency designated for such payment
pursuant to the terms of such Registered Security mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register or
by wire transfer to an account in such currency designated by such Person in
writing not less than ten days prior to the date of such payment.
Any interest on any Registered Security of any series which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of his having
been such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Registered Securities of such series (or
their respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Registered Security of such series and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money and/or, to the extent such Debt Securities are
denominated and payable in Dollars only, Eligible Instruments the payments
of principal and interest on which when due (and without reinvestment and
providing no tax liability will be imposed upon the Trustee or the Holder
of such Registered Securities) will provide money in such amounts as will
(together with any money irrevocably deposited in trust with the Trustee,
without investment) be equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment,
such money and/or Eligible Instruments when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as in
this
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22
Clause provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date. Unless the Trustee is acting as the Security
Registrar, promptly after such Special Record Date, the Company shall
furnish the Trustee with a list, or shall make arrangements satisfactory to
the Trustee with respect thereto, of the names and addresses of, and
principal amounts of Registered Securities of such series held by, the
Holders appearing on the Security Register at the close of business on such
Special Record Date. In the name and at the expense of the Company, the
Trustee shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder of Registered Securities of such series at
his address as it appears in the Security Register, not less than 10 days
prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been mailed
as aforesaid, such Defaulted Interest shall be paid to the Persons in whose
names the Registered Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the
following Clause (2). In case a Bearer Security of any series is
surrendered at the office or agency in a Place of Payment for such series
in exchange for a Registered Security of such series after the close of
business at such office or agency on any Special Record Date and before the
opening of business at such office or agency on the related proposed date
for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the coupon relating to such proposed date of payment
and Defaulted Interest will not be payable on such proposed date of payment
in respect of the Registered Security issued in exchange for such Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture.
(2) The Company may make payment of any Defaulted Interest on the
Registered Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Registered Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this Clause, such manner of
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Debt Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Debt Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Debt
Security.
Subject to the limitations set forth in Section 1002, the Holder of any
coupon appertaining to a Bearer Security shall be entitled to receive the
interest payable on such coupon upon presentation and surrender of such coupon
on or after the Interest Payment Date of such coupon at an office or agency
maintained for such purpose pursuant to Section 1002.
If any Registered Security is exchanged for Capital Securities after any
record date and on or prior to the next succeeding Interest Payment Date (other
than any Debt Security whose Maturity is prior to such Interest Payment Date),
interest whose Stated Maturity is on such Interest Payment Date shall be paid by
the Company on such Interest Payment Date notwithstanding such exchange, and
such interest (whether or not punctually paid or duly provided for) shall be
paid to the Person in whose name that Debt Security is registered at the close
of business on such record date.
If any Bearer Security is exchanged for Capital Securities after any record
date and on or prior to the next succeeding Interest Payment Date (other than
any Debt Security whose Maturity is prior to such Interest Payment Date),
interest whose Stated Maturity is on such Interest Payment Date shall be payable
on such Interest Payment Date notwithstanding such exchange, and such interest
(whether or not punctually paid or duly provided for) shall be paid by the
Company pursuant to such procedures as may be satisfactory to the Trustee.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Registered Security for registration of
transfer, the Company, the Trustee and any agent of the Company or of the
Trustee may treat the Person in whose name such Registered Security is
registered as the owner of such Registered Security for the purpose of receiving
payment of principal of (and
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23
premium, if any) and (subject to Section 307) interest on such Registered
Security and for all other purposes whatsoever, whether or not such Registered
Security be overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the bearer of any Bearer Security and the bearer of any coupon as the
absolute owner of such Bearer Security or coupon for the purpose of receiving
payment thereof or on account thereof and for all other purposes whatsoever,
whether or not such Bearer Security or coupon be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Global Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
SECTION 309. Cancellation.
Unless otherwise provided with respect to a series of Debt Securities, all
Debt Securities and coupons surrendered for payment, redemption, repayment,
transfer, exchange or credit against any sinking fund payment pursuant to this
Indenture, shall, if surrendered to the Company or any agent of the Company, be
delivered to the Trustee and shall be promptly cancelled by it. The Company may
at any time deliver to the Trustee for cancellation any Debt Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Debt Securities so delivered shall be
promptly cancelled by the Trustee. No Debt Securities shall be authenticated in
lieu of or in exchange for any Debt Securities cancelled as provided in this
Section, except as expressly permitted by this Indenture. All cancelled Debt
Securities and coupons held by the Trustee shall be destroyed and certification
of their destruction delivered to the Company unless by a Company Order the
Company shall direct that the cancelled Debt Securities or coupons be returned
to it.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for Debt
Securities of any series, interest on the Debt Securities of each series shall
be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 311. Certification by a Person Entitled to Delivery of a Bearer
Security.
Whenever any provision of this Indenture or a Debt Security contemplates
that certification be given by a Person entitled to delivery of a Bearer
Security, such certification shall be provided substantially in the form of
Exhibit A-1 and, if applicable, A-2 hereto, with only such changes as shall be
approved by the Company and consented to by the Trustee whose consent shall not
unreasonably be withheld.
SECTION 312. Judgments.
The Company may provide, pursuant to Section 301, for the Debt Securities
of any series that, to the fullest extent possible under applicable law and
except as may otherwise be specified as contemplated in Section 301, (a) the
obligation, if any, of the Company to pay the principal of (and premium, if any)
and interest on the Debt Securities of any series and any appurtenant coupons in
a Foreign Currency, composite currency or Dollars (the "Designated Currency") as
may be specified pursuant to Section 301 is of the essence and agrees that
judgments in respect of such Debt Securities shall be given in the Designated
Currency;(b) the obligation of the Company to make payments in the Designated
Currency of the principal of (and premium, if any) and interest on such Debt
Securities and any appurtenant coupons shall, notwithstanding any payment in any
other currency (whether pursuant to a judgment or otherwise), be discharged only
to the extent of the amount in the Designated Currency that the Holder receiving
such payment may, in accordance with normal banking procedures, purchase with
the sum paid in such other currency (after any premium and cost of exchange) in
the country of issue of the Designated Currency in the case of Foreign Currency
or Dollars or in the international banking community in the case of a composite
currency on the Business Day immediately following the day on which such Holder
receives such payment;(c) if the amount in the Designated Currency that may be
so purchased for any reason falls short of the amount originally due, the
Company shall pay such additional amounts as may be necessary to compensate for
such
<PAGE>
24
shortfall; and (d) any obligation of the Company not discharged by such payment
shall be due as a separate and independent obligation and, until discharged as
provided herein, shall continue in full force and effect.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Debt Securities herein expressly provided for and rights to receive payments of
principal and interest thereon and any right to receive additional amounts, as
provided in Section 1006) and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture when
(1) either
(A) all Debt Securities theretofore authenticated and delivered and
all coupons appertaining thereto (other than (i) coupons appertaining to
Bearer Securities surrendered in exchange for Registered Securities and
maturing after such exchange, surrender of which is not required or has
been waived as provided in Section 305, (ii) Debt Securities and coupons
which have been destroyed, lost or stolen and which have been replaced or
paid as provided in Section 306, (iii) coupons appertaining to Bearer
Securities called for redemption or surrendered for repayment and maturing
after the relevant Redemption Date or Repayment Date, as appropriate,
surrender of which has been waived as provided in Section 1106 or 1303 and
(iv) Debt Securities and coupons for whose payment money and/or Eligible
Instruments have theretofore been deposited in trust or segregated and held
in trust by the Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 1003) have been delivered to the
Trustee cancelled or for cancellation; or
(B) all such Debt Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice by
the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (B)(i), (B)(ii) or (B)(iii) above, has
irrevocably deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose money and/or, to the extent such Debt
Securities are denominated and payable in Dollars only, Eligible
Instruments the payments of principal and interest on which when due (and
without reinvestment and providing no tax liability will be imposed upon
the Trustee or the Holders of Debt Securities) will provide money in such
amounts as will (together with any money irrevocably deposited in trust
with the Trustee, without investment) be sufficient to pay and discharge
the entire indebtedness on such Debt Securities and coupons of such series
for principal (and premium, if any) and interest, and any mandatory sinking
fund, repayment or analogous payments thereon, on the scheduled due dates
therefor to the date of such deposit (in the case of Debt Securities and
coupons which have become due and payable) or to the Stated Maturity or
Redemption Date, if any, and all Repayment Dates (in the case of Debt
Securities repayable at the option of the Holders thereof); provided,
however, that in the event a petition for relief under the Bankruptcy
Reform Act of 1978 or a successor statute is filed with respect to the
Company within 91 days after the deposit, the obligations of the Company
under the Indenture with respect to the Debt Securities of such series
shall not be deemed terminated or discharged, and in such event the Trustee
shall be required to return the deposited money and Eligible Instruments to
the Company;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
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25
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Sections 607 and, if money or
Eligible Instruments shall have been deposited with the Trustee pursuant to
Subclause (B) of Clause (1) of this Section, the obligations of the Trustee
under Section 402 and the last paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money and Eligible Instruments.
Subject to the provisions of the last paragraph of Section 1003, all money
and Eligible Instruments deposited with the Trustee pursuant to Section 401
shall be held in trust and such money and the principal and interest received on
such Eligible Instruments shall be applied by it, in accordance with the
provisions of the Debt Securities, the coupons and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal (and premium, if any) and interest for whose
payment such money or Eligible Instruments have been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Debt Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law, pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the entry of a decree or order for relief in respect of the
Company or the Bank by a court having jurisdiction in the premises in an
involuntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or State bankruptcy,
insolvency or other similar law, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of
the Company or the Bank or of any substantial part of the property of
either, or ordering the winding up or liquidation of the affairs of either,
and the continuance of any such decree or order unstayed and in effect for
a period of 60 consecutive days; or
(2) the commencement by the Company or the Bank of a voluntary case
under the Federal bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal or State bankruptcy, insolvency or other similar
law, or the consent by the Company or the Bank to the entry of a decree or
order for relief in an involuntary case under any such law or to the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or other similar official of either of the foregoing or of any
substantial part of the property of either, or the making by the Company or
the Bank of an assignment for the benefit of creditors, or the admission by
the Company or the Bank in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the
Company or the Bank in furtherance of any such action; or
(3) any other Event of Default, if any, provided with respect to Debt
Securities of such series specified as contemplated by Section 301.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Debt Securities of any series at the
time Outstanding occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of Outstanding
Debt Securities of such series may declare the principal amount (or, if the Debt
Securities of such series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of such series) of and
all accrued but unpaid interest on all the Debt Securities of such series to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by such Holders), and upon any
<PAGE>
26
such declaration such principal amount (or specified amount) shall become
immediately due and payable. Upon payment of such amount, all obligations of the
Company in respect of the payment of principal of the Debt Securities of such
series shall terminate.
At any time after such a declaration of acceleration with respect to Debt
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Debt Securities of such series, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue instalments of interest on all Debt Securities of
such series and any related coupons,
(B) the principal of (and premium, if any, on) any Debt
Securities of such series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates
prescribed therefor in such Debt Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue instalments of interest on each Debt Security
and any related coupons at the rate or rates prescribed therefor in
such Debt Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Debt Securities of such
series have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if:
(1) default is made in the payment of any instalment of interest on
any Debt Security or any related coupon when such interest becomes due and
payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Debt Security at the Maturity thereof, or
(3) defaults in the deposit of any sinking fund payment, when and as
due by the terms of a Debt Security of such series, or
(4) defaults in any required designation of funds as Securities Funds,
or
(5) defaults in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with or which has been expressly included
in this Indenture solely for the benefit of series of Debt Securities other
than such series), and such default or breach continues for a period of 30
days after there has been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders of
at least 25% in principal amount of the Outstanding Debt Securities of such
series a written notice specifying such default or breach and requiring it
to be remedied and stating that such notice is a "Notice of Default"
hereunder,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Debt Securities and coupons, the amount then due and payable on
such Debt Securities and coupons for any overdue principal (and premium, if any)
and interest, sinking fund installment and interest, including the delivery of
any Capital Securities then required to be delivered, and, to the extent that
payment of such interest shall be legally enforceable, interest upon the overdue
principal (and premium, if any) and, upon overdue instalments of interest, at
the rate or rates
<PAGE>
27
prescribed therefor in such Debt Securities; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts (including the delivery of any
Capital Securities then required to be delivered) forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid and the
delivery of any Capital Securities required to be delivered and not so
delivered, or, in the case of the failure to deliver Capital Securities, money
equal to the principal amount of the Debt Securities for which the Capital
Securities were to be exchanged, and may prosecute such proceeding to judgment
or final decree, and may enforce the same against the Company or any other
obligor upon such Debt Securities and coupons and collect the moneys (or money
equal to the principal amount of any Debt Securities for which Capital
Securities were to be exchanged) adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other obligor upon
such Debt Securities and coupons, wherever situated.
If an Event of Default or a default specified in this Section with respect
to Debt Securities of any series occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders of Debt Securities of such series and any related coupons by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceedings, or any voluntary or involuntary case under the Federal
bankruptcy laws as now or hereafter constituted, relative to the Company or any
other obligor upon the Debt Securities of a particular series or any related
coupons or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of such Debt
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
on the Company for the payment of overdue principal or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Debt
Securities of such series and any appurtenant coupons and to file such
other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding,
and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, custodian, liquidator, sequestrator or
other similar official in any such proceeding is hereby authorized by each
Holder to make such payments to the Trustee, and in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Debt
Securities or coupons or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee May Enforce Claims without Possession of Debt
Securities or Coupons.
All rights of action and claims under this Indenture or the Debt Securities
or coupons may be prosecuted and enforced by the Trustee without the possession
of any of the Debt Securities or coupons or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name,
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28
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Debt Securities and coupons in respect of
which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (and premium,
if any) or interest, upon presentation of the Debt Securities or coupons, or
both, as the case may be, and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607;
SECOND: To the payment of amounts then due and unpaid to the holders
of Senior Debt, to the extent required by Article Eighteen;
THIRD: To the payment of the amounts then due and unpaid for principal
of (and premium, if any) and interest on the Debt Securities and any
coupons, in respect of which or for the benefit of which such money has
been collected ratably, without preference or priority of any kind,
according to the amounts due and payable on such Debt Securities and any
coupons for principal (and premium, if any) and interest, respectively. The
Holders of each series of Debt Securities denominated in ECU, any other
composite currency or a Foreign Currency and any matured coupons relating
thereto shall be entitled to receive a ratable portion of the amount
determined by the Exchange Rate Agent by converting the principal amount
Outstanding of such series of Debt Securities and matured but unpaid
interest on such series of Debt Securities in the currency in which such
series of Debt Securities is denominated into Dollars at the Exchange Rate
as of the date of declaration of acceleration of the Maturity of the Debt
Securities; and
FOURTH: The balance, if any, to the Person or Persons entitled
thereto.
SECTION 507. Limitation on Suits.
No Holder of any Debt Security of any series or any related coupons shall
have any right to institute any proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Debt Securities of such
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Debt Securities of such series shall have made written request
to the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Debt Securities of such series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other such
Holders, or to obtain or to seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all of such
Holders.
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SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest and to Exchange Debt Securities for Capital Securities.
Notwithstanding any other provision in this Indenture, the Holder of any
Debt Security or coupon shall have the right which is absolute and unconditional
to receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest on such Debt Security or payment of such coupon on the
respective Stated Maturity or Maturities expressed in such Debt Security or
coupon (or, in the case of redemption or repayment, on the Redemption Date or
the Repayment Date, as the case may be), to have the Debt Securities exchanged
for Capital Securities pursuant to Article Fourteen, if applicable, and to
institute suit for the enforcement of any such payment or exchange, and such
right shall not be impaired without the consent of such Holder, subject however,
to the provisions of Article Eighteen.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case the Company, the Trustee and the
Holders shall, subject to any determination in such proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided in Section 306, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Debt Security
or coupon to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
SECTION 512. Control by Holders of Debt Securities.
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the Debt
Securities of such series, provided, that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture;
(2) subject to the provisions of Section 601, the Trustee shall have
the right to decline to follow any such direction if the Trustee in good
faith shall, by a Responsible Officer or Responsible Officers of the
Trustee, determine that the proceeding so directed would be unjustly
prejudicial to the Holders of Debt Securities of such series not joining in
any such direction; and
(3) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series may on behalf of the Holders of all
the Debt Securities of any such series and any related coupons waive any past
default hereunder with respect to such series and its consequences, except a
default
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(1) in the payment of the principal of (or premium, if any) or
interest on any Debt Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Debt Security of such series or coupon affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Debt Security
or coupon by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant,
but the provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Debt
Securities of any series, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on any Debt Security or the payment of any coupon on or after the respective
Stated Maturity or Maturities expressed in such Debt Security or coupon (or, in
the case of redemption or repayment, on or after the Redemption Date or
Repayment Date, as the case may be) or for the enforcement of the right to
exchange any Debt Securities for Capital Securities as provided in Article
Fourteen.
SECTION 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law whenever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefits or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
(a) With respect to Debt Securities of any series, except during the
continuance of an Event of Default with respect to the Debt Securities of such
series,
(1) the Trustee undertakes to perform such duties as are specifically
set forth in this Indenture, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provisions
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Event of Default with respect to Debt Securities of any
series has occurred and is continuing, the Trustee shall, with respect to the
Debt Securities of such series or any coupons, as the case may be, exercise such
of the rights and powers vested in it by this Indenture, and use the same degree
of care and skill in their
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exercise, as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action taken,
suffered or omitted to be taken by it with respect to Debt Securities of
any series in good faith in accordance with the direction of the Holders of
a majority in principal amount of the Outstanding Debt Securities of such
series relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture with respect to the Debt
Securities of such series.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(e) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder with respect
to Debt Securities of any series the Trustee shall transmit by mail to all
Holders of Debt Securities of such series, entitled to receive reports pursuant
to Section 703(c), notice of such default hereunder known to the Trustee, unless
such default shall have been cured or waived; provided, however, that, except in
the case of a default in the payment of the principal of (or premium, if any) or
interest on any Debt Security of such series or any related coupons or in the
payment of any sinking fund instalment with respect to Debt Securities of such
series or in the exchange of Capital Securities for Debt Securities of such
series, the Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interest of the Holders of Debt
Securities of such series. For the purpose of this Section, the term "default'
means any event which is, or after notice or lapse of time or both would become,
an Event of Default with respect to Debt Securities of such series.
SECTION 603. Certain Rights of Trustee.
Except as otherwise provided in Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
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(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders of Debt Securities of such series or any related
coupons pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses
and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon, other evidence of indebtedness or other
paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see
fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney, other than any
such books or records containing information as to the affairs of the
customers of the Company or any of its subsidiaries; provided that the
Trustee may examine such books and records relating to customers to the
extent that such books and records contain information as to any payments
made to such customers in their capacity as Holders of Debt Securities; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; no Exchange Rate Agent, Global Exchange Agent, Capital
Exchange Agent, Depositary or Paying Agent shall be deemed an agent of the
Trustee and the Trustee shall not be responsible for any act or omission by
any of them.
SECTION 604. Not Responsible for Recitals or Issuance of Debt Securities.
The recitals contained herein and in the Debt Securities, except the
Trustee's certificates of authentication, and in any coupons, and the
information in any registration statement, including all attachments thereto,
except information provided by the Trustee therein, shall be taken as the
statements of the Company, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Debt Securities of any series or any
coupons or any Capital Securities. The Trustee shall not be accountable for the
use or application by the Company of any Debt Securities or the proceeds
thereof. The Trustee shall not be responsible for and makes no representations
to the Company's ability or authority to issue Bearer Securities or the
lawfulness thereof.
SECTION 605. May Hold Debt Securities or Coupons.
The Trustee, any Paying Agent, the Security Registrar or any other agent of
the Company or the Trustee, in its individual or any other capacity, may become
the owner or pledgee of Debt Securities and coupons, and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Paying Agent, Security Registrar or such agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee or any Paying Agent in trust hereunder need not
be segregated from other funds except to the extent required by law. Neither the
Trustee nor any Paying Agent shall be under any liability for interest on any
money received by it hereunder except as otherwise agreed with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its
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agents and counsel), except any such expense, disbursement or advance as
may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration
of this trust or performance of its duties hereunder, including the costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
As security for the performance of the obligations of the Company under
this Section the Trustee shall have a claim prior to the Debt Securities and any
coupons upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the payment of principal of (and premium, if any)
or interest on particular Debt Securities or any coupons. The claims of the
Trustee under this Section shall not be subject to the provisions of Article
Eighteen.
SECTION 608. Disqualification; Conflicting Interests.
(a) If the Trustee has or shall acquire any conflicting interest, as
defined in this Section with respect to the Debt Securities of any series then,
within 90 days after ascertaining that it has such conflicting interest, and if
the default (as defined in this Section) to which such conflicting interest
relates has not been cured or duly waived or otherwise eliminated before the end
of such 90-day period, the Trustee shall either eliminate such conflicting
interest or, except as otherwise provided below in this Section, resign with
respect to the Debt Securities of such series in the manner and with the effect
hereinafter specified in this Article and the Company shall take prompt steps to
have a successor appointed in the manner provided herein.
(b) (1) In the event that the Trustee shall fail to comply with the
provisions of Subsection (a) of this Section with respect to the Debt Securities
of any series, the Trustee shall, within 10 days after the expiration of such
90-day period, transmit, in the manner and to the extent provided in Section
703(c), to all Holders of Debt Securities of such series notice of such failure.
(2) Subject to the provisions of Section 514, unless the Trustee's duty to
resign is stayed as provided in Subsection (f) of this Section, any Holder who
has been a bona fide Holder of Debt Securities of any series referred to in
Subsection (a) of this Section for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of such Trustee, and the appointment of a successor, if such
Trustee fails, after written request thereof by such Holder to comply with the
provisions of Subsection (a) of this Section.
(c) For the purposes of this Section, the Trustee shall be deemed to have a
conflicting interest with respect to the Debt Securities of any series, if a
default (under the terms of this-Indenture), but exclusive of any period of
grace or requirement of notice, has occurred with respect to such Debt
Securities and
(1) the Trustee is trustee under this Indenture with respect to the
Outstanding Debt Securities of any series other than that series or is
trustee under another indenture under which any other securities, or
certificates of interest or participation in any other securities, of the
Company are outstanding, unless such other indenture is a collateral trust
indenture under which the only collateral consists of Debt Securities
issued under this Indenture, provided that there shall be excluded from the
operation of this paragraph (A) this Indenture with respect to the Debt
Securities of any series other than that series, (B) the indenture between
the Company and the Trustee dated as of June 15, 1984, as supplemented and
amended from time to time, under which the Company's Floating Rate
Subordinated Capital Notes due August 1, 1996, Floating Rate Subordinated
Capital Notes due July, 1996, Subordinated Auction Rate Capital Notes due
May 1999, Floating Rate Subordinated Capital Notes Due October, 1999, 9.75%
Subordinated Notes due July 1, 2000 and 9.70% Subordinated Notes due August
1, 2000 were issued, (C) the indenture between the Company and the Trustee
dated as of September 1, 1990, under which the Company's Medium Term Notes,
Series E, 10% Subordinated Notes Due February 1,2003, 9 3/4% Subordinated
Notes Due February 13, 2001, 9 3/4% Subordinated Notes Due March 1, 2001, 9
1/2% Subordinated Notes Due April 1, 2001 and 9.20% Subordinated Notes Due
May 15, 2003 were issued, and (D) any other indenture or indentures
hereafter qualified under the Trust Indenture Act under which other
securities, or certificates of interest or participation in other
securities, of the Company are outstanding, and
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(i) this Indenture and such other indenture or indentures (and
all series of securities issuable thereunder) are wholly unsecured and
rank equally, unless the Commission shall have found and declared by
order pursuant to Section 305(b) or Section 307(c) of the Trust
Indenture Act that differences exist between the provisions of this
Indenture with respect to the Debt Securities of such series and one
or more other series or the provisions of such other indenture or
indentures which are so likely to involve a material conflict of
interest as to make it necessary in the public interest or for the
protection of investors to disqualify the Trustee from acting as such
under this Indenture with respect to the Debt Securities of such
series and such other series or under such other indenture or
indentures, or
(ii) the Company shall have sustained the burden of proving, on
application to the Commission and after opportunity for hearing
thereon, that trusteeship under this Indenture with respect to the
Debt Securities of such series and such other series or such other
indenture or indentures is not so likely to involve a material
conflict of interest as to make it necessary in the public interest or
for the protection of investors to disqualify the Trustee from acting
as such under this Indenture with respect to the Debt Securities of
such series and such other series or under such other indenture or
indentures;
(2) the Trustee or any of its directors or executive officers is an
underwriter for the Company;
(3) the Trustee directly or indirectly controls or is directly or
indirectly controlled by or is under direct or indirect common control with
an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee or representative of the
Company, or of an underwriter (other than the Trustee itself) for the
Company who is currently engaged in the business of underwriting, except
that (i) one individual may be a director or an executive officer, or both,
of the Trustee and a director or an executive officer, or both of the
Company but may not be at the same time an executive officer of both the
Trustee and the Company; (ii) if and so long as the number of directors of
the Trustee in office is more than nine, one additional individual may be a
director or an executive officer, or both, of the Trustee and a director of
the Company; and (iii) the Trustee may be designated by the Company or by
any underwriter for the Company to act in the capacity of transfer agent,
registrar, custodian, paying agent, fiscal agent, escrow agent, or
depositary, or in any other similar capacity, or, subject to the provisions
of paragraph (1) of this Subsection, to act as trustee, whether under an
indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by the Company or by any director, partner, or
executive officer thereof, or 20% or more of such voting securities is
beneficially owned, collectively, by any two or more of such persons; or
10% or more of the voting securities of the Trustee is beneficially owned
either by an underwriter for the Company or by any director, partner or
executive officer thereof, or is beneficially owned, collectively, by any
two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), (i) 5% or more of the voting securities, or 10% or
more of any other class of security, of the Company not including the Debt
Securities issued under this Indenture and securities issued under any
other indenture under which the Trustee is also trustee, or (ii) 10% or
more of any class of security of an underwriter for the Company;
(7) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 5% or more of the voting securities of any person who,
to the knowledge of the Trustee, owns 10% or more of the voting securities
of, or controls directly or indirectly or is under direct or indirect
common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 10% or more of any class of security of any person
who, to the knowledge of the Trustee, owns 50% or more of the voting
securities of the Company;
(9) the Trustee owns, on the date a default under this Indenture (but
exclusive of any period of grace or requirement of notice) has occurred
upon the Debt Securities of any series or any anniversary of such default
while such default upon such Debt Securities remains outstanding, in the
capacity of executor administrator,
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testamentary or inter vivos trustee, guardian, committee or conservator, or
in any other similar capacity, an aggregate of 25% or more of the voting
securities, or of any class of security, of any person, the beneficial
ownership of a specified percentage of which would have constituted a
conflicting interest under paragraph (6), (7) or (8) of this Subsection. As
to any such securities of which the Trustee acquired ownership through
becoming executor, administrator, or testamentary trustee of an estate
which included them, the provisions of the preceding sentence shall not
apply, for a period of two years from the date of such acquisition, to the
extent that such securities included in such estate do not exceed 25% of
such voting securities or 25% of any such class of security. Promptly after
the dates of any such Event of Default upon the Debt Securities of any
series and annually in each succeeding year that such Event of Default upon
such Debt Securities continues, the Trustee shall make a check of its
holdings of such securities in any of the above-mentioned capacities as of
such dates. If the Company fails to make payments in full of the principal
of (or premium, if any), or interest on, any of the Debt Securities or
coupons when and as the same becomes due and payable, and such failure
continues for 30 days thereafter, the Trustee shall make a prompt check of
its holdings of such securities in any of the above-mentioned capacities as
of the date of the expiration of such 30-day period, and after such date,
notwithstanding the foregoing provisions of this paragraph, all such
securities so held by the Trustee, with sole or joint control over such
securities vested in it, shall, but only so long as such failure shall
continue, be considered as though beneficially owned by the Trustee for the
purposes of paragraphs (6), (7) and (8) of this Subsection; or
(10) except under the circumstances described in paragraphs (1), (3),
(4), (5) or (6) of Section 613(b), the Trustee shall be or shall become a
creditor of the Company.
For purposes of paragraph (1) of this Subsection, and of Sections 512 and
513, the term "series" means a series, class or group of securities issuable
under an indenture or this Indenture pursuant to whose terms holders of one such
series may vote to direct the trustee, or otherwise take action pursuant to a
vote of such holders, separately from holders of another such series; provided,
that "series" shall not include any series of securities issuable under an
indenture (including any series of Debt Securities issuable under this
Indenture) if all such series rank equally and are wholly unsecured.
The specifications of percentages on paragraphs (5) to (9), inclusive, of
this Subsection shall not be construed as indicating that the ownership of such
percentages of the securities of a person is or is not necessary or sufficient
to constitute direct or indirect control for the purpose of paragraph (3) or (7)
of this Subsection.
For the purposes of paragraphs (6), (7), (8) and (9) of this Subsection
only, (i) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not include
any note or other evidence of indebtedness issued to evidence an obligation to
repay moneys lent to a person by one or more banks, trust companies or banking
firms, or any certificate of interest or participation in any such note or
evidence of indebtedness; (ii) an obligation shall be deemed to be "in default"
when a default in payment of principal shall have continued for 30 days or more
and shall not have been cured; and (iii) the Trustee shall not be deemed to be
the owner or holder of (A) any security which it holds as collateral security,
as trustee or otherwise, for an obligation which is not in default as defined in
Clause (ii) above, or (B) any security which it holds as collateral security
under this Indenture, irrespective of any default hereunder, or (C) any security
which it holds as agent for collection, or as custodian, escrow agent or
depositary, or in any similar representative capacity.
(d) For the purposes of this Section:
(1) The term "underwriter" when used with reference to the Company
means every person who, within one year prior to the time as of which the
determination is made, has purchased from the Company with a view to, or
has offered or sold for the Company in connection with, the distribution of
any security of the Company outstanding at such time, or has participated
or has had a direct or indirect participation in any such undertaking, or
has participated or has had a participation in the direct or indirect
underwriting of any such undertaking, but such term shall not include a
person whose interest was limited to a commission from an underwriter or
dealer not in excess of the usual and customary distributors' or sellers'
commission.
(2) The term "director" means any director of a corporation, or any
individual performing similar functions with respect to any organization
whether incorporated or unincorporated.
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(3) The term "person" means an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, an
unincorporated organization, or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only a
trust where the interest or interests of the beneficiary or beneficiaries
are evidenced by a security.
(4) The term "voting security" means any security presently entitling
the owner or holder thereof to vote in the direction or management of the
affairs of a person, or any security issued under or pursuant to any trust,
agreement or arrangement whereby a trustee or trustees or agent or agents
for the owner or holder of such security are presently entitled to vote in
the direction of management of the affairs of a person.
(5) The term "Company" means any obligor upon the Debt Securities of
any series or any related coupons.
(6) The term "executive officer" means the president, every vice
president, every trust officer, the cashier, the secretary, and the
treasurer of a corporation, and any individual customarily performing
similar functions with respect to any organization, whether incorporated or
unincorporated, but shall not include the chairman of the board of
directors.
(e) The percentages of voting securities and other securities specified in
this Section shall be calculated in accordance with the following provisions:
(1) A specified percentage of the voting securities of the Trustee,
the Company or any other person referred to in this Section (each of whom
is referred to as a "person" in this paragraph) means such amount of the
outstanding voting securities of such person as entitles the holder or
holders thereof to cast such specified percentage of the aggregate votes
which the holders of all the outstanding voting securities of such person
are entitled to cast in the direction or management of the affairs of such
person.
(2) A specified percentage of a class of securities of a person means
such percentage of the aggregate amount of securities of the class
outstanding.
(3) The term "amount", when used in regard to securities, means the
principal amount if relating to evidences of indebtedness, the number of
shares if relating to capital shares, and the number of units if relating
to any other kind of security.
(4) The term "outstanding" means issued and not held by or for the
account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund relating to
securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating to
another class of securities of the issuer, if the obligation evidenced
by such other class of securities is not in default as to principal or
interest or otherwise;
(iii) securities pledged by the issuer thereof as security for an
obligation of the issuer not in default as to principal or interest or
otherwise; and
(iv) securities held in escrow if placed in escrow by the issuer
thereof;
provided, however, that any voting securities of an issuer shall be deemed
outstanding if any person other than the issuer is entitled to exercise the
voting rights thereof.
(5) A security shall be deemed to be of the same class as another
security if both securities confer upon the holder or holders thereof
substantially the same rights and privileges; provided, however, that in
the case of secured evidences of indebtedness, all of which are issued
under a single indenture, differences in the interest rates or maturity
dates of various series thereof shall not be deemed sufficient to
constitute such series different classes and provided, further, that, in
the case of unsecured evidences of indebtedness, differences in the
interest rates or maturity dates thereof shall not be deemed sufficient to
constitute them securities of different classes, whether or not they are
issued under a single indenture.
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(f) Except in the case of a default in the payment of the principal of or
interest on any Debt Securities of any series, or in the payment of any sinking
or purchase fund installment, the Trustee shall not be required to resign as
provided by this Section if the Trustee shall have sustained the burden of
proving, on application to the Commission and after opportunity for hearing
thereon, that (i) the Event of Default under this Indenture may be cured or
waived during a reasonable period and under the procedures described in such
application, and (ii) a stay of the Trustee's duty to resign will not be
inconsistent with the interests of Holders of such Debt Securities. The filing
of such an application shall automatically stay the performance of the duty to
resign until the Commission orders otherwise.
(g) If Section 310(b) of the Trust Indenture Act is amended at any time
after the date of this Indenture to change the circumstances under which a
Trustee shall be deemed to have a conflicting interest with respect to the Debt
Securities of any series or to change any of the definitions in connection
therewith, this Section 608 shall be automatically amended to incorporate such
changes, unless such changes would cause any Trustee then acting as Trustee
hereunder with respect to any Outstanding Debt Securities to be deemed to have a
conflicting interest, in which case such changes shall be incorporated herein
only to the extent that such changes (i) would not cause the Trustee to be
deemed to have a conflicting interest or (ii) are required by law.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States,
any State thereof or the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $5,000,000, and subject to supervision or examination by Federal or State
authority, provided, however, that if Section 310(a) of the Trust Indenture Act
or the rules and regulations of the Commission under the Trust Indenture Act at
any time permit a corporation organized and doing business under the laws of any
other jurisdiction to serve as trustee of an indenture qualified under the Trust
Indenture Act, this Section 609 shall be automatically amended to permit a
corporation organized and doing business under the laws of any such other
jurisdiction to serve as Trustee hereunder. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. Neither the Company nor any person directly or
indirectly controlling, controlled by or under common control with the Company
may serve as Trustee. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(b) The Trustee may resign at any time with respect to the Debt Securities
of one or more series by giving written notice thereof to the Company. If an
instrument of acceptance by a successor Trustee shall not have been delivered to
the Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Debt Securities of such
series.
(c) The Trustee may be removed at any time with respect to the Debt
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Debt Securities of such series, delivered to the Trustee and
to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608(a) with respect
to the Debt Securities of any series after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a Debt Security
of such series for at least six months, unless the Trustee's duty to resign
has been stayed as provided in Section 608(f), or
(2) the Trustee shall cease to be eligible under Section 609 with
respect to any series of Debt Securities and shall fail to resign after
written request therefor by the Company or by any such Holder, or
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(3) the Trustee shall become incapable of acting with respect to any
series of Debt Securities or a decree or order for relief by a court having
jurisdiction in the premises shall have been entered in respect of the
Trustee in an involuntary case under the Federal bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal or State bankruptcy,
insolvency or similar law; or a decree or order by a court having
jurisdiction in the premises shall have been entered for the appointment of
a receiver, custodian, liquidator, assignee, trustee, sequestrator or other
similar official of the Trustee or of its property or affairs, or any
public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation,
winding up or liquidation, or
(4) the Trustee shall commence a voluntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or State bankruptcy, insolvency or similar law or shall consent to
the appointment of or taking possession by a receiver, custodian,
liquidator, assignee, trustee, sequestrator or other similar official of
the Trustee or its property or affairs, or shall make an assignment for the
benefit of creditors, or shall admit in writing its inability to pay its
debts generally as they become due, or shall take corporate action in
furtherance of any such action,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to such series or (ii) subject to Section 514, any Holder
who has been a bona fide Holder of a Debt Security of any series for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Trustee for the Debt
Securities of such series and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of acting
with respect to any series of Debt Securities, or if a vacancy shall occur in
the office of Trustee for any cause, with respect to the Debt Securities or one
or more series, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee or Trustees with respect to the Debt Securities of that or
those series (it being understood that any such successor Trustee may be
appointed with respect to the Debt Securities of one or more or all of such
series and that at any time there shall be only one Trustee with respect to the
Debt Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Debt Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Debt Securities of
such series delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Trustee with respect to the Debt Securities of such series
and to that extent supersede the successor Trustee appointed by the Company. If
no successor Trustee with respect to the Debt Securities of any series shall
have been so appointed by the Company or the Holders and accepted appointment in
the manner hereinafter provided, any Holder who has been a bona fide Holder of
a Debt Security of such series for at least six months may, subject to Section
514, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee with
respect to the Debt Securities of such series.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Debt Securities of any series and each
appointment of a successor Trustee with respect to the Debt Securities of any
series by mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of Registered Securities, if any, of such series as
their names and addresses appear in the Security Register and, if Debt
Securities of such series are issuable as Bearer Securities, by publishing
notice of such event once in an Authorized Newspaper in each Place of Payment
located outside the United States. Each notice shall include the name of the
successor Trustee with respect to the Debt Securities of such series and the
address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
(a) In the case of an appointment hereunder of a successor Trustee with
respect to all Debt Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on request of
the Company or the successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument transferring to
<PAGE>
39
such successor Trustee all the rights, powers and trusts of the retiring
Trustee, and shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Debt Securities of one or more (but not all) series, the Company,
the retiring Trustee upon payment of its charges and each successor Trustee with
respect to the Debt Securities of one or more series shall execute and deliver
an indenture supplemental hereto wherein each successor Trustee shall accept
such appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Debt Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee is
not retiring with respect to all Debt Securities, shall contain such provisions
as shall be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to the Debt
Securities of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Trustee; and upon the execution and delivery of such supplemental
indenture, the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Debt Securities of that or those series to which the appointment of such
successor Trustee relates; but, on the request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Debt Securities of that or those series to which the
appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in
paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the executing or filing of any paper or any further act on the
part of any of the parties hereto. In case any Debt Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Debt Securities so authenticated with the
same effect as if such successor Trustee had itself authenticated such Debt
Securities. In case any Debt Securities shall not have been authenticated by
such predecessor Trustee, any such successor Trustee may authenticate and
deliver such Debt Securities, in either its own name or that of its predecessor
Trustee, with the full force and effect which this Indenture provides for the
certificate of authentication of the Trustee.
SECTION 613. Preferential Collection of Claims Against Company.
(a) Subject to Subsection (b) of this Section, if the Trustee shall be or
shall become a creditor, directly or indirectly, secured or unsecured, of the
Company within three months prior to a default, as defined in Subsection (c) of
this Section, or subsequent to such a default, then, unless and until such
default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually, the Holders of the Debt
Securities and coupons and the holders of other indenture securities (as defined
in Subsection (c) of this Section):
(1) an amount equal to any and all reductions in the amount due and
owing upon any claim as such creditor in respect of principal or interest,
effected after the beginning of such three-month period and valid as
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40
against the Company and its other creditors, except any such reduction
resulting from the receipt or disposition of any property described in
paragraph (2) of this Subsection, or from the exercise of any right of
set-off which the Trustee could have exercised if a voluntary or
involuntary case had been commenced in respect of the Company under the
Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency or other similar law
upon the date of such default; and
(2) all property received by the Trustee in respect of any claim as
such creditor, either as security therefor, or in satisfaction or
composition thereof, or otherwise, after the beginning of such three-month
period, or an amount equal to the proceeds of any such property, if
disposed of, subject however, to the rights, if any, of the Company and its
other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account of any
such claim by any Person (other than the Company) who is liable thereon,
and (ii) the proceeds of the bona fide sale of any such claim by the
Trustee to a third Person, and (iii) distributions made in cash, securities
or other property in respect of claims filed against the Company in
bankruptcy or receivership or in proceedings for reorganization pursuant to
the Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency or other similar law;
(B) to realize, for its own account, upon any property held by it as
security for any such claim, if such property was so held prior to the
beginning of such three-month period;
(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned, upon any property held by it as security for
any such claim, if such claim was created after the beginning of such
three-month period and such property was received as security therefor
simultaneously with the creation thereof, and if the Trustee shall sustain
the burden of proving that at the time such property was so received the
Trustee had no reasonable cause to believe that a default as defined in
Subsection (c) of this Section would occur within three months; or
(D) to receive payment on any claim referred to in paragraph (B) or
(C), against the release of any property held as security for such claim as
provided in paragraph (B) or (C), as the case may be, to the extent of the
fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted after
the beginning of such three-month period for property held as security at the
time of such substitution shall, to the extent of the fair value of the property
released, have the same status as the property released, and, to the extent that
any claim referred to in any of such paragraphs is created in renewal of or in
substitution for or for the purpose of repaying or refunding any pre-existing
claim of the Trustee as such creditor, such claim shall have the same status as
such pre-existing claim.
If the Trustee shall be required to account, the funds and property held in
such special account and the proceeds thereof shall be apportioned among the
Trustee, the Holders and the holders of other indenture securities in such
manner that the Trustee, the Holders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or State bankruptcy, insolvency or other similar law, the same
percentage of their respective claims, figured before crediting to the claim of
the Trustee anything on account of the receipt by it from the Company of the
funds and property in such special account and before crediting to the
respective claims of the Trustee and the Holders and the holders of other
indenture securities dividends on claims filed against the Company in bankruptcy
or receivership or in proceedings for reorganization pursuant to the Federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or State bankruptcy, insolvency or other similar law, but after
crediting thereon receipts on account of the indebtedness represented by their
respective claims from all sources other than from such dividends and from the
funds and property so held in such special account. As used in this paragraph,
with respect to any claim, the term "dividends" shall include any distribution
with respect to such claim, in bankruptcy or receivership or proceedings for
reorganization pursuant to the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or State bankruptcy, insolvency or
other similar law, whether such distribution is made in cash, securities, or
other property, but shall not include any
<PAGE>
41
such distribution with respect to the secured portion, if any, of such claim.
The court in which such bankruptcy, receivership or proceedings for
reorganization is pending shall have jurisdiction (i) to apportion among the
Trustee and the Holders and the holders of other indenture securities, in
accordance with the provisions of this paragraph, the funds and property held in
such special account and proceeds thereof, or (ii) in lieu of such
apportionment, in whole or in part, to give to the provisions of this paragraph
due consideration in determining the fairness of the distributions to be made to
the Trustee and the Holders and the holders of other indenture securities with
respect to their respective claims, in which event it shall not be necessary to
liquidate or to appraise the value of any securities or other property held in
such special account or as security for any such claim, or to make a specific
allocation of such distributions as between the secured and unsecured portions
of such claims, or otherwise to apply the provisions of this paragraph as a
mathematical formula.
Any Trustee which has resigned or been removed after the beginning of such
three-month period shall be subject to the provisions of this Subsection as
though such resignation or removal had not occurred. If any Trustee has resigned
or been removed prior to the beginning of such three-month period, it shall be
subject to the provisions of this Subsection if and only if the following
conditions exist:
(i) the receipt of property or reduction of claim, which would have
given rise to the obligation to account, if such Trustee had continued as
Trustee, occurred after the beginning of such three-month period; and
(ii) such receipt of property or reduction of claim occurred within
three months after such resignation or removal.
(b) There shall be excluded from the operation of Subsection (a) of this
Section a creditor relationship arising from
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year or
more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction or by this Indenture, for the purpose of preserving
any property which shall at any time be subject to the lien of this
Indenture or of discharging tax liens or other prior liens or encumbrances
thereon, if notice of such advances and of the circumstances surrounding
the making thereof is given to the Holders at the time and in the manner
provided in this Indenture;
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity,
(4) an indebtedness created as a result of services rendered or
premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction as defined in Subsection (c) of this
Section;
(5) the ownership of stock or of other securities of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve Act,
as amended, which is directly or indirectly a creditor of the Company; or
(6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within the
classification of self-liquidating paper as defined in Subsection (c) of
this Section.
(c) For the purposes of this Section only:
(1) The term "default" means any failure to make payment in full of
the principal of or interest on any of the Debt Securities or upon the
other indenture securities when and as such principal or interest becomes
due and payable.
(2) The term "other indenture securities" means securities upon which
the Company is an obligor outstanding under any other indenture (i) under
which the Trustee is also trustee, (ii) which contains provisions
substantially similar to the provisions of this Section, and (iii) under
which a default exists at the time of the apportionment of the funds and
property held in such special account.
(3) The term "cash transaction" means any transaction in which full
payment for goods or securities sold is made seven days after delivery of
the goods or securities in currency or in checks or other orders drawn upon
banks and payable upon demand.
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(4) The term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security is
received by the Trustee simultaneously with the creation of the creditor
relationship with the Company arising from the making, drawing,
negotiating or incurring of the draft, bill of exchange, acceptance or
obligation.
(5) The term "Company" means any obligor upon the Debt Securities.
SECTION 614. Authenticating Agent.
The Trustee shall upon Company request appoint one or more authenticating
agents (including, without limitation, the Company or any Affiliate thereof with
respect to one or more series of Debt Securities which shall be authorized on
behalf of the Trustee in authenticating Debt Securities of such series in
connection with the issue, delivery, registration of transfer, exchange, partial
redemption or repayment of such Debt Securities. Wherever reference is made in
this Indenture to the authentication of Debt Securities by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication on behalf of the Trustee by an authenticating agent and a
certificate of authentication executed on behalf of the Trustee by an
authenticating agent. Each authenticating agent must be acceptable to the
Company and must be a corporation organized and doing business under the laws of
the United States or of any State, having a principal office in the State of
California or the Borough of Manhattan, The City of New York, having a combined
capital surplus of at least $1,000,000, authorized under such laws to do a trust
business and subject to supervision or examination by Federal or State
authorities or the equivalent foreign authority in the case of an authenticating
agent who is not organized and doing business under the laws of the United
States or of any State thereof or the District of Columbia.
Any corporation succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any paper or any further act on the part of the Trustee
or such authenticating agent.
An authenticating agent may at any time resign with respect to one or more
series of Debt Securities by giving written notice of resignation to the Trustee
and to the Company. The Trustee may at any time terminate the agency of an
authenticating agent with respect to one or more series of Debt Securities by
giving written notice of termination to such authenticating agent and to the
Company. Upon receiving such a notice of resignation or upon such a termination,
or in case at any time an authenticating agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee promptly may appoint
a successor authenticating agent. Any successor authenticating agent upon
acceptance of its appointment hereunder shall become vested with all rights,
powers and duties of its predecessor hereunder, with like effect as if
originally named as an authenticating agent herein. No successor authenticating
agent shall be appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each authenticating agent from time to time
reasonable compensation for its services under this Section, subject to the
provisions of Section 607.
The provisions of Sections 104, 111, 306, 309, 603, 604 and 605 shall be
applicable to any authenticating agent.
Pursuant to each appointment made under this Section, the Debt Securities
of each series covered by such appointment may have endorsed thereon, in lieu of
the Trustee's certificate of authentication, an alternate certificate of
authentication in substantially the following form:
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43
This is one of the Debt Securities, of the series designated herein,
described in the within-mentioned Indenture.
MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA
By_________________________________________
As Authenticating Agent for the Trustee
By_________________________________________
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee with
respect to Debt Securities of each series for which it acts as Trustee:
(1) semi-annually, not more than 15 days after the Regular Record Date
in respect of the Debt Securities of such series or on June 30 and December
31 of each year with respect to each series of Debt Securities for which
there are no Regular Record Dates, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Registered
Securities as of such Regular Record Date or June 15 or December 15, as the
case may be, and
(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished,
provided, however, that if and so long as the Trustee shall be the Security
Registrar, no such list need be furnished.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders of Registered Securities
contained in the most recent list furnished to the Trustee as provided in
Section 701 and the names and addresses of Holders of Registered Securities
received by the Trustee in its capacity as Paying Agent or Security Registrar,
if so acting. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished. The Trustee shall preserve
for at least two years the names and addresses of Holders of Bearer Securities
filed with the Trustee pursuant to Section 703(c).
(b) If three or more Holders of Debt Securities of any series (hereinafter
referred to as "applicants") apply in writing to the Trustee, and furnish to the
Trustee proof that each such applicant has owned a Debt Security for a period of
at least six months preceding the date of such application, and such application
states that the applicants desire to communicate with other Holders of Debt
Securities of such series (in which case the applicants must hold Debt
Securities of such series) or with all Holders of Debt Securities with respect
to their rights under this Indenture or under the Debt Securities and is
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, at its election, either
(i) afford such applicants access to the information preserved at the
time by the Trustee in accordance with Section 702(a), or
(ii) inform such applicants as to the approximate number of Holders of
Debt Securities of such series or of all Debt Securities, as the case may
be, whose names and addresses appear in the information preserved at the
time by the Trustee in accordance with Section 702(a), and as to the
approximate cost of mailing to such Holders the form of proxy or other
communication, if any, specified in such application.
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44
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder whose name and address appear in the information preserved
at the time by the Trustee in accordance with Section 702(a), a copy of the form
of proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five days after such tender, the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the best interests of the Holders
or would be in violation of applicable law. Such written statement shall specify
the basis of such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed, shall enter an
order refusing to sustain any of such objections or if, after the entry of an
order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all the objections so sustained
have been met and shall enter an order so declaring, the Trustee shall mail
copies of such material to all such Holders with reasonable promptness after the
entry of such order and the renewal of such tender, otherwise the Trustee shall
be relieved of any obligation or duty to such applicants respecting their
application.
(c) Every Holder of Debt Securities or coupons, by receiving and holding
the same, agrees with the Company and the Trustee that neither the Company nor
the Trustee shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders in accordance with
Section 702(b), regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under Section 702(b).
SECTION 703. Reports by Trustee.
(a) Within 60 days after May 15 of each year commencing with the year 1992,
the Trustee shall transmit by mail to all Holders of Debt Securities of any
series with respect to which it acts as Trustee, as provided in Subsection (c)
of this Section, a brief report dated as of such May 15 with respect to any of
the following events which may have occurred within the previous twelve months
(but if no such event has occurred within such period, no report need be
transmitted):
(1) any change to its eligibility under Section 609 and its
qualifications under Section 608;
(2) the creation of or any material change to a relationship specified
in paragraphs (1) through (10) of Section 608(c);
(3) the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making thereof) made
by the Trustee (as such) which remain unpaid on the date of such report,
and for the reimbursement of which it claims or may claim a lien or charge,
prior to that of the Debt Securities of such series or any related coupons,
on any property or funds held or collected by it as Trustee, except that
the Trustee shall not be required (but may elect) to report such advances
if such advances so remaining unpaid aggregate not more than 1/2 of 1% of
the principal amount of the Outstanding Debt Securities of such series on
the date of such report;
(4) the amount, interest rate and maturity date of all other
indebtedness owing by the Company (or any other obligor on the Debt
Securities of such series) to the Trustee in its individual capacity, on
the date of such report, with a brief description of any property held as
collateral security therefor, except an indebtedness based upon a creditor
relationship arising in any manner described in Section 613(b)(2), (3),
(4) or (6);
(5) any change to the property and funds, if any, physically in the
possession of the Trustee as such on the date of such report,
(6) any additional issue of Debt Securities which the Trustee has not
previously reported; and
(7) any action taken by the Trustee in the performance of its duties
hereunder which it has not previously reported and which in its opinion
materially affects the Debt Securities, except action in respect of a
default, notice of which has been or is to be withheld by the Trustee in
accordance with Section 602;
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45
provided, however, that if the Trust Indenture Act is amended subsequent to the
date hereof to eliminate the requirement of the Trustee's brief report, the
report required by this Section need not be transmitted to any Holders.
(b) The Trustee shall transmit by mail to all Holders of Debt Securities of
any series for which it acts as the Trustee, as provided in Subsection (c) of
this Section, a brief report with respect to the character and amount of any
advances (and if the Trustee elects so to state, the circumstances surrounding
the making thereof) made by the Trustee (as such) since the date of the last
report transmitted pursuant to Subsection (a) of this Section (or if no such
report has yet been so transmitted, since the date of execution of this
instrument) for the reimbursement of which it claims or may claim a right or
charge, prior to that of the Debt Securities of such series, on property or
funds held or collected by it as Trustee, and which it has not previously
reported pursuant to this Subsection, except that the Trustee for each series
shall not be required (but may elect) to report such advances if such advances
remaining unpaid at any time aggregate 10% or less of the principal amount of
the Debt Securities of such series Outstanding at such time, such report to be
transmitted within 90 days after such time.
(c) Reports pursuant to this Section shall be transmitted by mail:
(1) to all Holders of Registered Securities, as the names and
addresses of such Holders appear in the Security Register.
(2) to such Holders of Bearer Securities as have, within the two years
preceding such transmission, filed their names and addresses with the
Trustee for that purpose; and
(3) except in the case of reports pursuant to Subsection (b) of this
Section, to each Holder of a Debt Security whose name and address is
preserved at the time by the Trustee, as provided in Section 702(a).
(d) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any Debt
Securities of such series are listed, with the Commission and also with the
Company. The Company will notify the Trustee when any series of Debt Securities
are listed on any stock exchange.
SECTION 704. Reports by Company.
The Company will:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or, if the Company is not required to file
information, documents or reports pursuant to either of said Sections, then
it will file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a National Securities
Exchange as may be prescribed from time to time in such rules and
regulations;
(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(3) transmit by mail to all Holders of Debt Securities, in the manner
and to the extent provided in Section 703(c) with respect to reports
pursuant to Section 703(a), within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2) of
this Section as may be required by rules and regulations prescribed from
time to time by the Commission.
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46
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other corporation
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, unless:
(1) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer,
or which leases, the properties and assets of the Company substantially as
an entirety shall be a corporation organized and existing under the laws of
the United States of America, any political subdivision thereof or any
State thereof and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of (and premium, if
any) and interest (including all additional amounts, if any, payable
pursuant to Section 1006) on all the Debt Securities and any related
coupons and the performance of every covenant of this Indenture on the part
of the Company to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing;
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that such consolidation, merger,
conveyance, transfer or lease and, such supplemental indenture comply with
this Article and that all conditions precedent herein provided for relating
to such transaction have been met.
SECTION 802. Successor Corporation Substituted.
Upon any consolidation with or merger into any other corporation, or any
conveyance, transfer or lease of the properties and assets of the Company
substantially as an entirety in accordance with Section 801, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor had been named as the
Company herein, and thereafter, except in the case of a lease, the Company
(which term for this purpose shall mean the Person named as the "Company" in the
first paragraph of this instrument or any successor corporation which shall
theretofore have become such in the manner presented in this Article) shall be
relieved of all obligations and covenants under this Indenture and the Debt
Securities and coupons.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to evidence the succession of another corporation to the Company,
and the assumption by such successor of the covenants of the Company herein
and in the Debt Securities contained; or
(2) to add to the covenants of the Company, for the benefit of the
Holders of all or any series of Debt Securities or coupons (and if such
covenants are to be for the benefit of less than all series of Debt
Securities, or coupons stating that such covenants are expressly being
included solely for the benefit of such series), to convey, transfer,
assign, mortgage or pledge any property to or with the Trustee, or to
surrender any right or power herein conferred upon the Company; or
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47
(3) to add to any additional Events of Default (and if such Events of
Default are to be applicable to less than all series of Debt Securities,
stating that such Events of Default are expressly being included solely to
be applicable to such series); or
(4) to add to, change or eliminate any of the provisions of this
Indenture to provide that Bearer Securities may be registrable as to
principal, to change or eliminate any restrictions on the payment of
principal (or premium, if any) on Registered Securities or of principal (or
premium, if any) or any interest on Bearer Securities, to permit Bearer
Securities to be issued in exchange for Registered Securities, to permit
Bearer Securities to be issued in exchange for Bearer Securities of other
authorized denominations or to permit or facilitate the issuance of Debt
Securities in uncertificated form, provided any such action shall not
adversely affect the interests of the Holders of Debt Securities of any
series or any related coupons in any material respect; or
(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination (a) shall become effective
only when there is no Debt Security Outstanding of any series created prior
to the execution of such supplemental indenture which is entitled to the
benefit of such provision or (b) shall not apply to any Debt Security
Outstanding; or
(6) to establish the form or terms of Debt Securities of any series as
permitted by Sections 201 and 301; or
(7) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Debt Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 611(b); or
(8) to evidence any changes to Section 608, 609 or 703(a) permitted by
the terms thereof; or
(9) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent with
any provision of this Indenture, provided such other provisions shall not
adversely affect the interests of the Holders of Debt Securities of any
series or any related coupons in any material respect; or
(10) to add to or change or eliminate any provision of this Indenture
as shall be necessary or desirable in accordance with any amendments to the
Trust Indenture Act, provided such action shall not adversely affect the
interest of Holders of the Debt Securities of any series or any appurtenant
coupons in any material respect.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than 66 2/3% in principal
amount of the Outstanding Debt Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders under this Indenture of such Debt Securities of such series and any
related coupons; provided, however, that an indenture supplemental hereto which
changes the required ownership set forth in the definition of Controlled
Subsidiary in Section 101 hereof from 80% to a majority but does not change any
other provision of this Indenture or modify in any other manner the rights of
the Holders of all the Debt Securities under this Indenture may be entered into
with the consent of the Holders of at least a majority in principal amount of
the Outstanding Debt Securities of each series; and provided further, that no
such supplemental indenture shall, without the consent of the Holder of each
Outstanding Debt Security or coupon affected thereby,
(1) change the Stated Maturity of the principal or any installment of
principal of, or any installment of interest on, any Debt Security, or
reduce the principal amount thereof or the interest thereon or any premium
payable upon redemption or repayment thereof, or change any obligation of
the Company to pay additional amounts pursuant to Section 1006 (except as
contemplated by Section 801(1) and permitted by Section 901(1)), or reduce
the amount of the principal of an Original Issue Discount Security that
would be due
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and payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 502, or change any Place of Payment, or the coin or
currency in which any Debt Security or the interest thereon or any coupon
is payable, or impair any right to the delivery of Capital Securities in
exchange for Debt Securities provided for in this Indenture or the right to
institute suit for the enforcement of any such payment or delivery on or
after the Stated Maturity thereof (or, in the case of redemption, repayment
or exchange, on or after the Redemption Date, Repayment Date or Capital
Exchange Date, as the case may be); or
(2) reduce the percentage in principal amount of the Outstanding Debt
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or reduce the requirements of Section 1604 for quorum or voting;
or
(3) modify any of the provisions of this Section, Section 513 or
Section 1007, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Debt Security
affected thereby; provided, however, that this clause shall not be deemed
to require the consent of any Holder with respect to changes in the
references to "the Trustee" and concomitant changes in this Section and
Section 1007, or the deletion of this proviso, in accordance with the
requirements of Section 611(b) and 901(7); or
(4) adversely affect the right to repayment, if any, of Debt
Securities of any series at the option of the Holders thereof; or
(5) impair the right of any Holder of Debt Securities of any series to
receive Capital Securities on any Capital Exchange Date for Debt Securities
of such series with a Market Value equal to the principal amount of such
Holder's Debt Securities of such series or in an amount sufficient to
provide proceeds upon sale by the Company in the Secondary Offering equal
to the principal amount of such Holder's Debt Securities of such series; or
(6) impair the right of any Holder of Convertible Securities of any
series to convert such Debt Securities pursuant to Article Nineteen;
and provided, further, that no change shall be made in the provisions of Article
Eighteen that will affect adversely the holders of Senior Debt without the
consent of the holders of all Senior Debt Outstanding.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Debt Securities, or which modifies
the rights of the Holders of Debt Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Debt Securities of any other series.
It shall not be necessary for any Act of Holders of the Debt Securities
under this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Debt Securities theretofore or thereafter authenticated and delivered
hereunder and of any coupons appertaining thereto shall be bound thereby.
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SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Debt Securities to Supplemental Indentures.
Debt Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Debt Securities of any series and any appurtenant coupons so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Debt Securities of such series and any appurtenant coupons.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of Debt
Securities and any appurtenant coupons that it will duly and punctually pay the
principal of (and premium, if any) and interest on the Debt Securities and any
appurtenant coupons in accordance with the terms of the Debt Securities, any
appurtenant coupons and this Indenture. Any interest due on Bearer Securities on
or before Maturity, other than additional amounts, if any, payable as provided
in Section 1006 in respect of principal of (or premium, if any, on) such a Debt
Security, shall be payable only upon presentation and surrender of the several
coupons for such interest installments as are evidenced thereby as they
severally mature. For all purposes of this Indenture, the exchange of Capital
Securities for Debt Securities of any series pursuant to the Indenture shall
constitute full payment of principal of the Debt Securities of such series being
exchanged on any Capital Exchange Date for Debt Securities of such series,
without prejudice to any Holder's rights pursuant to Section 1413.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of Debt
Securities an office or agency where Debt Securities (but, except as otherwise
provided below, unless such Place of Payment is located outside the United
States, not Bearer Securities) may be presented or surrendered for payment,
where Debt Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Debt Securities and this Indenture may be served. If Debt Securities of a series
are issuable as Bearer Securities, the Company will maintain, subject to any
laws or regulations applicable thereto, an office or agency in a Place of
Payment for such series which is located outside the United States where Debt
Securities of such series and the related coupons may be presented and
surrendered for payment (including payment of any additional amounts payable on
Debt Securities of such series pursuant to Section 1006); provided, however,
that if the Debt Securities of such series are listed on The Stock Exchange of
the United Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange
or any other stock exchange located outside the United States and such stock
exchange shall so require, the Company will maintain a Paying Agent in London or
Luxembourg or any other required city located outside the United States, as the
case may be, so long as the Debt Securities of such series are listed on such
exchange. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of any such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee its agent to receive all presentations, surrenders, notices and demands,
except that Bearer Securities of that series and the related coupons may be
presented and surrendered for payment (including payment of any additional
amounts payable on Bearer Securities of that series pursuant to Section 1006) at
the place specified for the purpose pursuant to Section 301(5).
No payment of principal of, premium or interest on Bearer Securities shall
be made at any office or agency of the Company in the United States or by check
mailed to any address in the United States or by transfer to an
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50
account maintained with a bank located in the United States; provided, however,
payment of principal of and any premium and interest denominated in Dollars
(including additional amounts payable in respect thereof) on any Bearer Security
may be made at an office or agency of, and designated by, the Company located in
the United States if (but only if) payment of the full amount of such principal,
premium, interest or additional amounts in Dollars at all offices outside the
United States maintained for the purpose by the Company in accordance with this
Indenture is illegal or effectively precluded by exchange controls or other
similar restrictions and the Trustee receives an Opinion of Counsel that such
payment within the United States is legal. Unless otherwise provided as
contemplated by Section 301 with respect to any series of Debt Securities, at
the option of the Holder of any Bearer Security or related coupon, payment may
be made by check in the currency designated for such payment pursuant to the
terms of such Bearer Security presented or mailed to an address outside the
United States or by transfer to an account in such currency maintained by the
payee with a bank located outside the United States.
The Company may also from time to time designate one or more other offices
or agencies (in or outside of such Place of Payment) where the Debt Securities
of one or more series and any appurtenant coupons (subject to the preceding
paragraph) may be presented or surrendered for any or all such purposes, and may
from time to time rescind such designations; provided however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in each Place of Payment for any
series of Debt Securities, for such purposes. The Company will give prompt
written notice to the Trustee of any such designation and any change in the
location of any such other office or agency.
SECTION 1003. Money for Debt Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Debt Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Debt Securities of
such series and any appurtenant coupons, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the principal
(and premium, if any) or interest so becoming due until such sums shall be paid
to such Persons or otherwise disposed of as herein provided, and will promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents with respect to
any series of Debt Securities, it will, prior to each due date of the principal
of (and premium, if any) or interest on any Debt Securities of such series and
any appurtenant coupons, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent with respect to any series of Debt
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Debt Securities of such series and any
appurtenant coupons in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Debt Securities of such series or any appurtenant
coupons) in the making of any payment of principal of (and premium, if any)
or interest on the Debt Securities of such series or any appurtenant
coupons; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of terminating its obligations
under this Indenture with respect to Debt Securities of any series or for any
other purpose, pay, or by Company Order direct any Paying Agent to pay, to the
Trustee all sums held in trust by the Company or such Paying Agent, such sums to
be held by the Trustee upon the same trusts as those upon which such sums were
held by the Company or such Paying Agent and, upon such payment by any Paying
Agent to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
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51
Any principal and interest received on the Eligible Instruments deposited
with the Trustee or any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of (and
premium, if any) or interest on any Debt Security of any series or any
appurtenant coupons or any money on deposit with the Trustee or any Paying Agent
representing amounts deducted from the Redemption Price or Repayment Price with
respect to unmatured coupons not presented upon redemption or exercise of the
Holder's option for repayment pursuant to Section 1106 or 1303 and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from such trust, and the
Holder of such Debt Security or any coupon appertaining thereto shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money (including the principal and interest received on
Eligible Instruments deposited with the Trustee), and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in an Authorized
Newspaper of general circulation in each of the City and County of San Francisco
and the Borough of Manhattan, The City of New York, and each Place of Payment or
mailed to each such Holder, or both, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication or mailing, any unclaimed balance of such
money then remaining will be repaid to the Company.
SECTION 1004. Officers' Certificate as to Default.
The Company will deliver to the Trustee, on or before a date not more than
four months after the end of each fiscal year of the Company (which on the date
hereof is the calendar year) ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture, and, if the Company shall be in
default, specifying all such defaults and the nature thereof of which they may
have knowledge.
SECTION 1005. Limitation on Disposition of Voting Stock of and Merger and
Sale of Assets by the Bank.
The Company will not
(1) sell, transfer or otherwise dispose of any shares of Voting Stock
of the Bank or permit the Bank to issue, sell, or otherwise dispose of any
shares of its Voting Stock, unless, after giving effect to any such
transaction, the Bank remains a Controlled Subsidiary; or
(2) permit the Bank to
(a) merge or consolidate, unless the surviving corporation is a
Controlled Subsidiary; or
(b) convey or transfer its properties and assets substantially as
an entirety to any Person, except to a Controlled Subsidiary.
SECTION 1006. Payment of Additional Amounts.
If the Debt Securities of a series provide for the payment of additional
amounts, the Company will pay to the Holder of any Debt Security of any series
or any coupon appertaining thereto additional amounts upon the terms and subject
to the conditions provided therein. Whenever in this Indenture there is
mentioned, in any context, the payment of the principal of (or premium, if any)
or interest on, or in respect of, any Debt Security of any series or any related
coupon or the net proceeds received on the sale or exchange of any Debt Security
of any series, such mention shall be deemed to include mention of the payment of
additional amounts provided for in the terms of such Debt Securities and this
Section to the extent that, in such context, additional amounts are, were or
would be payable in respect thereof pursuant to the provisions of this Section
and express mention of the payment of additional amounts (if applicable) in any
provisions hereof shall not be construed as excluding additional amounts in
those provisions hereof where such express mention is not made.
If the Debt Securities of a series provide for the payment of additional
amounts, at least 10 days prior to the first Interest Payment Date with respect
to that series of Debt Securities (or if the Debt Securities of that series will
not bear interest prior to Maturity, the first day on which a payment of
principal (and premium, if any) is made),
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and at least 10 days prior to each date of payment of principal (and premium, if
any) or interest if there has been any change with respect to the matters set
forth in the below-mentioned Officers' Certificate, the Company will furnish the
Trustee and the Company's principal Paying Agent or Paying Agents, if other than
the Trustee, with an Officers' Certificate instructing the Trustee and such
Paying Agent or Paying Agents whether such payment of principal of (and premium,
if any) or interest on the Debt Securities of that series shall be made to
Holders of Debt Securities of that series or the related coupons who are United
States Aliens without withholding for or on account of any tax, assessment or
other governmental charge described in the Debt Securities of that series. If
any such withholding shall be required, then such Officers' Certificate shall
specify by country the amount, if any, required to be withheld on such payments
to such Holders of Debt Securities or coupons and the Company will pay to the
Trustee or such Paying Agent the additional amounts, if any, required by the
terms of such Debt Securities and the first paragraph of this Section. The
Company covenants to indemnify the Trustee and any Paying Agent for, and to hold
them harmless against, any loss, liability or expense reasonably incurred
without 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 Officers'
Certificate furnished pursuant to this Section.
SECTION 1007. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any covenant
or condition set forth in Section 1005, with respect to the Debt Securities of
any series if, before the time for such compliance the Holders of at least 66
2/3% in principal amount of the Debt Securities of such series at the time
Outstanding shall, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such covenant or condition, but no
such waiver shall extend to or affect such covenant or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
covenant or condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF DEBT SECURITIES
SECTION 1101. Applicability of Article.
Debt Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Debt Securities of any
series) in accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Debt Securities shall be
evidenced by an Officers' Certificate authorized by or pursuant to a Board
Resolution. In case of any redemption at the election of the Company of less
than all of the Debt Securities of any series, the Company shall, at least 45
days prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date and of the principal amount and the tenor and terms of the Debt Securities
of any series to be redeemed. In the case of any redemption of Debt Securities
prior to the expiration of any restriction on such redemption provided in the
terms of such Debt Securities or elsewhere in this Indenture, the Company shall
furnish the Trustee with an Officers' Certificate evidencing compliance with
such restriction.
SECTION 1103. Selection by Trustee of Debt Securities to Be Redeemed.
Except as otherwise specified as contemplated by Section 301 for Debt
Securities of any series, if less than all the Debt Securities of any series
with like tenor and terms are to be redeemed, the particular Debt Securities to
be redeemed shall be selected not more than 60 days prior to the Redemption Date
by the Trustee, from the Outstanding Debt Securities of such series with like
tenor and terms not previously called for redemption, by such method as the
Trustee shall deem fair and appropriate and which may provide for the selection
for redemption of portions (equal to the minimum authorized denomination for
Debt Securities of such series or any integral multiple thereof which is also an
authorized denomination) of the principal amount of Registered Securities or
Bearer Securities (if issued in more than one authorized denomination) of such
series of a denomination larger than the minimum authorized denomination for
Debt Securities of such series.
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The Trustee shall promptly notify the Company in writing of the Debt
Securities selected for redemption and, in the case of any Debt Securities
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Debt Securities shall relate, in
the case of any Debt Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Debt Security which has been or is to be
redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given in the manner provided in Section 106
not less than 30 nor more than 60 days prior to the Redemption Date, to each
Holder of Debt Securities to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Debt Securities of any series are to
be redeemed, the identification (and, in the case of partial redemption,
the principal amounts) of the particular Debt Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Debt Security to be redeemed, and that interest
thereon shall cease to accrue on and after said date,
(5) the Place or Places of Payment where such Debt Securities,
together in the case of Bearer Securities with all coupons, if any,
appertaining thereto maturing after the Redemption Date, are to be
surrendered for payment of the Redemption Price,
(6) that Bearer Securities may be surrendered for payment only at such
place or places which are outside the United States, except as otherwise
provided in Section 1002,
(7) that the redemption is for a sinking fund, if such is the case,
and
(8) the CUSIP number, if any.
A notice of redemption published as contemplated by Section 106 need not
identify particular Registered Securities to be redeemed.
Notice of redemption of Debt Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money and/or, to the extent such Debt Securities to be redeemed are denominated
and payable in Dollars only, Eligible Instruments the payments of principal and
interest on which when due (and without reinvestment and providing no tax
liability will be imposed upon the Trustee or the Holders of the Debt Securities
to be redeemed) will provide money on or prior to the Redemption Date in such
amounts as will (together with any money irrevocably deposited in trust with the
Trustee, without investment) be sufficient to pay the Redemption Price of, and
(except if the Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Debt Securities or portions thereof which are to be
redeemed on that date; provided, however, that deposits with respect to Bearer
Securities shall be made with a Paying Agent or Paying Agents located outside
the United States except as otherwise provided in Section 1002, unless otherwise
specified as contemplated by Section 301.
SECTION 1106. Debt Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Debt Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Debt Securities shall cease to bear interest and the coupons for
such interest appertaining to any Bearer Securities so to be redeemed, except to
the extent provided below, shall be void. Upon surrender of any such Debt
Security for
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redemption in accordance with said notice, such Debt Security shall be paid by
the Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided however, that installments of interest on Bearer
Securities whose Stated Maturity is on or prior to the Redemption Date shall be
payable only upon presentation and surrender of coupons for such interest (at an
office or agency located outside the United States except as otherwise provided
in Section 1002), and provided further, that installments of interest on
Registered Securities whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Debt Securities, or one or more
Predecessor Securities, registered as such on the relevant Record Dates
according to their terms and the provisions of Section 307.
If any Bearer Security surrendered for redemption shall not be accompanied
by all appurtenant coupons maturing after the Redemption Date, such Bearer
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Bearer
Security shall surrender to the Trustee or any Paying Agent any such missing
coupon in respect of which a deduction shall have been made from the Redemption
Price, such Holder shall be entitled to receive the amount so deducted without
interest thereon; provided, however, that interest represented by coupons shall
be payable only upon presentation and surrender of those coupons at an office or
agency located outside of the United States except as otherwise provided in
Section 1002.
If any Debt Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Debt Security.
SECTION 1107. Debt Securities Redeemed in Part.
Any Registered Security which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company, the Security
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Debt Security without
service charge, a new Registered Security or Registered Securities of the same
series and of like tenor and terms, of any authorized denominations as requested
by such Holder in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Debt Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Debt Securities of a series except as otherwise specified as
contemplated by Section 301 for Debt Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Debt Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
term of Debt Securities of any series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of Debt Securities of any
series, the amount of any sinking fund payment may be subject to reduction as
provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Debt Securities of any series as provided for by the terms of Debt
Securities of such series.
SECTION 1202. Satisfaction of Sinking Fund Payments with Debt Securities.
The Company (1) may deliver Outstanding Debt Securities of a series (other
than any previously called for redemption), together in the case of any Bearer
Securities of such series with all unmatured coupons appertaining thereto, and
(2) may apply as a credit Debt Securities of a series which have been redeemed
either at the election of the Company pursuant to the terms of such Debt
Securities or through the application of permitted optional sinking
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fund payments pursuant to the terms of such Debt Securities, in each case in
satisfaction of all or any part of any sinking fund payment with respect to the
Debt Securities of such series required to be made pursuant to the terms of such
Debt Securities as provided for by the terms of such series; provided that such
Debt Securities have not been previously so credited. Such Debt Securities shall
be received and credited for such purpose by the Trustee at the Redemption Price
specified in such Debt Securities for redemption through operation of the
sinking fund and the amount of such sinking fund payment shall be reduced
accordingly. If as a result of the delivery or credit of Debt Securities in lieu
of cash payments pursuant to this Section 1202, the principal amount of Debt
Securities to be redeemed in order to exhaust the aforesaid cash payment shall
be less than $100,000, the Trustee need not call Debt Securities for
redemption, except upon Company Request, and such cash payment shall be held by
the Trustee or a Paying Agent and applied to the next succeeding sinking fund
payment, provided, however, that the Trustee or such Paying Agent shall at the
request of the Company from time to time pay over and deliver to the Company any
cash payment so being held by the Trustee or such Paying Agent upon delivery by
the Company to the Trustee of Debt Securities purchased by the Company having an
unpaid principal amount equal to the cash payment requested to be released to
the Company.
SECTION 1203. Redemption of Debt Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Debt Securities (unless a shorter period shall be satisfactory to the
Trustee), the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if any, which is to
be satisfied by payment of cash, the portion thereof, if any, which is to be
satisfied by crediting Debt Securities of that series pursuant to Section 1202
and the basis for any such credit and, prior to or concurrently with the
delivery of such Officers' Certificate, will also deliver to the Trustee any
Debt Securities to be so credited and not theretofore delivered to the Trustee.
Not less than 30 days (unless a shorter period shall be satisfactory to the
Trustee) before each such sinking fund payment date the Trustee shall select the
Debt Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 1103 and cause notice of the redemption thereof to be given
in the name of and at the expense of the Company in the manner provided in
Section 1104. Such notice having been duly given, the redemption of such Debt
Securities shall be made upon the terms and in the manner stated in Sections
1105, 1106 and 1107.
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. Applicability of Article. Debt Securities of any series which
are repayable at the option of the Holders thereof before their Stated Maturity
shall be repaid in accordance with their terms and (except as otherwise
specified pursuant to Section 301 for Debt Securities of such series) in
accordance with this Article.
SECTION 1302. Repayment of Debt Securities.
Each Debt Security which is subject to repayment in whole or in part at the
option of the Holder thereof on a Repayment Date shall be repaid at the
applicable Repayment Price together with interest accrued to such Repayment Date
as specified pursuant to Section 301.
SECTION 1303. Exercise of Option: Notice.
Each Holder desiring to exercise such Holder's option for repayment shall,
as conditions to such repayment, surrender the Debt Security to be repaid in
whole or in part together with written notice of the exercise of such option at
any office or agency of the Company in a Place of Payment, not less than 30 nor
more than 45 days prior to the Repayment Date; provided, however, that surrender
of Bearer Securities together with written notice of exercise of such option
shall be made at an office or agency located outside the United States except as
otherwise provided in Section 1002. Such notice, which shall be irrevocable,
shall specify the principal amount of such Debt Security to be repaid, which
shall be equal to the minimum authorized denomination for such Debt Security or
an integral multiple thereof, and shall identify the Debt Security to be repaid
and, in the case of a partial repayment of the Debt Security, shall specify the
denomination or denominations of the Debt Security or Debt Securities of the
same series to be issued to the Holder for the portion of the principal of the
Debt Security surrendered which is not to be repaid.
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If any Bearer Security surrendered for repayment shall not be accompanied
by all unmatured coupons and all matured coupons in default, such Bearer
Security may be paid after deducting from the Repayment Price an amount equal to
the face amount of all such missing coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Bearer
Security shall surrender to the Trustee or any Paying Agent any such missing
coupon in respect of which a deduction shall have been made from the Repayment
Price, such Holder shall be entitled to receive the amount so deducted without
interest thereon; provided, however, that interest represented by coupons shall
be payable only at an office or agency located outside the United States except
as otherwise provided in Section 1002.
The Company shall execute and the Trustee shall authenticate and deliver
without service charge to the Holder of any Registered Security so surrendered a
new Registered Security or Securities of the same series, of any authorized
denomination specified in the foregoing notice, in an aggregate principal amount
equal to any portion of the principal of the Registered Security so surrendered
which is not to be repaid.
The Company shall execute and the Trustee shall authenticate and deliver
without service charge to the Holder of any Bearer Security so surrendered a new
Registered Security or Securities or new Bearer Security or Securities (and all
appurtenant unmatured coupons and matured coupons in default) or any combination
thereof of the same series of any authorized denomination or denominations
specified in the foregoing notice, in an aggregate principal amount equal to any
portion of the principal of the Debt Security so surrendered which is not to be
paid; provided, however, that the issuance of a Registered Security therefor
shall be subject to applicable laws and regulations, including provisions of the
United States federal income tax laws and regulations in effect at the time of
the exchange; neither the Company, the Trustee nor the Security Registrar shall
issue Registered Securities for Bearer Securities if it has received an Opinion
of Counsel that as a result of such issuance the Company would suffer adverse
consequences under the United States federal income tax laws then in effect and
the Company has delivered to the Trustee a Company Order directing the Trustee
not to make such issuances thereafter unless and until the Trustee receives a
subsequent Company Order to the contrary. The Company shall deliver copies of
such Company Order to the Security Registrar.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the repayment of Debt Securities shall relate, in the
case of any Debt Security repaid or to be repaid only in part, to the portion of
the principal of such Debt Security which has been or is to be repaid.
SECTION 1304. Election of Repayment by Remarketing Entities.
The Company may elect, with respect to Debt Securities of any series which
are repayable at the option of the Holders thereof before their Stated Maturity,
at any time prior to any Repayment Date to designate one or more Remarketing
Entities to purchase, at a price equal to the Repayment Price, Debt Securities
of such series from the Holders thereof who give notice and surrender their Debt
Securities in accordance with Section 1303.
SECTION 1305. Debt Securities Payable on the Repayment Date.
Notice of exercise of the option of repayment having been given and the
Debt Securities so to be repaid having been surrendered as aforesaid, such Debt
Securities shall, unless purchased in accordance with Section 1304, on the
Repayment Date become due and payable at the price therein specified and from
and after the Repayment Date such Debt Securities shall cease to bear interest
and shall be paid on the Repayment Date, and the coupons for such interest
appertaining to Bearer Securities so to be repaid, except to the extent provided
above, shall be void, unless the Company shall default in the payment of such
price, in which case the Company shall continue to be obligated for the
principal amount of such Debt Securities and shall be obligated to pay interest
on such principal amount at the rate borne by such Debt Securities from time to
time until payment in full of such principal amount.
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ARTICLE FOURTEEN
EXCHANGE OF CAPITAL SECURITIES FOR DEBT SECURITIES
SECTION 1401. Applicability of Article.
If an Officers' Certificate or supplemental indenture pursuant to Section
301 provides for the exchange of Capital Securities for Debt Securities of any
series at the election of the Company or otherwise, Debt Securities of such
series shall be exchanged for Capital Securities in accordance with their terms
and (except as otherwise specified in such Officers' Certificate or supplemental
indenture) in accordance with this Article.
SECTION 1402. Exchange of Capital Securities for Debt Securities at Stated
Maturity.
At the Stated Maturity of Debt Securities of any series which may be
exchanged, subject to prepayment prior to such Stated Maturity on the Capital
Exchange Date selected by the Company for Debt Securities of such series, as
described below, early exchange pursuant to Section 1403 or payment in cash
pursuant to Section 502, 1416 or 1417, the Company shall exchange Capital
Securities with a Market Value equal to the principal amount of the Outstanding
Debt Securities of such series for the Debt Securities of such series in whole.
The Company shall give notice in the manner provided in Section 106 to
Holders of the Debt Securities of any series to be exchanged, the Trustee and
the Capital Exchange Agent as to the type of Capital Securities to be exchanged
for the Debt Securities of such series on the Capital Exchange Date for Debt
Securities of such series. Such notice shall include a form of Capital Security
Election Form substantially as set forth in Section 1409, shall make the
statements and contain the information included in Section 1404(a), and shall be
given no less than 90 days prior to the Stated Maturity of such Debt Securities.
Notice of such Capital Exchange Date, together with the amount of Capital
Securities being exchanged for each $1,000 principal amount of Debt Securities
of such series, or the minimum denomination of the Debt Securities of such
series, if larger, shall also be given by the Company in the manner required by
Section 1404(b) not less than three Business Days prior to such Capital Exchange
Date.
The Capital Exchange Date for any prepayment of Debt Securities of each
series may be selected by the Company to be any date between a date 60 days
prior to the Stated Maturity of such Debt Securities and such Stated Maturity,
inclusive, and to be the date of the closing of the Secondary Offering for Debt
Securities of such series. In the event the Company fails to effect such
Secondary Offering, the Capital Exchange Date will be the Stated Maturity of the
Debt Securities of such series. Notice of each such Capital Exchange Date,
together with the amount of Capital Securities being exchanged for each $1,000
principal amount of Debt Securities of such series, or the minimum denomination
of the Debt Securities of such series, if larger, shall also be given by the
Company in the manner required by Section 1404(b) not less than three Business
Days prior to such Capital Exchange Date.
The Company will effect each Secondary Offering such that the closing of
the Secondary Offering will occur on the Capital Exchange Date.
SECTION 1403. Right of Early Exchange of Capital Securities for Debt
Securities.
The Debt Securities of any series to be exchanged may be exchanged at the
election of the Company, as a whole or from time to time in part, prior to the
Stated Maturity thereof for Capital Securities with a Market Value equal to the
principal amount of such Debt Securities on any early Capital Exchange Date,
together with accrued interest to such Capital Exchange Date.
The Company shall give notice in the manner provided in Section 106 to
Holders of the Debt Securities of any series to be exchanged, the Trustee and
the Capital Exchange Agent not less than 90 days nor more than 120 days prior to
any early Capital Exchange Date for Debt Securities of such series, which notice
shall include a form of Capital Security Election Form substantially as set
forth in Section 1409 and make the statements and contain the information
included in Section 1404(a). Notice of each such early Capital Exchange Date,
together with the amount of Capital Securities being exchanged for each $1,000
principal amount of Debt Securities of such series, or the minimum denomination
of such series, if larger, shall also be given by the Company in the manner
required by Section 1404(b) not less than three Business Days prior to such
early Capital Exchange Date.
The Company may at its option accelerate any such Capital Exchange Date
within the 60-day period prior to such Capital Exchange Date by giving notice of
such accelerated Capital Exchange Date, together with the amount
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of Capital Securities being exchanged for each $1,000 principal amount of Debt
Securities of such series, or the minimum denomination of such series, if
larger, in the manner required by Section 1404(b) not less than three Business
Days prior to such accelerated Capital Exchange Date.
The Company will effect each Secondary Offering such that the closing of
such Secondary Offering will occur on the Capital Exchange Date.
SECTION 1404. Notices of Exchange.
(a) All notices of exchange subject to this paragraph shall state:
(1) the type of Capital Securities to be exchanged for the Debt
Securities of such series on the Capital Exchange Date for Debt Securities
of such series;
(2) the proposed Capital Exchange Date;
(3) that each Holder of Debt Securities of such series being exchanged
will receive on such Capital Exchange Date accrued and unpaid interest in
cash and may elect to receive on such Capital Exchange Date Capital
Securities with a Market Value equal to the principal amount of the Debt
Securities of such series owned by such Holder and that, in the absence of
any such election by the Holder, such Holder will be deemed to have
received on such Capital Exchange Date Capital Securities having such
Market Value and to have elected to have such Capital Securities sold for
such Holder by the Company in the related Secondary Offering for cash
proceeds to such Holder on such Capital Exchange Date equal to the
aggregate principal amount of all Debt Securities of such series being
exchanged owned by such Holder;
(4) that on such Capital Exchange Date the Capital Exchange Price will
become due and payable upon each such Debt Security to be exchanged and
that interest thereon will cease to accrue on and after said date;
(5) if less than all the Outstanding Debt Securities of any series are
to be exchanged, the identification and principal amount of the particular
Debt Securities to be exchanged;
(6) that each Holder for whom Capital Securities are being offered in
the Secondary Offering shall be deemed to have appointed the Company its
attorney-in-fact to execute any and all documents and agreements the
Company deems necessary or appropriate to effect such Secondary Offering;
(7) (A) that the Company will assume, unless advised to the contrary
in writing within 30 days after the date of the notice of exchange, that
the Capital Securities are to be offered for the account of the Holder,
that such Holder has not held any position, office or other material
relationship with the Company within three years preceding the Secondary
Offering, that the Holder owns no other Capital Securities, and that after
completion of the Secondary Offering the Holder will own less than one
percent of the class of such Capital Securities, and (B) that if any of
these assumptions is not correct, the Holder shall promptly so advise the
Company;
(8) the Place or Places of Capital Exchange;
(9) that Bearer Securities may be surrendered for payment or exchange
only at a Place or Places of Capital Exchange which are outside the United
States, except as otherwise provided in Section 1002; and
(10) the CUSIP number, if any.
(b) Each notice of exchange subject to this paragraph shall be given in the
manner provided in Section 106 to each Holder of Debt Securities to be
exchanged, and the Company shall forthwith give such notice by telephone to the
Trustee and the Capital Exchange Agent, promptly confirmed in writing.
(c) (1) Except as may otherwise be specified pursuant to Section 301 for
Debt Securities of any series, if less than all the Debt Securities of any
series are to be exchanged, the Company shall at least 135 days prior to the
related Capital Exchange Date (unless a shorter period shall be satisfactory to
the Trustee) notify the Trustee of such Capital Exchange Date and of the
principal amount of Debt Securities of such series to be exchanged and the
particular Debt Securities to be exchanged shall be selected not more than 135
days prior to the related Capital Exchange Date by the Trustee, from the
Outstanding Debt Securities of such series not previously exchanged, by
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such method as the Trustee shall deem fair and appropriate and which may provide
for the selection for exchange of portions (equal to the minimum authorized
denomination for Debt Securities of such series or any integral multiple
thereof) of the principal amount of Registered or Bearer Securities of such
series of a denomination larger than the minimum authorized denomination for
Debt Securities of such series.
In any case where Debt Securities of such series are registered in the same
name, the Trustee in its discretion may treat the aggregate principal amount so
registered as if it were represented by one Debt Security of such series.
(2) The Trustee shall promptly notify the Company in writing of the Debt
Securities selected for exchange and, in the case of any Debt Securities
selected for partial exchange, the principal amount thereof to be exchanged.
(3) For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the exchange of Debt Securities shall
relate, in the case of any Debt Securities exchanged or to be exchanged only in
part, to the portion of the principal amount of such Debt Security which has
been or is to be exchanged.
SECTION 1405. Rights and Duties of Holders of Debt Securities to be
Exchanged for Capital Securities.
(a) Subject to Section 503, and without prejudice to the rights pursuant to
Section 1413 of Holders of Debt Securities of any series to be exchanged, no
Holder of Debt Securities of such series shall be entitled to receive any cash
from the Company on any Capital Exchange Date or at the Stated Maturity of any
Debt Security of such series except from the proceeds of the sale of such
Holder's Capital Securities in the related Secondary Offering and except as
provided herein with respect to fractional Capital Securities, amounts equal to
expenses of the sale in the related Secondary Offering of such Capital
Securities accrued and unpaid interest and acceleration upon an Event of
Default. In the event that the Company does not effect such Secondary Offering,
such Holder will receive Capital Securities with a Market Value equal to the
principal amount of Debt Securities of such series owned by such Holder which
are subject to such exchange and not cash other than in lieu of any fractional
Capital Securities and for accrued and unpaid interest, without prejudice to
such Holder's rights pursuant to Section 1413.
(b) Each Holder for whom Capital Securities are being offered in the
Secondary Offering shall be deemed to have appointed the Company its
attorney-in-fact to execute any and all documents and agreements the Company
deems necessary or appropriate to effect such Secondary Offering.
(c) Unless advised to the contrary in writing within 30 days following the
date of the notice described in Section 1404(a) by any Holder for whom Capital
Securities are being offered in the Secondary Offering, the Company shall assume
for the purposes of any Secondary Offering that the Capital Securities are to be
offered for the account of such Holder, that such Holder has not held any
position, office or other material relationship with the Company within three
years preceding the Secondary Offering, that such Holder owns no other Capital
Securities, and that after completion of the Secondary Offering such Holder will
own less than one percent of the class of such Capital Securities.
(d) Each Holder for whom Capital Securities are being offered in the
Secondary Offering agrees to indemnify and hold harmless the Company, any other
Holder, and any underwriter, agent or other similar person from and against any
and all losses, claims, damages and liabilities resulting from or based upon any
untrue statement or alleged untrue statement of any material fact contained in
any notice of exchange, any offering memorandum or selling document or
registration statement relating to the Secondary Offering, a preliminary
prospectus or prospectus contained therein, or any amendment thereof or
supplement thereto, or resulting from or based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, which untrue statement,
alleged untrue statement, omission or alleged omission is made therein (i) in
reliance upon and in conformity with any written information furnished to the
Company by or on behalf of any such Holder specifically for use in connection
with the preparation thereof or (ii) because of such Holder's failure to advise
the Company in writing that any of the assumptions described in Section 1404(a)
(7) (A) and Subsection (c) of this Section is incorrect.
(e) In order for any Holder who has duly returned a Capital Security
Election Form to receive Capital Securities on any Capital Exchange Date for any
Debt Security of any series, (1) the Holder of any Registered Security to be
exchanged shall surrender such Debt Security (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly
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executed by, the Holder of any Registered Security or his attorney duly
authorized in writing), to the Capital Exchange Agent on the Capital Exchange
Date, and (2) the Holder of any Bearer Security to be exchanged shall surrender
such Debt Security and all unmatured coupons and all matured coupons in default
with the Capital Security Election Form at a Place of Capital Exchange outside
the United States designated pursuant to Section 1404(a) (8) except as otherwise
provided in Section 1002. If the Holder of a Bearer Security is unable to
produce any such Debt Security or coupons, the surrender of such Debt Security
or coupons may be waived by the Company and the Trustee, if there be furnished
to them such security or indemnity as they may require to save each of them and
any Capital Exchange Agent harmless in respect of such Debt Security or coupons.
Except as provided in Section 307, no payment or adjustment shall be made upon
any exchange on account of any interest accrued on any Debt Securities
surrendered for exchange or on account of any dividends or interest on the
Capital Securities issued upon exchange.
(f) Debt Securities of any series to be exchanged shall be deemed to have
been exchanged on the Capital Exchange Date therefor in accordance with the
foregoing provisions, and at such time the rights of the Holders of such Debt
Securities as Holders shall cease (subject to the provisions of Section 307 and
without prejudice to the rights of Holders of Debt Securities of such series
pursuant to Section 1413), and the Person or Persons entitled to receive the
Capital Securities issuable upon such exchange shall be treated for all purposes
as the record holder or holders of such Capital Securities at such time.
SECTION 1406. Election to Exchange.
The election of the Company to exchange Capital Securities for Debt
Securities pursuant to Section 1403 shall be evidenced by a Board Resolution.
SECTION 1407. Deposit of Capital Exchange Price.
On any Capital Exchange Date for Debt Securities of any series which may be
exchanged, the Company shall deposit with the Trustee or with a Capital Exchange
Agent in the City and County of San Francisco or the Borough of Manhattan, The
City of New York (or, if the Company is acting as Capital Exchange Agent,
segregate and hold in trust as provided in Section 1003) Capital Securities and
an amount of money which together are sufficient to pay the Capital Exchange
Price of, and (except if such Capital Exchange Date shall be an Interest Payment
Date) accrued interest on, all the Debt Securities of such series or portions
thereof which are to be exchanged on that date; provided, however, that deposits
with respect to Bearer Securities shall be made with a Capital Exchange Agent or
Capital Exchange Agents, located outside the United States except as otherwise
provided in Section 1002, unless otherwise specified as contemplated by Section
301.
SECTION 1408. Debt Securities Due on Capital Exchange Date; Debt Securities
Exchanged in Part.
Notice of exchange having been given as aforesaid, the Debt Securities of
any series so to be exchanged shall, on the Capital Exchange Date for such Debt
Securities, become due and payable at the Capital Exchange Price therein
specified, and from and after such date (unless the Company shall default in the
payment of the Capital Exchange Price and accrued interest) Debt Securities of
such series to be exchanged shall cease to bear interest and the coupons for
such interest appertaining to any Bearer Securities so to be exchanged, except
to the extent provided below, shall be void. Upon surrender of any Debt Security
of such series for exchange in accordance with said notice, such Debt Security
shall be paid by the Company at the Capital Exchange Price, together with
accrued interest to the Capital Exchange Date; provided, however, that if such
Capital Exchange Date is an Interest Payment Dare, the interest payable on such
date shall be paid to the Holder of Debt Securities of such series according to
the terms of the Debt Securities of such series and the provisions of Section
307; and provided further, that exchanges of Bearer Securities shall be made
only and installments of interest on Bearer Securities whose Stated Maturity is
on or prior to the Capital Exchange Date shall be payable only at an office or
agency located outside the United States except as otherwise provided in Section
1002 and, unless otherwise specified as contemplated by Section 301, only upon
presentation and surrender of those Bearer Securities and coupons.
If any Bearer Security surrendered for exchange shall not be accompanied by
all unmatured coupons and all matured coupons in default such Bearer Security
may be paid after deducting from the Capital Exchange Price an amount equal to
the face amount of all missing coupons, or the surrender of such missing coupons
may be waived by
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the Company and the Trustee if there be furnished to them such security or
indemnity as they may require to save each of them and any Capital Exchange
Agent harmless. If thereafter the Holder of such Bearer Security shall surrender
to the Trustee or Capital Exchange Agent any such missing coupon in respect of
which a deduction shall have been made from the Capital Exchange Price, such
Holder shall be entitled to receive the amount so deducted; provided, however,
that interest on Bearer Securities shall be payable only at an office or agency
located outside of the United States except as otherwise provided in Section
1002.
If any Debt Security of any series called for exchange shall not be so paid
or exchanged upon surrender thereof for exchange, the principal shall, until
paid, bear interest from such Capital Exchange Date at the rate or rates
prescribed therefor in such Debt Security; provided, however, that in the case
of Bearer Securities, any such principal and interest thereon shall be paid at
an office or agency located outside the United States except as otherwise
provided in Section 1002.
Any Registered Security which is to be exchanged only in part shall be
surrendered as provided herein (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder or his attorney duly
authorized in writing) and the Company shall execute, the Trustee shall
authenticate and there shall be delivered to the Holder of such Debt Security
without service charge a new Registered Security or Securities of the same
series, of any authorized denomination or denominations as requested by such
Holder in aggregate principal amount equal to and in exchange for the
unexchanged portion of principal of the Debt Security so surrendered.
Any Bearer Security which is to be exchanged only in part shall be
surrendered as provided herein and the Company shall execute, the Trustee shall
authenticate and there shall be delivered to the Holder of such Debt Security
without service charge a new Registered Security or Securities or new Bearer
Security or Securities (and all appurtenant unmatured coupons and coupons in
default) or any combination thereof of the same series of any authorized
denomination or denominations as requested by such Holder in aggregate principal
amount equal to and in exchange for the unexchanged portion of principal of the
Debt Security so surrendered; provided, however, the issuance of a Registered
Security therefor shall be subject to applicable laws and regulations, including
provisions of the United States federal income tax laws and regulations in
effect at the time of the exchange; neither the Company, the Trustee nor the
Security Registrar shall issue Registered Securities in exchange for Bearer
Securities if it has received an Opinion of Counsel that as a result of such
exchanges the Company would suffer adverse consequences under the United States
federal income tax laws then in effect and the Company has delivered to the
Trustee a Company Order directing the Trustee not to make such exchanges
thereafter unless and until the Company delivers to the Trustee a subsequent
Company Order to the contrary. The Company shall deliver copies of such Company
Orders to the Security Registrar.
SECTION 1409. Form of Capital Security Election Form.
The form of Capital Security Election Form shall be substantially as
follows with such additions, deletions or changes thereto as may be approved by
the Company:
CAPITAL SECURITY ELECTION FORM
To: [Insert Names and Addresses of
Capital Exchange Agents]
The undersigned Holder of [insert title of Debt Security] ("Debt
Securities") of BankAmerica Corporation hereby elects to receive on the Capital
Exchange Date determined pursuant to the Indenture dated as of November 1, 1991
("Indenture"), between BankAmerica Corporation and Manufacturers Hanover Trust
Company of California, as Trustee, and referred to in the notice of exchange
published or delivered to the undersigned with this Capital Security Election
Form, Capital Securities of BankAmerica Corporation with a Market Value equal to
the principal amount of the Debt Securities being exchanged owned by the
undersigned Holder and, in the case of Bearer Securities, delivered herewith
together with all coupons appertaining thereto. Unless this Capital Security
Election Form together with, in the case of Bearer Securities, such Bearer
Securities and coupons, is received by any Capital Exchange Agent named above at
an address shown above on or prior to _______________ the Holder will
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be deemed to have elected to participate in the sale of the Holder's Capital
Securities in the Secondary Offering and will receive cash on the Capital
Exchange Date in an amount equal to the principal amount of all Debt Securities
being exchanged owned by the Holder. All terms used herein and not otherwise
defined herein shall have the meanings specified in the Indenture.
Dated__________________________ _____________________________
Name of Holder
SECTION 1410. Fractional Capital Securities.
No fractional Capital Securities shall be issued upon exchange for any Debt
Securities. If more than one Debt Security of any series shall be surrendered
for exchange at one time by the same Holder, the amount of all Capital
Securities which shall be issuable upon exchange thereof shall be computed on
the basis of the aggregate principal amount of Debt Securities of such series so
surrendered. In lieu of issuing any fractional Capital Security, the Company
shall pay a cash adjustment in respect of such fraction in an amount equal to
the same fraction of the Market Value of the Capital Security.
SECTION 1411. Company to Obtain Governmental and Regulatory Approvals.
The Company covenants that if any Capital Securities required to be
exchanged for Debt Securities hereunder require registration with or approval of
any governmental authority under any federal or state law, or any national
securities exchange, before such Capital Securities may be issued, the Company
will in good faith and as expeditiously as possible endeavor to cause such
Capital Securities to be duly registered or approved, as the case may be;
provided, however, that nothing in this Section shall be deemed to affect in any
way the obligation of the Company to exchange Capital Securities for Debt
Securities as provided in this Article.
SECTION 1412. Taxes on Exchange.
The Company will pay any and all transfer, stamp or similar taxes that may
be payable in respect of the issue or delivery of Capital Securities in exchange
for Debt Securities pursuant hereto.
SECTION 1413. Covenants as to Capital Securities and Secondary Offering.
(a) The Company covenants that it will issue, or cause to be issued,
Capital Securities of the type, in the amounts and at the times required by this
Indenture.
(b) The Company covenants that all Capital Securities which may be issued
in exchange for Debt Securities will upon issuance be duly and validly issued
and, if applicable, fully paid and nonassessable.
(c) The Company unconditionally undertakes to sell Capital Securities in
each Secondary Offering (and to bear all expenses of each Secondary Offering,
including underwriting discounts and commissions) at the times and in the manner
required by this Indenture unless all Holders have duly elected to receive
Capital Securities on the related Capital Exchange Date.
(d) The Company agrees to indemnify and hold harmless in connection with
any Secondary Offering any Holder for the account of whom Capital Securities are
being offered and sold from and against any and all losses, claims, damages and
liabilities resulting from or based upon any untrue statement or alleged untrue
statement of any material fact contained in any notice of exchange, any offering
memorandum or selling document or registration statement relating to the
Secondary Offering, any preliminary prospectus or prospectus contained therein,
or any amendment thereof or supplement thereto, or resulting from or based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
resulting from the Company's failure to comply with Section 1411; provided
however, the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement, alleged untrue statement, omission or alleged omission made
therein (i) in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any such Holder specifically for use
in connection with the preparation thereof or (ii) because of such Holder's
failure to advise the Company in writing that any of the assumptions described
in Section 1404(a) (7) (A) is incorrect. In connection with any Secondary
Offering, the Company agrees to obtain appropriate indemnification of any Holder
for the
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account of whom Capital Securities are being offered and sold in any Secondary
Offering from any underwriter, agent or other similar person.
SECTION 1414. Provision in Case of Consolidation, Merger or Transfer of
Assets.
In case of any consolidation of the Company with, or merger of the Company
into, any other corporation (other than a consolidation or merger in which the
Company is the continuing corporation), or in case of any conveyance or transfer
of the properties and assets of the Company substantially as an entirety, the
corporation formed by such consolidation or the corporation into which the
Company shall have been merged or the corporation which shall have acquired such
assets of the Company, as the case may be, shall execute and deliver to the
Trustee a supplemental indenture providing that the Holder of each Debt Security
then Outstanding shall have the right thereafter to receive securities of such
successor on the Capital Exchange Date for such Debt Security with a Market
Value equal to the principal amount of such Debt Security. The above provisions
of this Section shall similarly apply to successive consolidations, mergers,
conveyances or transfers.
SECTION 1415. Responsibility of Trustee.
The Trustee shall not at any time be under any duty or responsibility to
any Holder of Debt Securities of any series to be exchanged to determine the
Market Value of any Capital Securities delivered in exchange for Debt Securities
of such series and may rely on and shall be entitled to receive prior to any
Capital Exchange Date for Debt Securities of such series an Officers'
Certificate of the Company as to the Market Value of the Capital Securities
being exchanged for the Debt Securities of such series and the amount of Capital
Securities being exchanged for each $1,000 principal amount of Debt Securities
of such series or the minimum denomination of such series, if larger, and that
such Capital Securities qualify as Capital Securities under the definition
thereof contained herein. The Trustee shall not be accountable with respect to
the validity or value (or the kind or amount) of any Capital Securities which
may at any time be issued or delivered in exchange for any Debt Security, and
the Trustee does not make any representation with respect thereto. The Trustee
shall not be responsible for any failure of the Company to issue, transfer or
deliver any Capital Securities or Capital Security certificates or other
securities or property upon the surrender of any Debt Security for the purpose
of exchange or to comply with any of the covenants of the Company contained in
this Article.
SECTION 1416. Revocation of Obligation to Exchange Capital Securities for
Debt Securities.
The Company's obligation to exchange Capital Securities for Debt Securities
of any series as provided in Section 1402 is absolute and unconditional;
provided, however, that such obligation may be revoked at the option of the
Company at any time on not less than 60 days' prior notice given in the manner
provided in Section 106 to the Holders of Debt Securities of such series, the
Trustee and the Capital Exchange Agent, if the Company shall determine that
under then regulations of the Company's Primary Federal Regulator either the
Debt Securities are no longer includable as capital or it is no longer necessary
for the Company to be obligated to exchange Capital Securities for Debt
Securities in order for the Debt Securities to maintain the same capital
treatment as they are then receiving under such regulations or if approval of
the Primary Federal Regulator is obtained for such revocation.
In the event such obligation is revoked
(a) the Company will pay the Debt Securities of such series in cash at
100% of the principal amount thereof on the Stated Maturity thereof, and
(b) the Company may, at any time on or after a date selected by the
Company, on not less than 60 days' prior notice given in the manner
provided in Section 106 to the Holders of Debt Securities of such series
and the Trustee, redeem the Debt Securities of such series, in whole or in
part, for cash at 100% of the principal amount thereof, plus accrued
interest to the Redemption Date.
SECTION 1417. Optional Securities Funds.
(a) (1) With respect to Debt Securities of any series for which an
Officers' Certificate or supplemental indenture pursuant to Section 301
provides that the Debt Securities of such series are exchangeable for
Capital Securities, the Company may elect to establish a fund (referred to
herein as the "Optional Securities Funds")
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to which funds may at any time be designated by the Company as provided in
Section 1502 as if such Optional Securities Funds were Securities Funds (as
defined in Article Fifteen) to be used to pay the principal of the Debt
Securities of such series.
(2) Notwithstanding any provisions to the contrary contained in this
Indenture or in the Debt Securities of any series, neither funds designated
as Optional Securities Funds nor any other property from time to time held
as Optional Securities Funds shall be deemed to be for any purpose property
of the Holders or trust funds for the benefit of the Holders, and the
Optional Securities Funds shall not constitute security for the payment of
the Debt Securities.
(b) In lieu of, or in addition to, any exchange of Capital Securities for
Debt Securities of any series which may be made in accordance with the
provisions of Sections 1402 and 1403, the Company may elect to redeem the Debt
Securities of such series in accordance with the provisions of Section 1106 and
the terms of the Debt Securities of each series, in whole or in part, by paying
the principal of such Debt Securities with funds designated as Optional
Securities Funds at a price equal to the percentage of the principal amount
established in the terms of the Debt Securities of such series on the Redemption
Date of the Debt Securities to be so redeemed, and (except if such Redemption
Date shall be an Interest Payment Date) by paying accrued interest on such Debt
Securities. If such Redemption Date is an Interest Payment Date, the interest
payable on such date shall be paid to the Holder of Debt Securities of such
series according to the terms of the Debt Securities of such series and the
provisions of Section 307.
(c) The Company shall give notice of such proposed redemption in the manner
provided in Section 106 to the Holders of the Debt Securities of such series
within the time prescribed for the giving of the initial notice in Section 1402
or 1403, depending upon the Redemption Date selected by the Company. Such notice
shall state the Redemption Date and the place or places where the Debt
Securities of the series to be paid are to be surrendered for payment; provided
however, if such redemption is of less than all of the Debt Securities of such
series and is to be made on a Capital Exchange Date specified in accordance with
Section 1402 or 1403, then such notice may be incorporated into any initial
notice of such Capital Exchange Date and provided that no notice of any
redemption may be given unless there are sufficient Optional Securities Funds to
pay the principal amount of the Debt Securities to be redeemed.
(d) If less than all the Debt Securities of any series are to be so
redeemed, then Sections 1404(c) and 1408 shall apply to the redemption in the
same manner as if such Debt Securities were to be exchanged for Capital
Securities.
(e) Funds designated as Optional Securities Funds shall be released from
such designation under the circumstances described in Section 1503.
ARTICLE FIFTEEN
SECURITIES FUNDS
SECTION 1501. Creation of Securities Funds.
A fund (the "Securities Funds") will be established when specified in an
Officers' Certificate or supplemental indenture pursuant to Section 301 for the
Debt Securities of any series pursuant to which funds may be designated by the
Company as provided in Section 1502, to be used to pay the principal of the Debt
Securities of that series.
Notwithstanding any provision to the contrary contained in this Indenture
or in the Debt Securities of any series, neither funds designated as Securities
Funds nor any other property from time to time held as Securities Funds shall be
deemed to be for any purpose property of the Holders or trust funds for the
benefit of the Holders, and the Securities Funds shall not constitute security
for the payment of the Debt Securities.
SECTION 1502. Designations of Securities Funds.
The Securities Funds will consist of amounts equal to (i) the net proceeds
of the sale of Capital Securities for cash from time to time after the date of
initial issuance of the Debt Securities of any series for which funds may be
designated by the Company as provided in this Section, and (ii) the market
value, as determined by the Company,
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of Capital Securities sold from time to time after the date of initial issuance
of the Debt Securities of such series in exchange for other property, less the
expenses to effect any such exchanges, and (iii) other funds which the
regulations of the Primary Federal Regulator then permit for the payment of
principal of "mandatory convertible securities (equity commitment notes)" as
defined in such regulations; provided that (x) the Company has designated such
amounts as Securities Funds on its books and records in the manner required by
the Primary Federal Regulator, and (y) there shall be deducted from the
Securities Funds an amount equal to the amount of any funds used to redeem or
repay the Debt Securities of such series for which Securities Funds are required
to be designated or any similar securities.
SECTION 1503. Covenant of the Company to Obtain Securities Funds.
Notwithstanding anything else contained herein, the Company hereby
covenants and agrees that with regard to the Debt Securities of any series which
by its terms requires the designation of Securities Funds (i) by the Interest
Payment Date which occurs on or next preceding the date when one-third of the
period from the date of issuance of the Debt Securities of such series to their
Stated Maturity has elapsed, it will have obtained Securities Funds in an amount
that will equal at least one-third of the original aggregate principal amount of
the Debt Securities of such series (or such lesser amount as the Primary Federal
Regulator may permit from time to time) and will have prepared and delivered to
the Trustee an Officer's Certificate to the foregoing effect, (ii) by the
Interest Payment Date which occurs on or next preceding the date when two-thirds
of the period from the date of issuance of the Debt Securities of such series to
their Stated Maturity has elapsed, it will have obtained Securities Funds in an
amount that will equal at least two-thirds of the original aggregate principal
amount of the Debt Securities of such series (or such lesser amount as the
Primary Federal Regulator may permit from time to time) and will have prepared
and delivered to the Trustee an Officers' Certificate to the foregoing effect,
and (iii) by 60 days prior to the Stated Maturity of the Debt Securities of such
series, it will have obtained Securities Funds in an amount that will equal not
less than the original aggregate principal amount of the Debt Securities of such
series (or such lesser amount as the Primary Federal Regulator may permit from
time to time) and will have prepared and delivered to the Trustee an Officers'
Certificate to the foregoing effect; provided, however, that such covenant and
agreement of the Company shall be cancelled, and amounts theretofore designated
as Securities Funds will be released from such designation in the event and to
the extent that the Company shall determine that under then regulations of the
Company's Primary Federal Regulator either the Debt Securities are no longer
includable as capital or it is no longer necessary for the Company to be
obligated to pay the principal of the Debt Securities out of Securities Funds in
order for the Debt Securities to maintain the same capital treatment as they are
then receiving under such regulations, in the event and to the extent that
approval of the Primary Federal Regulator is obtained for such cancellation and
release or in the event and to the extent that the Company shall have exchanged
or redeemed such Debt Securities pursuant to the terms of such Debt Securities
of such series from a source other than amounts designated as Securities Funds.
ARTICLE SIXTEEN
MEETINGS OF HOLDERS OF DEBT SECURITIES
SECTION 1601. Purposes for Which Meetings May Be Called.
If Debt Securities of a series are issuable in whole or in part as Bearer
Securities, a meeting of Holders of Debt Securities of such series may be called
at any time and from time to time pursuant to this Article to make, give or take
any request, demand, authorization, direction, notice, consent, waiver or other
Act provided by this Indenture to be made, given or taken by Holders of Debt
Securities of such series.
SECTION 1602. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of Debt
Securities of any series issuable as Bearer Securities for any purpose specified
in Section 1601, to be held at such time and at such place in the City and
County of San Francisco, the Borough of Manhattan, The City of New York, or in
London as the Trustee shall determine. Notice of every meeting of Holders of
Debt Securities of any series, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be given, in the manner provided in Section 106, not less than 21 nor more
than 180 days prior to the date fixed for the meeting.
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(b) In case at any time the Company, pursuant to a Board Resolution, or the
Holders of at least 10% in principal amount of the Outstanding Debt Securities
of any series shall have requested the Trustee to call a meeting of the Holders
of Debt Securities of such series for any purpose specified in Section 1601, by
written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have made the first publication
of the 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 Company or the Holders of Debt Securities of such series in the amount
above specified, as the case may be, may determine the time and the place in the
City and County of San Francisco, the Borough of Manhattan, The City of New
York, or in London for such meeting and may call such meeting for such purposes
by giving notice thereof as provided in subsection (a) of this Section.
SECTION 1603. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Debt Securities of any
series, a Person shall be (1) a Holder of one or more Outstanding Debt
Securities of such series, or (2) a Person appointed by an instrument in writing
as proxy for a Holder or Holders of one or more Outstanding Debt Securities of
such series by such Holder or Holders. The only Persons who shall be entitled to
be present or to speak at any meeting of Holders of Debt Securities of any
series shall be the Persons entitled to vote at such meeting and their counsel,
any representatives of the Trustee and its counsel and any representatives of
the Company and its counsel.
SECTION 1604. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
Outstanding Debt Securities of a series shall constitute a quorum for a meeting
of Holders of Debt Securities of such series, provided, however, that if any
action is to be taken at such meeting with respect to a consent or waiver which
this Indenture expressly provides may be given by the Holders of not less than
66 2/3% in principal amount of the Outstanding Debt Securities of a series, the
Persons entitled to vote 66 2/3% in principal amount of the Outstanding Debt
Securities of such series shall constitute a quorum. 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 Holders of Debt Securities of such series, be
dissolved. In the absence of a quorum in any other case the meeting may 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 meeting. In the absence of a quorum
at any such adjourned meeting, such adjourned meeting may be further adjourned
for a period of not less than 10 days as determined by the chairperson 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
1602(a), except that such notice need be given only once not less than five days
prior to the date on which the meeting is scheduled to be reconvened. Notice of
the reconvening of an adjourned meeting shall state expressly the percentage, as
provided above, of the principal amount of the Outstanding Debt Securities of
such series which shall constitute a quorum.
Except as limited by the provisos to Section 902, any resolution presented
to a meeting or adjourned meeting duly reconvened at which a quorum is present
as aforesaid may be adopted only by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Debt Securities of that series;
provided, however, that, except as limited by the provisos to Section 902, any
resolution with respect to any consent or waiver which this Indenture expressly
provides may be given by the Holders of not less than 66 2/3% in principal
amount of the Outstanding Debt Securities of a series may be adopted at a
meeting or an adjourned meeting duly reconvened and at which a quorum is present
as aforesaid only by the affirmative vote of the Holders of 66 2/3% in principal
amount of the Outstanding Debt Securities of that series; and provided, further,
that, except as limited by the provisos to Section 902, any resolution with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other Act which this Indenture expressly provides may be made, given
or taken by the Holders of a specified percentage, which is less than a
majority, in principal amount of the Outstanding Debt Securities of a series may
be adopted at a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid by the affirmative vote of the Holders of such
specified percentage in principal amount of the Outstanding Debt Securities of
that series.
Any resolution passed or decision taken at any meeting of Holders of Debt
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Debt Securities of such series and the related
coupons, whether or not present or represented at the meeting.
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SECTION 1605. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any other provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Holders of Debt Securities of such series in regard to proof of the holding of
Debt Securities of such series 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 otherwise permitted or required by any such regulations,
the holding of Debt Securities shall be proved in the manner specified in
Section 104 and the appointment of any proxy shall be proved in the manner
specified in Section 104 or, in the case of Bearer Securities, by having the
signature of the person executing the proxy witnessed or guaranteed by any trust
company, bank or banker authorized by Section 104 to certify to the holding of
Bearer Securities. Such regulations may provide that written instruments
appointing proxies, regular on their face, may be presumed valid and genuine
without the proof specified in Section 104 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairperson of the meeting, unless the meeting shall have been called by the
Company or by Holders of Debt Securities as provided in Section 1602(b), in
which case the Company or the Holders of Debt Securities of the series calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairperson. A permanent chairperson and a permanent secretary of the meeting
shall be elected by vote of the Persons entitled to vote a majority in principal
amount of the Outstanding Debt Securities of such series represented at the
meeting.
(c) At any meeting each Holder of a Debt Security of such series or proxy
shall be entitled to one vote for each $1,000 principal amount (or the
equivalent in ECU, any other composite currency or a Foreign Currency) of Debt
Securities of such series held or represented by him; provided however, that no
vote shall be cast or counted at any meeting in respect of any Debt Security
challenged as not Outstanding and ruled by the chairperson of the meeting not to
be Outstanding. The chairperson of the meeting shall have no right to vote,
except as a Holder of a Debt Security of such series or proxy.
(d) Any meeting of Holders of Debt Securities of any series duly called
pursuant to Section 1602 at which a quorum is present may be adjourned from time
to time by Persons entitled to vote a majority in principal amount of the
Outstanding Debt Securities of such series represented at the meeting, and the
meeting may be held as so adjourned without further notice.
SECTION 1606. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of Debt
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Debt Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Debt Securities of such series 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 Debt Securities of
any series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors 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 given as provided in Section 1602 and, if
applicable, Section 1604. Each copy shall be signed and verified by the
affidavits of the permanent chairperson and secretary of the meeting and one
such copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter 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.
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ARTICLE SEVENTEEN
DEFEASANCE
Section 1701. Termination of Company's Obligations.
With respect to any series of Debt Securities, if the Company deposits
irrevocably in trust with the Trustee money and/or, to the extent such Debt
Securities are denominated and payable in Dollars only, Eligible Instruments the
payments of principal and interest on which when due (and without reinvestment
and providing no tax liability will be imposed upon the Trustee or the Holders
of such Debt Securities) will provide money in such amounts as will (together
with any money irrevocably deposited in trust with the Trustee, without
investment) be sufficient, to pay principal (and premium, if any) and interest
when due on the Debt Securities of such series and any coupons appertaining
thereto and any mandatory sinking fund, repayment or analogous payments thereon
on the scheduled due dates therefor at the Stated Maturity thereof, the
Company's obligations under Section 1005 shall terminate with respect to the
Debt Securities of the series for which such deposit was made; provided,
however, that (i) no Event of Default with respect to the Debt Securities of
such series under Section 501 (1) or 501(2) or event that with notice or lapse
of time or both would constitute such an Event of Default shall have occurred
and be continuing on such date and (ii) such termination shall not relieve the
Company of its obligations under the Debt Securities of such series and this
Indenture to pay when due the principal of (and premium, if any) and interest
and additional amounts on such Debt Securities and any coupons appertaining
thereto if such Debt Securities or coupons are not paid (or payment is not
provided for) when due from the money and Eligible Instruments (and the proceeds
thereof) so deposited.
It shall be a condition to the deposit of cash and/or Eligible Instruments
and the termination of the Company's obligations with respect to the Debt
Securities of any series under Section 1005 pursuant to the provisions of this
Section that the Company deliver to the Trustee (i) an opinion of nationally
recognized independent tax counsel to the effect that (a) Holders of Debt
Securities of such series and any coupons appertaining thereto will not
recognize income, gain or loss for Federal income tax purposes as a result of
such deposit and termination and (b) such Holders (and future Holders) will be
subject to tax in the same amount, manner and timing as if such deposit and
termination has not occurred and (ii) an Officers' Certificate to the effect
that under the laws in effect on the date such money and/or Eligible Instruments
are deposited with the Trustee, the amount thereof will be sufficient, after
payment of all Federal, state and local taxes in respect thereof payable by the
Trustee, to pay principal (and premium, if any) and interest when due on the
Debt Securities of such series and any coupons appertaining thereto.
It shall be an additional condition to the deposit of cash and/or Eligible
Instruments and the termination of the Company's obligations under Section 1005
pursuant to the provisions if this Section, with respect to the Debt Securities
of any series then listed on the New York Stock Exchange, that the Company
deliver an Opinion of Counsel that the Debt Securities of such series will not
be delisted from the New York Stock Exchange as a result of such deposit and
termination.
After a deposit as provided herein, the Trustee shall, upon Company
Request, acknowledge in writing the discharge of the Company's obligations with
respect to the Debt Securities of such series under Section 1005 pursuant to the
provisions of this Section.
SECTION 1702. Repayment to Company.
The Trustee and any Paying Agent shall promptly pay to the Company upon
Company Request any money or Eligible Instruments not required for the payment
of the principal of (and premium, if any) and interest on the Debt Securities of
any series and any related coupons for which money or Eligible Instruments have
been deposited pursuant to Section 1701 held by them at any time.
The Trustee and any Paying Agent shall pay to the Company upon Company
Request any money held by them for the payment of principal (and premium, if
any) and interest that remains unclaimed for two years after the Maturity of the
Debt Securities for which a deposit has been made pursuant to Section 1701.
After such payment to the Company, the Holders of the Debt Securities of such
series and any related coupons shall thereafter, as unsecured general creditors,
look only to the Company for the payment thereof.
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SECTION 1703. Indemnity for Eligible Instruments.
The Company shall pay and shall indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the deposited Eligible
Instruments or the principal or interest received on such Eligible Instruments.
ARTICLE EIGHTEEN
SUBORDINATION OF DEBT SECURITIES
SECTION 1801. Debt Securities Subordinate to Senior Debt.
The Company covenants and agrees that anything in this Indenture or the
Debt Securities of any series to the contrary notwithstanding, the indebtedness
evidenced by the Debt Securities of each series and any coupons appurtenant
thereto is subordinate and junior in right of payment to all Senior Debt to the
extent provided herein, and each Holder of Debt Securities of each series and
coupons appurtenant thereto, by such Holder's acceptance thereof, likewise
covenants and agrees to the subordination herein provided and shall be bound by
the provisions hereof. Senior Debt shall continue to be Senior Debt and
entitled to the benefits of these subordination provisions irrespective of any
amendment, modification or waiver of any term of the Senior Debt or extension or
renewal of the Senior Debt.
In the event that the Company shall default in the payment of any principal
of (or premium, if any) or interest on any Senior Debt when the same become due
and payable, whether at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, upon written notice of such
default to the Company by the Holders of Senior Debt or any trustee therefor,
unless and until such default shall have been cured or waived or shall have
ceased to exist, no direct or indirect payment (in cash, property, securities,
by set-off or otherwise) shall be made or agreed to be made on account of the
principal of (or premium, if any) or interest on any of the Debt Securities, or
in respect of any redemption, repayment, retirement, purchase or other
acquisition of any of the Debt Securities.
In the event of
(a) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding
relating to the Company, its creditors or its property,
(b) any proceeding for the liquidation, dissolution or other winding
up of the Company, voluntary or involuntary, whether or not involving
insolvency or bankruptcy proceedings,
(c) any assignment by the Company for the benefit of creditors, or
(d) any other marshalling of the assets of the Company,
all Senior Debt (including any interest thereon accruing after the commencement
of any such proceedings) shall first be paid in full before any payment or
distribution, whether in cash, securities or other property, shall be made to
any Holder of any of the Debt Securities or coupons appurtenant thereto on
account thereof. Any payment or distribution, whether in cash, securities or
other property (other than securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in these subordination provisions
with respect to the indebtedness evidenced by the Debt Securities, to the
payment of all Senior Debt at the time outstanding and to any securities issued
in respect thereof under any such plan of reorganization or readjustment), which
would otherwise (but for these subordination provisions) be payable or
deliverable in respect of the Debt Securities of any series or coupons
appurtenant thereto shall be paid or delivered directly to the Holders of Senior
Debt in accordance with the priorities then existing among such Holders until
all Senior Debt (including any interest thereon accruing after the commencement
of any such proceedings) shall have been paid in full. In the event of any such
proceeding, after payment in full of all sums owing with respect to Senior Debt,
the Holders of the Debt Securities and coupons appurtenant thereto, together
with the Holders of any obligations of the Company ranking on a parity with the
Debt Securities, shall be entitled to be paid from the remaining assets of the
Company the amounts at the time due and owing on account of unpaid principal of
(and premium, if any) and interest on the Debt Securities and such other
obligations before any
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payment or other distribution, whether in cash, property or otherwise, shall be
made on account of any capital stock or any obligations of the Company ranking
junior to the Debt Securities and such other obligations.
In the event that, notwithstanding the foregoing, any payment or
distribution of any character or any security, whether in cash, securities or
other property (other than securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in these subordination provisions
with respect to the indebtedness evidenced by the Debt Securities, to the
payment of all Senior Debt at the time outstanding and to any securities issued
in respect thereof under any such plan of reorganization or readjustment), shall
be received by the Trustee or any Holder in contravention of any of the terms
hereof such payment or distribution or security shall be received in trust for
the benefit of, and shall be paid over or delivered and transferred to, the
holders of the Senior Debt at the time outstanding in accordance with the
priorities then existing among such holders for application to the payment of
all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior
Debt in full. In the event of the failure of the Trustee or any Holder to
endorse or assign any such payment, distribution or security, each holder of
Senior Debt is hereby irrevocably authorized to endorse or assign the same.
No present or future holder of any Senior Debt shall be prejudiced in the
right to enforce subordination of the indebtedness evidenced by the Debt
Securities by any act or failure to act on the part of the Company. Nothing
contained herein shall impair, as between the Company and the Holders of Debt
Securities of each series, the obligation of the Company to pay to such Holders
the principal of (and premium, if any) and interest on such Debt Securities and
coupons appurtenant thereto or prevent the Trustee or the Holder from exercising
all rights, powers and remedies otherwise permitted by applicable law or
hereunder upon a default or Event of Default hereunder, all subject to the
rights of the holders of the Senior Debt to receive cash, securities or other
property otherwise payable or deliverable to the Holders.
Senior Debt shall not be deemed to have been paid in full unless the
holders thereof shall have received cash, securities or other property equal to
the amount of such Senior Debt then outstanding. Upon the payment in full of all
Senior Debt, the Holders of Debt Securities of each series and coupons
appurtenant thereto, if any, shall be subrogated to all rights of any holders of
Senior Debt to receive any further payments or distributions applicable to the
Senior Debt until the indebtedness evidenced by the Debt Securities of such
series and coupons appertaining thereto, if any, shall have been paid in full,
and such payments or distributions received by such Holders, by reason of such
subrogation, of cash, securities or other property which otherwise would be paid
or distributed to the holders of Senior Debt, shall, as between the Company and
its creditors other than the holders of Senior Debt, on the one hand, and such
Holders, on the other hand, be deemed to be a payment by the Company on account
of Senior Debt, and not on account of the Debt Securities of such series.
The Trustee and Holders will take such action (including, without
limitation, the delivery of this Indenture to an agent for the holders of Senior
Debt or consent to the filing of a financing statement with respect hereto) as
may, in the opinion of counsel designated by the holders of a majority in
principal amount of the Senior Debt at the time outstanding, be necessary or
appropriate to assure the effectiveness of the subordination effected by these
provisions.
The provisions of this Section 1801 shall not impair any rights, interests,
remedies or powers of any secured creditor of the Company in respect of any
security interest the creation of which is not prohibited by the provisions of
this Indenture.
The securing of any obligations of the Company, otherwise ranking on a
parity with the Debt Securities or ranking junior to the Debt Securities, shall
not be deemed to prevent such obligations from constituting, respectively,
obligations ranking on a parity with the Debt Securities or ranking junior to
the Debt Securities.
SECTION 1802. Trustee and Holders of Debt Securities May Rely on
Certificate of Liquidating Agent; Trustee May Require Further Evidence as to
Ownership of Senior Debt; Trustee Not Fiduciary to Holders of Senior Debt.
Upon any payment or distribution of assets of the Company referred to in
this Article Eighteen, the Trustee and the Holders shall be entitled to rely
upon an order or decree made by any court of competent jurisdiction in which
such dissolution or winding up or liquidation or reorganization or arrangement
proceedings are pending or upon a certificate of the trustee in bankruptcy,
receiver, assignee for the benefit of creditors or other Person making such
payment or distribution, delivered to the Trustee or to the Holders, for the
purpose of ascertaining the persons
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entitled to participate in such distribution, the holders of the Senior Debt and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Eighteen. In the absence of any such bankruptcy
trustee, receiver, assignee or other Person, the Trustee shall be entitled to
rely upon a written notice by a Person representing himself or herself to be a
holder of Senior Debt (or a trustee or representative on behalf of such holder)
as evidence that such Person is a holder of such Senior Debt (or is such a
trustee or representative). In the event that the Trustee determines, in good
faith, that further evidence is required with respect to the right of any Person
as a holder of Senior Debt to participate in any payments or distributions
pursuant to this Article Eighteen, the Trustee may request such person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Debt held by such Person, as to the extent to which such Person is
entitled to participate in such payment or distribution, and as to other facts
pertinent to the rights of such Person under this Article Eighteen, and if such
evidence is not furnished, the Trustee may offer any payment to such Person
pending judicial determination as to the right of such Person to receive
payment. The Trustee, however, shall not be deemed to owe any fiduciary duty to
the holders of Senior Debt.
SECTION 1803. Payment Permitted If No Default.
Nothing contained in this Article Eighteen or elsewhere in this Indenture,
or in any of the Debt Securities, shall prevent (a) the Company at any time,
except during the pendency of any dissolution, winding up, liquidation or
reorganization proceedings referred to in, or under the conditions described in,
Section 1801, from making payments of the principal of (or premium, if any) or
interest on the Debt Securities or (b) the application by the Trustee or any
Paying Agent of any moneys deposited with it hereunder to payments of the
principal of or interest on the Debt Securities, if, at the time of such
deposit, the Trustee or such Paying Agent, as the case may be, did not have the
written notice provided for in Section 1804 of any event prohibiting the making
of such deposit, or if, at the time of such deposit (whether or not in trust) by
the Company with the Trustee or any Paying Agent (other than the Company) such
payment would not have been prohibited by the provisions of this Article, and
the Trustee or any Paying Agent shall not be affected by any notice to the
contrary received by it on or after such date.
SECTION 1804. Trustee Not Charged with Knowledge of Prohibition.
Anything in this Article Eighteen or elsewhere in this Indenture contained
to the contrary notwithstanding, the Trustee shall not at any time be charged
with knowledge of the existence of any facts which would prohibit the making of
any payment of money to or by the Trustee and shall be entitled conclusively to
assume that no such facts exist and that no event specified in Section 1801 has
happened, until the Trustee shall have received an Officers' Certificate to that
effect or notice in writing to that effect signed by or on behalf of the holder
or holders, or their representatives, of Senior Debt who shall have been
certified by the Company or otherwise established to the reasonable satisfaction
of the Trustee to be such holder or holders or representatives or from any
trustee under any indenture pursuant to which such Senior Debt shall be
outstanding. The Company shall give prompt written notice to the Trustee and to
the Paying Agent of any facts which would prohibit the payment of money to or by
the Trustee or any Paying Agent.
SECTION 1805. Trustee to Effectuate Subordination.
Each Holder of Debt Securities or coupons by such Holder's acceptance
thereof authorizes and directs the Trustee in such Holder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination as
between such Holder and holders of Senior Debt as provided in this Article and
appoints the Trustee its attorney-in-fact for any and all such purposes.
SECTION 1806. Rights of Trustee as Holder of Senior Debt.
The Trustee shall be entitled to all the rights set forth in this Article
with respect to any Senior Debt which may at the time be held by it, to the same
extent as any other holder of Senior Debt provided that nothing in this Article
shall deprive the Trustee of any rights as such holder and provided further that
nothing in this Article shall apply to claims of, or payments to, the Trustee
under or pursuant to Section 607.
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SECTION 1807. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall in such case (unless the context shall otherwise
require) be construed as extending to and including such Paying Agent within its
meaning as fully for all intents and purposes as if the Paying Agent were named
in this Article in addition to or in place of the Trustee; provided, however,
that Sections 1804 and 1806 shall not apply to the Company or any Affiliate of
the Company if the Company or such Affiliate acts as Paying Agent.
SECTION 1808. Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Debt.
No right of any present or future holders of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior Debt may, at any time or from time
to time and in their absolute discretion, change the manner, place or terms of
payment, change or extend the time of payment of, or renew or alter, any such
Senior Debt, or amend or supplement any instrument pursuant to which any such
Senior Debt is issued or by which it may be secured, or release any security
therefor, or exercise or refrain from exercising any other of their rights
unders the Senior Debt including, without limitation, the waiver of default
thereunder, all without notice to or assent from the Holders of the Debt
Securities or the Trustee and without affecting the obligations of the Company,
the Trustee or the Holders of the Debt Securities under this Article.
ARTICLE NINETEEN
CONVERSION OF CONVERTIBLE SECURITIES
SECTION 1901. Applicability of Article.
If an Officers' Certificate or supplemental indenture pursuant to Section
301 provides that the Debt Securities of a series shall be Convertible
Securities, Debt Securities of such series shall be convertible in accordance
with their terms and (except as otherwise specified in such Officers'
Certificate or supplemental indenture) in accordance with this Article.
SECTION 1902. Right to Convert.
Subject to and upon compliance with the provisions of this Article, the
Holder of any Convertible Security shall have the right, at such Holder's
option, at any time prior to the close of business on the date set forth in the
Officers' Certificate delivered pursuant to Section 301 hereof (or if such
Convertible Security is called for redemption or submitted for repayment, then
in respect of such Convertible Security to and including but not after the close
of business on the Redemption or Repayment Date, as the case may be, unless the
Company shall default in the payment due) to convert the principal amount of any
such Convertible Security, or, in the case of any Convertible Security of a
denomination greater than $1,000, any portion of such principal which is $1,000
or an integral multiple thereof, into that number of fully paid and
nonassessable shares of Common Stock (as such shares shall then be constituted)
obtained by dividing the principal amount of the Convertible Security or portion
thereof surrendered for conversion by the Conversion Price, by surrender of the
Convertible Security so to be converted in whole or in part in the manner
provided in Section 1903. Such conversion shall be effected by the Company.
SECTION 1903. Exercise of Conversion Privilege; Delivery of Common Stock on
Conversion; No Adjustment for Interest or Dividends.
In order to exercise the conversion privilege, the Holder of any
Convertible Security to be converted in whole or in part shall surrender such
Convertible Security at an office or agency maintained by the Company pursuant
to Section 1002, accompanied by the funds, if any, required by the last
paragraph of this Section, together with written notice of conversion in the
form provided on the Convertible Securities, that the Holder elects to convert
such Convertible Security or the portion thereof specified in said notice. Such
notice shall also state the name or names
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(with address) in which the certificate or certificates for shares of Common
Stock which shall be deliverable on such conversion shall be registered, and
shall be accompanied by transfer taxes, if required pursuant to Section 1908.
Each Convertible Security surrendered for conversion shall, unless the shares
deliverable on conversion are to be registered in the same name as the
registration of such Convertible Security, be duly endorsed by, or accompanied
by instruments of transfer in form satisfactory to the Company duly executed by,
the Holder or such Holder's duly authorized attorney.
As promptly as practicable after the surrender of such Convertible Security
and the receipt of such notice and funds, if any, as aforesaid, the Company
shall deliver at such office or agency to such Holder, or on such Holder's
written order, a certificate or certificates for the number of full shares
deliverable upon the conversion of such Convertible Security or portion thereof
in accordance with the provisions of this Article and a check or cash in respect
of any fractional interest in respect of a share of Common Stock arising upon
such conversion as provided in Section 1904. In case any Convertible Security of
a denomination greater than $1,000 shall be surrendered for partial conversion
and subject to Section 302, the Company shall execute and the Trustee shall
authenticate and deliver to or upon the written order of the Holder of the
Convertible Security so surrendered, without charge to such Holder, a new
Convertible Security or Convertible Securities in authorized denominations in an
aggregate principal amount equal to the unconverted portion of the surrendered
Convertible Security.
Each conversion shall be deemed to have been effected on the date on which
such Convertible Security shall have been surrendered (accompanied by the funds,
if any, required by the last paragraph of this Section) and such notice shall
have been received by the Company, as aforesaid, and the person in whose name
any certificate or certificates for shares of Common Stock shall be registrable
upon such conversion shall be deemed to have become on said date the holder of
record of the shares represented thereby; provided however, that any such
surrender on any date when the stock transfer books of the Company shall be
closed shall constitute the person in whose name the certificates are to be
registered as the record holder thereof for all purposes on the next succeeding
day on which stock transfer books are open, but such conversion shall be at the
Conversion Price in effect on the date upon which such Convertible Security
shall have been surrendered.
Any Convertible Security or portion thereof surrendered for conversion
during the period from the close of business on the Regular Record Date for any
Interest Payment Date to the opening of business on such Interest Payment Date
shall (unless such Convertible Security or portion thereof being converted shall
have been called for redemption or submitted for repayment on a date in such
period) be accompanied by payment, in legal tender or other funds acceptable to
the Company, of an amount equal to the interest otherwise payable on such
Interest Payment Date on the principal amount being converted; provided however,
that no such payment need be made if there shall exist at the time of conversion
a default in the payment of interest on the Convertible Securities. An amount
equal to such payment shall be paid by the Company on such Interest Payment Date
to the Holder of such Convertible Security on such Regular Record Date,
provided, however, that if the Company shall default in the payment of interest
on such Interest Payment Date, such amount shall be paid to the person who made
such required payment. Except as provided above in this Section, no adjustment
shall be made for interest accrued on any Convertible Security converted or for
dividends on any shares issued upon the conversion of such Convertible Security
as provided in this Article.
SECTION 1904. Cash Payments in Lieu of Fractional Shares.
No fractional shares of Common Stock or scrip representing fractional
shares shall be delivered upon conversion of Convertible Securities. If more
than one Convertible Security shall be surrendered for conversion at one time by
the same Holder, the number of full shares which shall be deliverable upon
conversion shall be computed on the basis of the aggregate principal amount of
the Convertible Securities (or specified portions thereof to the extent
permitted hereby) so surrendered. If any fractional share of stock would be
deliverable upon the conversion of any Convertible Security or Convertible
Securities, the Company shall make an adjustment therefor in cash at the current
market value of such fractional share of stock. The market value of a share of
Common Stock shall be the Closing Price on the Business Day immediately
preceding the day on which the Convertible Securities (or specified portions
thereof) are deemed to have been convened.
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SECTION 1905. Conversion Price.
The Conversion Price shall be as specified in the form of Convertible
Security hereinabove set forth, subject to adjustment as provided in this
Article.
SECTION 1906. Adjustment to Conversion Price.
The Conversion Price shall be adjusted from time to time as follows:
(a) In case the Company shall (i) pay a dividend or make a distribution on
the Common Stock in shares of its capital stock (whether shares of Common Stock
or of capital stock of any other class), (ii) subdivide or reclassify its
outstanding Common Stock into a greater number of securities (including Common
Stock), or (iii) combine or reclassify its outstanding Common Stock into a
smaller number of securities (including Common Stock), the Conversion Price in
effect immediately prior thereto shall be adjusted so that the Holder of any
Convertible Security thereafter surrendered for conversion shall be entitled to
receive the number of shares of capital stock of the Company which such Holder
would have owned or have been entitled to receive after the happening of any of
the events described above had such Convertible Security been convened
immediately prior to the happening of such event. An adjustment made pursuant to
this subsection (a) shall become effective immediately after the record date in
the case of a dividend and shall become effective immediately after the
effective date in the case of a subdivision or combination. If, as a result of
an adjustment made pursuant to this subsection (a), the Holder of any
Convertible Security thereafter surrendered for conversion shall become entitled
to receive shares of two or more classes of capital stock of the Company, the
Board of Directors of the Company (whose determination shall be conclusive and
shall be described in a written statement filed with the Trustee and any
conversion agent) shall determine the allocation of the adjusted Conversion
Price between or among shares of such classes of capital stock.
In the event that at any time, as a result of an adjustment made pursuant
to this subsection (a) of this Section 1906, the Holder of any Convertible
Security thereafter converted shall become entitled to receive any shares or
other securities of the Company other than shares of Common Stock, thereafter
the number of such other shares so received upon conversion of any Convertible
Security shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
shares of Common Stock contained in this Section 1906, and other provisions of
this Article Nineteen with respect to the shares of Common Stock shall apply on
like terms to any such other shares or other securities.
(b) In case the Company shall fix a record date for the issuance of rights
or warrants to all holders of its Common Stock (or securities convertible into
Common Stock) entitling them (for a period expiring within 45 days after such
record date) to subscribe for or purchase Common Stock at a price per share (or
a conversion price per share) less than the current market price per share of
Common Stock (as defined in subsection (d) below) at such record date, the
Conversion Price in effect immediately prior thereto shall be adjusted so that
the same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to such record date by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding on such
record date plus the number of shares which the aggregate offering price of the
total number of shares so offered (or the aggregate initial conversion price of
the convertible securities so offered) would purchase at such current market
price, and of which the denominator shall be the number of shares of Common
Stock outstanding on such record date plus the number of additional shares of
Common Stock offered for subscription or purchase (or into which the convertible
securities so offered are initially convertible). Such adjustment shall be made
successively whenever such a record date is fixed, and shall become effective
immediately after such record date. In determining whether any rights or
warrants entitle the holders to subscribe for or purchase shares of Common Stock
at less than such current market price, and in determining the aggregate
offering price of such shares, there shall be taken into account any
consideration received by the Company for such rights or warrants, the value of
such consideration, if other than cash, to be determined by the Board of
Directors of the Company. Common Stock owned by or held for the account of the
Company or any majority owned subsidiary shall not be deemed outstanding for the
purpose of any adjustment required under this subsection (b).
<PAGE>
75
(c) In case the Company shall fix a record date for making a distribution
to all holders of its Common Stock evidences of its indebtedness or assets
(excluding regular quarterly or other periodic or recurring cash dividends or
distributions and cash dividends or distributions paid from retained earnings of
the Company or dividends or distributions referred to in subsection (a) above)
or rights or warrants to subscribe or purchase (excluding those referred to in
subsection (b) above), then in each such case the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to such record date by a fraction
of which the numerator shall be the current market price per share (as defined
in subsection (d) below) of the Common Stock on such record date less the then
fair market value (as determined by the Board of Directors of the Company whose
determination shall be conclusive, and described in a certificate filed with the
Trustee) of the portion of the assets or evidences of indebtedness so
distributed or of such rights or warrants applicable to one share of Common
Stock, and the denominator shall be the current market price per share (as
defined in subsection (d) below) of the Common Stock. Such adjustment shall be
made successively whenever such a record date is fixed and shall become
effective immediately after such record date. Notwithstanding the foregoing, in
the event that the Company shall distribute any rights or warrants to acquire
capital stock ("Rights") pursuant to this subsection (c), the distribution of
separate certificates representing such Rights subsequent to their initial
distribution (whether or not such distribution shall have occurred prior to the
date of the issuance of such Subordinated Capital Securities) shall be deemed to
be the distribution of such Rights for purposes of this subsection (c); provided
that the Company may, in lieu of making any adjustment pursuant to this
subsection (c) upon a distribution of separate certificates representing such
Rights, make proper provision so that each Holder of such Convertible Security
who converts such Convertible Security (or any portion thereof) (i) before the
record date for such distribution of separate certificates shall be entitled to
receive upon such conversion shares of Common Stock issued with Rights and (ii)
after such record date and prior to the expiration, redemption or termination of
such Rights shall be entitled to receive upon such conversion, in addition to
the shares of Common Stock issuable upon such conversion, the same number of
such Rights as would a holder of the number of shares of Common Stock that such
Convertible Security so converted would have entitled the holder thereof to
purchase in accordance with the terms and provisions of and applicable to the
rights if such Convertible Security were converted immediately prior to the
record date for such distribution. Common Stock owned by or held for the account
of the Company or any majority owned subsidiary shall not be deemed outstanding
for the purpose of any adjustment required under this subsection (c).
(d) For the purpose of any computation under subsection (b) and (c) above,
the current market price per share of Common Stock at any date shall be deemed
to be the average of the daily Closing Prices for the thirty consecutive days
(which are not legal holidays as defined in Section 113) commencing forty-five
days (which are not legal holidays as defined in Section 113) before the day in
question. The Closing Price for any day shall be (i) if the Common Stock is
listed or admitted for trading on any national securities exchange, the last
sale price (regular way), or the average of the closing bid and ask prices if no
sale occurred, of Common Stock on the principal securities exchange on which the
Common Stock is listed, (ii) if not listed as described in (i), the mean between
the closing high bid and low asked quotations of Common Stock in the National
Association of Securities Dealers, Inc., Automated Quotation System, or any
similar system or automated dissemination of quotations of securities prices
then in common use, if so quoted, or (iii) if not quoted as described in clause
(ii), the mean between the high bid and low asked quotations for Common Stock as
reported by the National Quotation Bureau Incorporated if at least two
securities dealers have inserted both bid and asked quotations for Common Stock
on at least 5 of the 10 preceding days. If none of the conditions set forth
above is met, the Closing Price of Common Stock on any day or the average of
such Closing Prices for any period shall be the fair market value of Common
Stock as determined by a member firm of the New York Stock Exchange, Inc.
selected by the Company.
(e) (i) Nothing contained herein shall be construed to require an
adjustment in the Conversion Price as a result of the issuance of Common Stock
pursuant to, or the granting or exercise of any rights under, the Company's
Shareholder Investment Plan or any successor plans providing for the purchase of
shares of Common Stock by the Company's shareholders or employees at a price not
less than 90% of the "average market price" during the "pricing period" as such
terms, or equivalent terms, are defined in, and as calculated pursuant to, such
plans from time to time.
<PAGE>
76
(ii) In addition, no adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason of this
subsection (e) (ii) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment; further provided, however, that
any adjustments which by reason of this subsection (e) (ii) are not otherwise
required to be made shall be made no later than 3 years after the date on which
occurs an event that requires an adjustment to be made or carried forward.
(iii) All calculations under this Article Nineteen shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case may be.
Anything in this Section 1906 to the contrary notwithstanding, the Company shall
be entitled to make such reductions in the Conversion Price, in addition to
those required by this Section 1906, as it in its discretion shall determine to
be advisable in order that any stock dividends, subdivision of shares,
distribution of rights to purchase stock or securities, or distribution of
securities convertible into or exchangeable for stock hereafter made by the
Company to its shareholders shall not be taxable.
(f) Whenever the Conversion Price is adjusted, as herein provided, the
Company shall promptly file with the Trustee and any conversion agent other than
the Trustee an Officers' Certificate setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment. Promptly after delivery of such certificate, the Company shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the date on which such adjustment becomes
effective and shall mail such notice of such adjustment of the Conversion Price
to the Holder of each Convertible Security at such Holder's last address
appearing on the Security Register provided for in Section 305 of this
Indenture.
(g) In any case in which this Section 1906 provides that an adjustment
shall become effective immediately after a record date for an event, the
Company may defer until the occurrence of such event (i) delivering to the
Holder of any Convertible Security converted after such record date and before
the occurrence of such event the additional shares of Common Stock deliverable
upon such conversion by reason of the adjustment required by such event over and
above the Common Stock deliverable upon such conversion before giving effect to
such adjustment and (ii) paying to such Holder any amount in cash in lieu of any
fraction pursuant to Section 1904, provided, however, that the Company shall
deliver to such Holder a due bill or other appropriate instrument evidencing
such Holder's rights to receive such additional shares, and such cash, upon the
occurrence of the event requiring such adjustment. If such event does not occur,
no adjustments shall be made pursuant to this Section 1906.
SECTION 1907. Effect of Reclassification. Consolidation, Merger or Sale.
If any of the following events occur, namely (i) any reclassification or
change of outstanding shares of Common Stock deliverable upon conversion of the
Convertible Securities (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination, but including any change in the shares of Common Stock into two
or more classes or series of securities), (ii) any consolidation or merger to
which the Company is a party (other than a consolidation or merger in which the
Company is the continuing corporation and which does not result in any
reclassification of, or change (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination) in, outstanding shares of its Common Stock) or (iii)
any sale or conveyance of the properties and assets of the Company as, or
substantially as, an entirety to any other corporation; then the Company, or
such successor or purchasing corporation, as the case may be, shall execute with
the Trustee a supplemental indenture (which shall conform to the Trust Indenture
Act as in force at the date of execution of such supplemental indenture and
comply with the provisions of Article Nine) providing that each Convertible
Security shall be convertible into the kind and amount of shares of stock and
other securities or property, including cash, receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of a number of shares of Common Stock deliverable upon conversion of such
Convertible Securities immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. Such supplemental indenture shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article. The Company shall
cause notice of the execution of such supplemental indenture to be mailed to
each holder of
<PAGE>
77
Convertible Securities, at his address appearing on the Security Register
provided for in Section 305 of this Indenture.
The above provisions of this Section shall similarly apply to successive
reclassifications, consolidations, mergers and sales.
SECTION 1908. Taxes on Shares Issued.
The delivery of stock certificates on conversions of Convertible Securities
shall be made without charge to the Holder converting a Convertible Security for
any tax in respect of the issue thereof. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the delivery of stock registered in any name other than of the Holder of any
Convertible Security converted, and the Company shall not be required to deliver
any such stock certificate unless and until the person or persons requesting the
delivery thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
SECTION 1909. Shares to be Fully Paid; Compliance with Governmental
Requirements; Listing of Common Stock.
The Company covenants that all shares of Common Stock which may be
delivered upon conversion of Convertible Securities will upon delivery be fully
paid and nonassessable by the Company and free from all taxes, liens and charges
with respect to the issue thereof.
The Company covenants that if any shares of Common Stock to be provided for
the purpose of conversion of Convertible Securities hereunder require
registration with or approval of any governmental authority under any Federal or
state law before such shares may be validly delivered upon conversion, the
Company will in good faith and as expeditiously as possible endeavor to secure
such registration or approval, as the case may be.
The Company further covenants that it will, if permitted by the rules of
the New York Stock Exchange, list and keep listed for so long as the Common
Stock shall be so listed on such exchange, upon official notice of issuance, all
Common Stock deliverable upon conversion of the Convertible Securities.
SECTION 1910. Responsibility of Trustee.
Neither the Trustee nor any authenticating agent nor any conversion agent
shall at any time be under any duty or responsibility to any Holder of
Convertible Securities to determine whether any facts exist which may require
any adjustment of the Conversion Price, or with respect to the nature or extent
of any such adjustment when made, or with respect to the method employed, or
herein or in any supplemental indenture provided to be employed, in making the
same. Neither the Trustee nor any authenticating agent nor any conversion agent
shall be accountable with respect to the validity or value (or the kind or
amount) of any shares of Common Stock, or of any securities or property, which
may at any time be delivered upon the conversion of any Convertible Security,
and neither the Trustee nor any authenticating agent nor any conversion agent
makes any representation with respect thereto. Subject to the provisions of
Section 601, neither the Trustee nor any authenticating agent nor any conversion
agent shall be responsible for any failure of the Company to deliver any shares
of Common Stock or stock certificates or other securities or property or cash
upon the surrender of any Convertible Security for the purpose of conversion or
for any failure of the Company to comply with any of the covenants of the
Company contained in this Article.
SECTION 1911. Notice to Holders Prior to Certain Actions.
In case:
(a) the Company shall declare a dividend (or any other distribution) on
the Common Stock (other than in cash out of its current or retained earnings);
or
(b) the Company shall authorize the granting to the holders of the Common
Stock of rights or warrants to subscribe for or purchase any share of any class
or any other rights or warrants, or
(c) of any reclassification or change of the Common Stock (other than a
subdivision or combination of its outstanding Common Stock, or a change in par
value, or from par value to no par value, or from no par value to par value) or,
of any consolidation or merger to which the Company is a party and for which
approval of any
<PAGE>
78
stockholders of the Corporation is required or of the sale or transfer of all or
substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding up
of the Company; the Company shall cause to be filed with the Trustee and the
Company shall cause to be mailed to each holder of Convertible Securities at his
address appearing on the Security Register, provided for in Section 305 of this
Indenture, as promptly as possible but in any event no less than fifteen days
prior to the applicable date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution or rights or warrants, or, if a record is not to be taken, the date
as of which the holders of Common Stock of record to be entitled to such
dividend, distribution or rights are to be determined, or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of such dividend, distribution,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up or any adjustment in the Conversion Price required by
this Article Nineteen.
SECTION 1912. Covenant to Reserve Shares.
The Company covenants that it will at all times reserve and keep available,
free from pre-emptive rights, out of its authorized but unissued Common Stock,
such number of shares of Common Stock as shall then be deliverable upon the
conversion of all outstanding Convertible Securities.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
BANKAMERICA CORPORATION
By __________________________________
(CORPORATE SEAL] Senior Vice President
Attest:
- ----------------------------------
Secretary
MANUFACTURERS HANOVER TRUST COMPANY OF
CALIFORNIA
By ___________________________________
[CORPORATE SEAL] Assistant Vice President
Attest:
- ----------------------------------
Assistant Secretary
<PAGE>
79
STATE OF CALIFORNIA }
} ss.
CITY AND COUNTY OF SAN FRANCISCO }
On this ____th day of January, 1992 before me, a notary public in and for
said State, personally appeared RICHARD LAIDERMAN, known to me to be a senior
vice president of BANKAMERICA CORPORATION, one of the corporations that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
[NOTARIAL SEAL] ____________________________________
NOTARY PUBLIC
In and for the State of California with principal
office in the City and County of San Francisco.
My Commission Expires
<PAGE>
80
STATE OF CALIFORNIA }
} ss.
CITY AND COUNTY OF SAN FRANCISCO }
On this __th day of January, 1992 before me, a notary public in and for
said State, personally appeared JAMES DEWHIRST, known to me to be an assistant
vice president of MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA, one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrumenL
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
[NOTARIAL SEAL] ____________________________________
NOTARY PUBLIC
In and for the State of California with principal
office in the City and County of San Francisco.
My Commission Expires
<PAGE>
A-1
EXHIBIT A-1
[Form of Certificate of Beneficial Ownership by a non-United States Person
or by Certain Other Persons]
Certificate
BANKAMERICA CORPORATION
[Insert title or sufficient description of
Debt Securities to be delivered]
Reference is hereby made to the Indenture dated as of November 1, 1991 (the
"Indenture") between BankAmerica Corporation and Manufacturers Hanover Trust
Company of California, as trustee (the "Trustee") covering the above-captioned
Debt Securities. This is to certify that as of the date hereof, _______________
principal amount of Debt Securities credited to you for our account (i) is owned
by persons that are not United States Persons, as defined below; (ii) is owned
by United States Persons that are (a) foreign branches of United States
financial institutions (as defined in U.S. Treasury Regulations Section
1.165-12(c)(1)(v)) ("financial institutions") purchasing for their own account
or for resale, or (b) United States Persons who acquired the Notes through
foreign branches of United States financial institutions and who hold the Notes
through such United States financial institutions on the date hereof (and in
either case (a) or (b), each such United States financial institution encloses
herewith a certificate in the form of Exhibit A-2 to the Indenture); or (iii) is
owned by United States or foreign financial institutions for purposes of resale
during the restricted period (as defined in U.S. Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), which United States or foreign financial institutions
described in clause (iii) above (whether or not also described in clause (i) or
(ii)) certify that they have not acquired the Notes for purposes of resale
directly or indirectly to a United States Person or to a person within the
United States or its possessions.
[Insert if certificate does not relate to an interest payment--We undertake
to advise you by tested telex followed by written confirmation if the above
statement as to beneficial ownership is not correct on the date of delivery of
the above-captioned Debt Securities in bearer form as to all of such Debt
Securities with respect to such of said Debt Securities as then appear in your
books as being held for our account.] We understand that this certificate is
required in connection with United States tax laws. We irrevocably authorize you
to produce this certificate or a copy hereof to any interested party in any
administrative or legal proceedings with respect to the matters covered by this
certificate. "United States Person" shall mean a citizen or resident of the
United States of America (including the District of Columbia), a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof or an estate or trust that is
subject to United States federal income taxation regardless of the source of its
income.
<PAGE>
A-2
[This certificate excepts and does not relate to ______________ principal
amount of Debt Securities credited to you for our account and to which we are
not now able to make the certification set forth above. We understand that
definitive Debt Securities cannot be delivered and interest cannot be paid until
we are able to so certify with respect to such principal amount of Debt
Securities.]*
Dated:___________________
[To be dated on or after
_________________ (the
date determined as provided in the
Indenture)]
[Name of Person Entitled to Receive Bearer Security]
---------------------------------------------------------
(Authorized Signatory)
Name:
---------------------------------------------------------
Title:
---------------------------------------------------------
- ----------
* Delete if inappropriate
<PAGE>
EXHIBIT A-2
A-3
[Form of Certificate of Status as a
Foreign Branch of a United States Flnancial Institution]
Certificate
BANKAMERICA CORPORATION
[Insert title or sufficient description of Debt Securities to be delivered]
Reference is hereby made to the Indenture dated as of November 1, 1991,
(the "Indenture"), between BankAmerica Corporation and Manufacturers Hanover
Trust Company of California, as trustee, relating to the offering of the
above-captioned Debt Securities (the "Debt Securities"). Unless herein defined,
terms used herein have the same meaning as given to them in the Indenture.
The undersigned represents that it is a branch located outside the United
States of a United States securities clearing organization, bank or other
financial institution (as defined in U.S. Treasury Regulations Section
1.165-12(c)(1)(v)) that holds customers' securities in the ordinary course of
its trade or business and agrees, and authorizes you to advise the issuer or the
issuer's agent, that it will comply with the requirements of Section
165j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986 and the
regulations thereunder and is not purchasing for resale directly or indirectly
to a United States Person or to a person within the United States or its
possessions. We undertake to advise you by tested telex followed by written
confirmation if the statement in the immediately preceding sentence is not
correct on the date of delivery of the above-captioned Debt Securities in bearer
form.
We understand that this certificate is required in connection with the
United States tax laws. We irrevocably authorize you to produce this certificate
or a copy hereof to any interested party in any administrative or legal
proceedings with respect to the matters covered by this certificate.
Dated:___________________
[To be dated on or after
_________________ (the
date determined as provided in the
Indenture)]
[Name of Person Entitled to Receive Bearer Security]
---------------------------------------------------------
(Authorized Signatory)
Name:
---------------------------------------------------------
Title:
---------------------------------------------------------
<PAGE>
B-1
EXHIBIT B
[Form of Certificate to be Given by Euroclear and Cedel S.A.
in Connection with the Exchange of All or a Portion of
a Temporary Global Security or to Obtain Interest Prior to Exchange]
Certificate
BANKAMERICA CORPORATION
[Insert title or sufficient description of Debt Securities to be delivered]
We refer to that portion, ___________________ of the Global Security
representing the above-captioned issue (which is herewith submitted to be
exchanged for definitive Debt Securities] * [for which we are seeking to obtain
payment of interest]* (the "Submitted Portion"). This is to certify, pursuant to
the Indenture dated as of November 1, 1991 (the "Indenture") between BankAmerica
Corporation and Manufacturers Hanover Trust Company of California, as trustee
(the "Trustee"), that we have received in writing, by tested telex or by
electronic transmission from member organizations with respect to each of the
persons appearing in our records as being entitled to a beneficial interest in
the Submitted Portion a Certificate of Beneficial Ownership by a Non-United
States Person or by Certain Other Persons, [and, in some cases, a Certificate of
Status as a Foreign Branch of a United States Financial Institution, authorizing
us to inform the issuer or the issuer's agent that it will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986 and the regulations thereunder]* substantially in the form of Exhibit A-l
[and A-2]* to the Indenture.
We hereby request that you deliver to the office of ___________________ in
___________________ definitive Bearer Securities in the denominations on the
attached Schedule A.
We further certify that as of the date hereof we have not received any
notification from any of the persons giving such certificates to the effect that
the statements made by them with respect to any part of the Submitted Portion
are no longer true and cannot be relied on as of the date hereof.
Dated: __________________________
[MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, BRUSSELS OFFICE, as
Operator of the Euroclear System]
[CEDEL S.A.]
By __________________________
- ----------
* Delete if inappropriate.
<PAGE>
BANKAMERICA CORPORATION
TO
CHEMICAL TRUST COMPANY OF CALIFORNIA
Trustee
-----------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of September 8, 1992
-----------------
Supplemental to Indenture
Dated as of November 1, 1991
<PAGE>
FIRST BUPPLEMENTAL INDENTURE
First Supplemental Indenture (the "Indenture"), dated as of September 8,
1992, between BankAmerica Corporation, a Delaware corporation (hereinafter
called the "Company"), having its principal office at Bank of America Center,
555 California Street, San Francisco, California 94104, and Chemical Trust
Company of California, a California corporation (hereinafter called "Trustee"),
having its principal corporate trust office at 50 California Street, San
Francisco, California 94111.
The Company has previously executed and delivered to the Trustee an
Indenture dated as of November 1, 1991 (hereinafter called the "Original
Indenture"), providing for the issuance from time to time of one or more series
of securities (herein called the "Debt Securities").
The Company desires and has requested the Trustee pursuant to Section
901(5) of the Original Indenture to join with it in the execution and delivery
of this Indenture in order to amend the Original Indenture in a First
Supplemental Indenture as set forth herein with respect solely to series of Debt
Securities created and issued on or after the date hereof.
Section 901(5) of the Original Indenture provides that a supplemental
indenture may be entered into by the Company and the Trustee without the consent
of any Holders to change or eliminate any of the provisions of the Original
Indenture, provided that any such change or elimination (a) shall become
effective only when there is no Debt Security Outstanding of any series created
prior to the execution of such supplemental indenture which is entitled to the
benefit of such provision or (b) shall not apply to any Debt Security
Outstanding.
All things necessary to make this Indenture a valid agreement of the
Company and the Trustee and a valid amendment to the Original Indenture have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Debt
Securities of any series created and issued on or after the date hereof by the
Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Debt Securities of any such series:
(a) that the definitions in Section 101 of "Controlled Subsidiary" and
"Voting Stock" are hereby deleted;
(b) that Subsections (1) and (2) of Section 501, "Events of Default", are
hereby amended to read in full as follows:
<PAGE>
"(1) the entry of a decree or order for relief in respect of the Company by
a court having jurisdiction in the promises in an involuntary case under the
Federal bankruptcy laws, as now or hereafter constituted, and the continuance of
any such decree or order unstayed and in effect for a period of 60 consecutive
days; or
(2) the commencement by the Company of a voluntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or the consent by the Company
to the entry of a decree or order for relief in an involuntary case under any
such law; or";
(c) that the first sentence of Section 902 is hereby amended to delete the
first proviso therein relating to changes in the required ownership set forth in
the definition of Controlled Subsidiary in Section 101;
(d) that Section 1005, "Limitation on Disposition of Voting Stock of, and
Merger and Sale of Assets by, the Bank" is hereby deleted; and
(e) that nothing in this Indenture shall: (i) apply to, or alter the rights
and remedies conferred by the Original Indenture upon, Debt Securities of any
series created and issued prior to the date hereof or (ii) affect the rights,
remedies and duties of the Trustee under the Original Indenture with respect to
such Debt Securities.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
BANKAMERICA CORPORATION
By:/S/ S.M. MAGUIRE
--------------------------
Vice President
[Corporate Seal]
Attest:
/S/ [ILLEGIBLE]
- --------------------------
Secretary
CHEMICAL TRUST COMPANY OF CALIFORNIA
By:/S/ JAMES DEWHIRST
--------------------------
Assistant Vice President
[Corporate Seal]
Attest:
/S/ [ILLEGIBLE]
- --------------------------
Asst. Secretary
<PAGE>
STATE OF CALIFORNIA )
) ss.
CITY AND COUNTY OF SAN FRANCISCO )
On this 14th day of September, 1992 before me, a notary public in and for
said State, personally appeared SHAUN M. MAGUIRE, known to me to be a vice
president of BANKAMERICA CORPORATION, one of the corporations that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Daysi Bermudez
----------------------------
[NOTARIAL SEAL] NOTARY PUBLIC
in and for the State of California with
principal office in the City and County
of San Francisco
My Commission Expires 10-7-94
<PAGE>
STATE OF CALIFORNIA )
) ss.
CITY AND COUNTY OF SAN FRANCISCO )
On this 14th day of September, 1992 before me, a notary public in and for
said State, personally appeared James Dewhirst, known to me to be an assistant
vice president of CHEMICAL TRUST COMPANY OF CALIFORNIA, one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Margaret Walsh
----------------------------
[NOTARIAL SEAL] NOTARY PUBLIC
in and for the State of California with
principal office in the City and County
of San Francisco
My Commission Expires 9/30/94
<PAGE>
- --------------------------------------------------------------------------------
BankAmerica Corporation
NationsBank (DE) Corporation
- --------------------------------------------------------------------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of September 15, 1998
Supplementing the Indenture, dated
as of November 1, 1991, between
BankAmerica Corporation and
Chase Manhattan Bank and Trust Company, National Association (successor to
Manufacturers Hanover Trust Company of California), as Trustee
- --------------------------------------------------------------------------------
<PAGE>
SECOND SUPPLEMENTAL INDENTURE, dated as of September 15, 1998 (the
"Second Supplemental Indenture"), among NationsBank (DE) Corporation, a Delaware
corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of
NationsBank Corporation, a North Carolina corporation ("NationsBank"),
BankAmerica Corporation, a Delaware corporation ("BankAmerica"), and Chase
Manhattan Bank and Trust Company, National Association (successor to
Manufacturers Hanover Trust Company of California), as Trustee (the "Trustee")
under the Indenture referred to herein;
WHEREAS, BankAmerica and the Trustee heretofore executed and delivered
an Indenture, dated as of November 1, 1991, as amended by a First Supplemental
Indenture dated as of September 8, 1992 (the "Indenture"); and
WHEREAS, pursuant to the Indenture BankAmerica issued and the Trustee
authenticated and delivered one or more series of BankAmerica's Notes (the
"Securities"); and
WHEREAS, NationsBank and BankAmerica have entered into the Agreement and
Plan of Reorganization, dated as of April 10, 1998, pursuant to which (i)
NationsBank will merge (the "Reincorporation Merger") with and into NationsBank
(DE), in accordance with the terms and conditions of the Plan of Reincorporation
Merger by and between NationsBank and NationsBank (DE), dated as of August 3,
1998, with NationsBank (DE) as the surviving corporation in the Reincorporation
Merger, and (ii) BankAmerica will thereafter merge (the "Merger," and together
with the Reincorporation Merger, the "Reorganization") with and into NationsBank
(DE), with NationsBank (DE) as the surviving corporation in the Merger; and
WHEREAS, the Reorganization is expected to be consummated on September
30, 1998; and
WHEREAS, Section 801 of the Indenture provides that in the case of the
Reorganization, NationsBank (DE) shall expressly assume by supplemental
indenture all the obligations under the Securities and the Indenture on the part
of BankAmerica to be performed or observed; and
WHEREAS, Section 1414 of the Indenture requires that, as a result of the
Reorganization, a supplemental indenture be entered into providing that the
Holder of each Security then Outstanding shall have the right thereafter to
receive securities of NationsBank (DE) on the Capital Exchange Date for such
Security with a Market Value equal to the principal amount of such Security; and
WHEREAS, Section 901(1) of the Indenture provides that BankAmerica and
the Trustee may amend the Indenture and the Securities without notice to or
consent of any Holders of the Securities in order to comply with Article Eight
of the Indenture; and
2
<PAGE>
WHEREAS, Section 901(9) of the Indenture provides that BankAmerica and
the Trustee may amend the Indenture and the Securities without notice to or
consent of any Holders of the Securities in order to make provisions with
respect to matters arising under the Indenture which shall not be inconsistent
with any provision in the Indenture, provided such provisions shall not
adversely affect the interests of the Holders of Securities of any series or any
related coupons in any material respect; and
WHEREAS, this Second Supplemental Indenture has been duly authorized by
all necessary corporate action on the part of each of NationsBank (DE) and
BankAmerica.
NOW, THEREFORE, NationsBank (DE), BankAmerica and the Trustee agree as
follows for the equal and ratable benefit of the Holders of the Securities:
ARTICLE I
ASSUMPTION BY SUCCESSOR CORPORATION
SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby
expressly assumes the due and punctual payment of the principal of (and premium,
if any) and interest (including all additional amounts, if any, payable pursuant
to Section 1006) on all the Securities and any related coupons and the
performance of every covenant of the Indenture on the part of BankAmerica to be
performed or observed.
SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this
Second Supplemental Indenture and agrees to perform the same under the terms and
conditions set forth in the Indenture.
SECTION 1.3. Rights of Certain Holders in the Event of an Exchange Date.
The Holder of each Security Outstanding on the date of the consummation of the
Merger shall have the right thereafter to receive securities of NationsBank (DE)
on the Capital Exchange Date for such Security with a Market Value equal to the
principal amount of such Security.
ARTICLE II
MISCELLANEOUS
SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur
of (i) the execution and delivery of this Second Supplemental Indenture by
NationsBank (DE), BankAmerica and the Trustee and (ii) the consummation of the
Reorganization, the Indenture shall be supplemented in accordance herewith, and
this Second Supplemental Indenture shall form a part of the Indenture for all
purposes, and every Holder of Securities heretofore or hereafter authenticated
and delivered under the Indenture shall be bound thereby.
3
<PAGE>
SECTION 2.2. Indenture Remains in Full Force and Effect. Except as
supplemented hereby, all provisions in the Indenture shall remain in full force
and effect.
SECTION 2.3. Indenture and Supplemental Indenture Construed Together.
This Second Supplemental Indenture is an indenture supplemental to and in
implementation of the Indenture, and the Indenture and this Second Supplemental
Indenture shall henceforth be read and construed together.
SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture
as supplemented by this Second Supplemental Indenture is in all respects
confirmed and preserved.
SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this
Second Supplemental Indenture limits, qualifies or conflicts with any provision
of the Trust Indenture Act ("TIA") that is required under the TIA to be part of
and govern any provision of this Second Supplemental Indenture, the provision of
the TIA shall control. If any provision of this Second Supplemental Indenture
modifies or excludes any provision of the TIA that may be so modified or
excluded, the provision of the TIA shall be deemed to apply to the Indenture as
so modified or to be excluded by this Second Supplemental Indenture, as the case
may be.
SECTION 2.6. Severability. In case any provision in this Second
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Indenture.
SECTION 2.8. Headings. The Article and Section headings of this Second
Supplemental Indenture have been inserted for convenience of reference only, are
not to be considered part of this Supplemental Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 2.9. Benefits of Second Supplemental Indenture, etc. Nothing in
this Second Supplemental Indenture or the Securities, express or implied, shall
give to any Person, other than the parties hereto and thereto and their
successors hereunder and thereunder and the Holders of the Securities, any
benefit of any legal or equitable right, remedy or claim under the Indenture,
this Second Supplemental Indenture or the Securities.
SECTION 2.10. Successors. All agreements of NationsBank (DE) in this
Second Supplemental Indenture shall bind its successors. All agreements of the
Trustee in this Second Supplemental Indenture shall bind its successors.
4
<PAGE>
SECTION 2.11. Trustee Not Responsible for Recitals. The recitals
contained herein shall be taken as the statements of BankAmerica and NationsBank
(DE), and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to, and shall not be responsible for, the
validity or sufficiency of this Second Supplemental Indenture.
SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In
entering into this Second Supplemental Indenture, the Trustee shall be entitled
to the benefit of every provision of the Indenture relating to the conduct or
affecting the liability or affording protection to the Trustee, whether or not
elsewhere herein so provided.
SECTION 2.13. Governing Law. This Second Supplemental Indenture shall be
governed by, and construed in accordance with, the laws of the jurisdiction
which govern the Indenture and its construction.
SECTION 2.14. Counterpart originals. The parties may sign any number of
copies of this Second Supplemental Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement.
5
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Second Supplemental
Indenture to be duly executed as of the date first written above.
NationsBank (DE) Corporation
By: /s/ John E. Mack
---------------------------------
Name: John E. Mack
Title: Senior Vice President
Attest:
/s/ James W. Kiser
- -----------------------------
Secretary
BankAmerica Corporation
By: /s/ S.M. Maguire
---------------------------------
Name: S.M. Maguire
Title: Senior Vice President and
Assistant Treasurer
Attest:
/s/ Cheryl Sorokin
- -----------------------------
Secretary
Chase Manhattan Bank and Trust Company,
National Association, as Trustee
By: /s/ James Nagy
---------------------------------
Name: James Nagy
Title: Assistant Vice President
Attest:
[illegible signature]
- -----------------------------
Assistant Vice President
6
[CONFORMED COPY]
================================================================================
BANKAMERICA CORPORATION
TO
BANKERS TRUST COMPANY OF CALIFORNIA, NATIONAL ASSOCIATION,
Trustee
----------
INDENTURE
Dated as of November 1, 1991
----------
Senior Debt Securities
================================================================================
<PAGE>
BANKAMERICA CORPORATION
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of November 1, 1991
Trust Indenture Act Section Indenture Section
ss. 310(a)(1) .............................................. 609
(a)(2) .............................................. 609
(a)(3) .............................................. Not Applicable
(a)(4) .............................................. Not Applicable
(a)(5) .............................................. 609
(b) ................................................. 608
610
(c) ................................................. Not Applicable
ss. 311(a) ................................................. 613(a)
(b) ................................................. 613(b)
(b)(2) .............................................. 703(a)(3)
703(b)
ss. 312(a) ................................................. 701
702(a)
(b) ................................................. 702(b)
(c) ................................................. 702(c)
ss. 313(a) ................................................. 703(a)
(b) ................................................. 703(b)
(c) ................................................. 703(c)
(d) ................................................. 703(d)
ss. 314(a) ................................................. 704, 1007
(b) ................................................. Not Applicable
(c)(1) .............................................. 102
(c)(2) .............................................. 102
(c)(3) .............................................. Not Applicable
(d) ................................................. Not Applicable
(e) ................................................. 102
ss. 315(a) ................................................. 601(a)
601(c)
(b) ................................................. 602
703(a)(7)
(c) ................................................. 601(b)
(d) ................................................. 601(c)
(d)(1) .............................................. 601(a)
(d)(2) .............................................. 601(c)(2)
(d)(3) .............................................. 601(c)(3)
(e) ................................................. 514
ss. 316(a) ................................................. 101
(a)(1)(A) ........................................... 104(h), 502
512
(a)(1)(B) ........................................... 104(h), 513
(a)(2) .............................................. Not Applicable
(b) ................................................. 508
(c) ................................................. 104(h)
ss.317 (a)(1) .............................................. 503
(a)(2) .............................................. 504
(b) ................................................. 1003
ss. 318(a) ................................................. 107
(c) ................................................. 107
- ----------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
<PAGE>
i
TABLE OF CONTENTS
<TABLE>
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PARTIES ................................................................................................... 1
RECITALS .................................................................................................. 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions:
Act ......................................................................................... 1
Affiliate; control; controlling; controlled ................................................. 1
Authorized Newspaper ........................................................................ 2
Bank ........................................................................................ 2
Bearer Security ............................................................................. 2
Board of Directors .......................................................................... 2
Board Resolution ............................................................................ 2
Business Day ................................................................................ 2
CEDEL; CEDEL S.A. ........................................................................... 2
Commission .................................................................................. 2
Company ..................................................................................... 2
Company Request; Company Order .............................................................. 2
Controlled Subsidiary ....................................................................... 2
Corporate Trust Office ...................................................................... 2
Corporation ................................................................................. 2
Coupon ...................................................................................... 2
Debt Securities ............................................................................. 2
Defaulted Interest .......................................................................... 2
Depositary .................................................................................. 2
Designated Currency ......................................................................... 3
Dollar ...................................................................................... 3
ECU ......................................................................................... 3
Eligible Instruments ........................................................................ 3
Euroclear ................................................................................... 3
European Communities ........................................................................ 3
Event of Default ............................................................................ 3
Exchange Rate ............................................................................... 3
Exchange Rate Agent ......................................................................... 3
Exchange Rate Office's Certificate .......................................................... 3
Foreign Currency ............................................................................ 3
Global Exchange Agent ....................................................................... 3
Global Exchange Date ........................................................................ 3
Global Security ............................................................................. 3
Holder ...................................................................................... 3
Indenture ................................................................................... 3
Interest .................................................................................... 3
Interest Payment Date ....................................................................... 3
Maturity .................................................................................... 4
Officers' Certificate ....................................................................... 4
Opinion of Counsel .......................................................................... 4
Original Issue Discount Security ............................................................ 4
</TABLE>
- ----------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
ii
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Outstanding ................................................................................. 4
Paying Agent ................................................................................ 4
Person ...................................................................................... 4
Place of Payment ............................................................................ 4
Predecessor Security ........................................................................ 4
Redemption Date ............................................................................. 5
Redemption Price ............................................................................ 5
Registered Security ......................................................................... 5
Regular Record Date ......................................................................... 5
Remarketing Entity .......................................................................... 5
Repayment Date .............................................................................. 5
Repayment Price ............................................................................. 5
Responsible Officer ......................................................................... 5
Security Register, Security Registrar ....................................................... 5
Special Record Date ......................................................................... 5
Stated Maturity ............................................................................. 5
Trust Indenture Act ......................................................................... 5
Trustee ..................................................................................... 5
United States ............................................................................... 5
United States Mien .......................................................................... 5
U.S. Government Obligations ................................................................. 5
Voting Stock ................................................................................ 6
SECTION 102. Compliance Certificates and Opinions ........................................................ 6
SECTION 103. Form of Documents Delivered to Trustee ...................................................... 6
SECTION 104. Acts of Holders ............................................................................. 6
SECTION 105. Notices, etc., to Trustee and Company ....................................................... 8
SECTION 106. Notice to Holders; Waiver ................................................................... 8
SECTION 107. Conflict with Trust Indenture Act ........................................................... 9
SECTION 108. Effect of Headings and Table of Contents .................................................... 9
SECTION 109. Successors and Assigns ...................................................................... 9
SECTION 110. Separability Clause ......................................................................... 9
SECTION 1ll. Benefits of Indenture ....................................................................... 9
SECTION 112. Governing Law ............................................................................... 9
SECTION 113. Legal Holidays .............................................................................. 9
SECTION 114. Counterparts ................................................................................ 9
ARTICLE TWO
DEBT SECURITY FORMS
SECTION 201. Fawn Generally .............................................................................. 9
SECTION 202. Form of Trustee's Certificate of Authentication ............................................. 10
SECTION 203. Debt Securities in Global Form .............................................................. 10
ARTICLE THREE
THE Den SECURITIES
SECTION 301. Amount Unlimited, Issuable in Series ........................................................ 11
SECTION 302. Denominations ............................................................................... 13
SECTION 303. Execution, Authentication, Delivery and Dating .............................................. 13
SECTION 304. Temporary Debt Securities ................................................................... 15
SECTION 305. Registration; Registration of Transfer and Exchange ......................................... 17
SECTION 306. Mutilated, Destroyed, Lost and Stolen Debt Securities ....................................... 19
</TABLE>
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SECTION 307. Payment of Interest; Interest Rights Preserved .............................................. 20
SECTION 308. Persons Deemed Owners ....................................................................... 21
SECTION 309. Cancellation ................................................................................ 21
SECTION 310. Computation of Interest ..................................................................... 22
SECTION 311. Certification by a Person Entitled to Delivery of a Bearer Security ......................... 22
SECTION 312. Judgments ................................................................................... 22
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture ..................................................... 22
SECTION 402. Application of Trust Money and Eligible Instruments ......................................... 23
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default ........................................................................... 23
SECTION 502. Acceleration of Maturity Rescission and Annulment ........................................... 25
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee ............................. 25
SECTION 504. Trustee May File Proofs of Claim ............................................................ 26
SECTION 505. Trustee May Enforce Claims without Possession of Debt Securities or Coupons ................. 26
SECTION 506. Application of Money Collected .............................................................. 26
SECTION 507. Limitation on Suits ......................................................................... 27
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest ................... 27
SECTION 509. Restoration of Rights and Remedies .......................................................... 27
SECTION 510. Rights and Remedies Cumulative .............................................................. 28
SECTION 511. Delay or Omission Not Waiver ................................................................ 28
SECTION 512. Control by Holders of Debt Securities ....................................................... 28
SECTION 513. Waiver of Past Defaults ..................................................................... 28
SECTION 514. Undertaking for Costs ....................................................................... 28
SECTION 515. Waiver of Stay or Extension Laws ............................................................ 29
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities ......................................................... 29
SECTION 602. Notice of Defaults .......................................................................... 30
SECTION 603. Certain Rights of Trustee ................................................................... 30
SECTION 604. Not Responsible for Recitals or Issuance of Debt Securities ................................. 31
SECTION 605. May Hold Debt Securities or Coupons ....................................................... 31
SECTION 606. Money Held in Trust ......................................................................... 31
SECTION 607. Compensation and Reimbursement .............................................................. 31
SECTION 608. Disqualification; Conflicting Interests ..................................................... 32
(a) Elimination of Conflicting Interest or Resignation .................................... 32
(b) Notice of Failure to Eliminate Conflicting Interest or Resign ......................... 32
(c) "Conflicting Interest" Defined ........................................................ 32
(d) Definitions of Certain Terms Used in this Section ..................................... 34
(e) Calculation of Percentages of Securities .............................................. 35
(f) Stay of Trustee's Duty to Resign ...................................................... 35
(g) Amendments to Trust Indenture Act ..................................................... 36
SECTION 609. Corporate Trustee Required; Eligibility ..................................................... 36
SECTION 610. Resignation and Removal, Appointment of Successor ........................................... 36
SECTION 611. Acceptance of Appointment by Successor ...................................................... 37
</TABLE>
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SECTION 612. Merger, Conversion, Consolidation or Succession to Business ................................. 38
SECTION 613. Preferential Collection of Claims Against Company ........................................... 38
(a) Segregation and Apportionment of Certain Collections by Trustee;
Certain Exceptions .................................................................. 38
(b) Certain Creditor Relationships Excluded from Segregation and
Apportionment ....................................................................... 40
(c) Definitions of Certain Terms Used in this Section ..................................... 40
SECTION 614. Authenticating Agent ........................................................................ 41
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders ................................... 42
SECTION 702. Preservation of Information; Communications to Holders ...................................... 42
SECTION 703. Reports by Trustee .......................................................................... 43
SECTION 704. Reports by Company .......................................................................... 44
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, etc., Only on Certain Terms ........................................ 45
SECTION 802. Successor Corporation Substituted ........................................................... 45
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures without Consent of Holders .......................................... 45
SECTION 902. Supplemental Indentures with Consent of Holders ............................................. 46
SECTION 903. Execution of Supplemental Indentures ........................................................ 47
SECTION 904. Effect of Supplemental Indentures ........................................................... 47
SECTION 905. Conformity with Trust Indenture Act ......................................................... 47
SECTION 906. Reference in Debt Securities to Supplemental Indentures ..................................... 47
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest .................................................. 48
SECTION 1002. Maintenance of Office or Agency ............................................................. 48
SECTION 1003. Money for Debt Securities Payments to Be Held in Trust ...................................... 49
SECTION 1004. Limitation on Mortgages and Liens ........................................................... 50
SECTION 1005. Limitation on Disposition of Voting Stock of, and Merger and Sale of Assets by, the Bank .... 50
SECTION 1006. Payment of Additional Amounts ............................................................... 50
SECTION 1007. Officers' Certificate as to Default ......................................................... 51
SECTION 1008. Waiver of Certain Covenants ................................................................. 51
ARTICLE ELEVEN
REDEMPTION OF DEBT SECURITIES
SECTION 1101. Applicability of Article .................................................................... 51
SECTION 1102. Election to Redeem; Notice to Trustee ....................................................... 51
SECTION 1103. Selection by Trustee of Debt Securities to Be Redeemed ...................................... 51
SECTION 1104. Notice of Redemption ........................................................................ 52
SECTION 1105. Deposit of Redemption Price ................................................................. 52
</TABLE>
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SECTION 1106. Debt Securities Payable on Redemption Date .................................................. 53
SECTION 1107. Debt Securities Redeemed in Part ............................................................ 53
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article .................................................................... 53
SECTION 1202. Satisfaction of Sinking Fund Payments with Debt Securities. ................................. 54
SECTION 1203. Redemption of Debt Securities for Sinking Fund .............................................. 54
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. Applicability of Article .................................................................... 54
SECTION 1302. Repayment of Debt Securities ................................................................ 54
SECTION 1303. Exercise of Option; Notice .................................................................. 54
SECTION 1304. Election of Repayment by Remarketing Entities ............................................... 55
SECTION 1305. Debt Securities Payable on the Repayment Date
ARTICLE FOURTEEN
MEETINGS OF HOLDERS OF DEBT SECURITIES
SECTION 1401. Purposes for Which Meetings May Be Called ................................................... 56
SECTION 1402. Call, Notice and Place of Meetings .......................................................... 56
SECTION 1403. Persons Entitled to Vote at Meetings ........................................................ 56
SECTION 1404. Quorum; Action .............................................................................. 56
SECTION 1405. Determination of Voting Rights; Conduct and Adjournment of Meetings ......................... 57
SECTION 1406. Counting Votes and Recording Action of Meetings ............................................. 58
ARTICLE FIFTEEN
DEFEASANCE
SECTION 1501. Termination of Company's Obligations ........................................................ 58
SECTION 1502. Repayment to Company ........................................................................ 59
SECTION 1503. Indemnity for Eligible Instruments .......................................................... 59
TESTIMONIUM ............................................................................................... 60
SIGNATURES AND SEALS ...................................................................................... 60
ACKNOWLEDGEMENTS .......................................................................................... 61
EXHIBIT A ................................................................................................. A-1
EXHIBIT B ................................................................................................. B-1
</TABLE>
<PAGE>
INDENTURE (the "Indenture") dated as of November 1, 1991, between
BANKAMERICA CORPORATION, a Delaware corporation (hereinafter called the
"Company"), having its principal place of business at Bank of America Center,
555 California Street, San Francisco, California 94104 and Bankers Trust Company
of California, National Association, a national banking association (hereinafter
called the "Trustee"), having its Corporate Trust Office at 50 Fremont Street,
San Francisco, California 94105.
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its debentures,
notes, bonds and other evidences of indebtedness (herein called the "Debt
Securities").
All things necessary have been done to make this Indenture a valid
agreement of the Company, in accordance with its terms.
Now, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Debt
Securities of any series created and issued on or after the date hereof by the
Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of such Debt Securities or of any such
series, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act or by Commission rule or regulation under the Trust Indenture
Act, either directly or by reference therein, as in force at the date as of
which this instrument was executed, except as provided in Section 905, have
the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted in the United States at the date of such
computation; and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act" when used with respect to any Holder has the meaning specified in
Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
<PAGE>
2
"Authorized Newspaper" means a newspaper in an official language of the
country of publication or in the English language customarily published on each
Business Day, whether or not published on Saturdays, Sundays or holidays, and of
general circulation in the place in connection with which the term is used or in
the financial community of such place. Where successive publications are
required to be made in Authorized Newspapers, the successive publications may be
made in the same or in different newspapers in the same city meeting the
foregoing requirements and in each case on any Business Day.
"Bank" means Bank of America National Trust and Savings Association, a
national banking association, and any successors to any substantial part of the
present business thereof.
"Bearer Security" means any Debt Security established pursuant to Section
201 which is payable to bearer including, without limitation, unless the context
otherwise indicates, a Debt Security in global bearer form.
"Board of Directors" means either the board of directors of the Company, or
the executive or any other committee of that board duly authorized to act in
respect hereof.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, means any
day which is not a Saturday or Sunday and which is not a legal holiday or a day
on which banking institutions or trust companies in that Place of Payment are
authorized or obligated by law or executive order to close.
"CEDEL" or "CEDEL S.A." means Centrale de Livraison de Valeurs Mobilieres
S.A.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties on such date.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" and "Company Order" mean, respectively, a written request
or order signed in the name of the Company by the Chairman of the Board, the
Chairman of the Executive Committee of the Board, a Vice Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, a Vice
Chairman or a Vice President (any reference to a Vice President of the Company
herein shall be deemed to include any Vice President of the Company whether or
not designated by a number or word or words added before or after the title
"Vice President"), and by the Treasurer, an Assistant Treasurer, Secretary or an
Assistant Secretary of the Company, and delivered to the Trustee.
"Controlled Subsidiary" means any corporation more than 80% of the
outstanding shares of Voting Stock, except for directors' qualifying shares, of
which shall at the time be owned directly by the Company.
"Corporate Trust Office" means the principal corporate trust office of the
Trustee at which at any particular time its corporate trust business shall be
administered.
The term "corporation" includes corporations, associations, companies and
business trusts.
The term "coupon" means any interest coupon appertaining to a Bearer
Security.
"Debt Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Debt Securities authenticated and
delivered under this Indenture.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means, respect to the Debt Securities of any series issuable
or issued in the form of a Global Security, the Person designated as Depositary
by the Company pursuant to Section 301 until a successor Depositary shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Depositary" shall
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3
mean or include each Person who is then a Depositary hereunder, and if at any
time there is more than one such Person, "Depositary" as used with respect to
the Debt Securities of any such series shall mean the Depositary with respect to
the Debt Securities of that series.
"Designated Currency" has the meaning specified in Section 312.
"Dollar" or "$" means the 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.
"ECU" means the European Currency Unit as defined and revised from time to
time by the Council of the European Communities.
"Eligible Instruments" means monetary assets, money market instruments and
securities that are payable in Dollars only and essentially risk free as to
collection of principal and interest, including U.S. Government Obligations.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
Office, as operator of the Euroclear System.
"European Communities" means the European Economic Community, the European
Coal and Steel Community and the European Atomic Energy Community.
"Event of Default" has the meaning specified in Section 501.
"Exchange Rate" shall have the meaning specified as contemplated in Section
301.
"Exchange Rate Agent" shall have the meaning specified as contemplated in
Section 301.
"Exchange Rate Officer's Certificate", with respect to any date for the
payment of principal of (and premium, if any) and interest on any series of Debt
Securities, means a certificate setting forth the applicable Exchange Rate and
the amounts payable in Dollars and Foreign Currencies in respect of the
principal of (and premium, if any) and interest on Debt Securities denominated
in ECU, and other composite currency or Foreign Currency, and signed by the
Chairman of the Board, the Chairman of the Executive Committee of the Board, a
Vice Chairman of the Board, the President, the Treasurer or any Assistant
Treasurer of the Company or the Exchange Rate Agent appointed pursuant to
Section 301 and delivered to the Trustee.
"Foreign Currency" means a currency issued by the government of any country
other than the United States of America.
"Global Exchange Agent" has the meaning specified in Section 304.
"Global Exchange Date" has the meaning specified in Section 304.
"Global Security" means a Debt Security issued to evidence all or a part of
a series of Debt Securities in accordance with Section 303.
"Holder", with respect to a Registered Security, means a Person in whose
name such Registered Security is registered in the Security Register and, with
respect to a Bearer Security or a coupon, means the bearer thereof.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented, amended or restated by or pursuant to one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof and, unless the context otherwise requires, shall include the
terms of a particular series of Debt Securities established as contemplated by
Section 301.
The term "interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.
"Interest Payment Date", with respect to any Debt Security, means the
Stated Maturity of an instalment of interest on such Debt Security.
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4
"Maturity", when used with respect to any Debt Security, means the date on
which the principal of such Debt Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption, repayment at the option of the Holder or
otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the Chairman of the Executive Committee of the Board, a Vice Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, a Vice Chairman or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered
to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may (except as
otherwise expressly provided in this Indenture) be counsel for the Company, or
who may be other counsel acceptable to the Trustee, which is delivered to the
Trustee.
"Original Issue Discount Security" means any Debt Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Debt Securities means, as of the
date of determination, all Debt Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Debt Securities theretofore cancelled by the Trustee or delivered
to the Trustee for cancellation;
(ii) Debt Securities or portions thereof for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Company) in trust or
set aside and segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of such Debt Securities and any
coupons appertaining thereto; provided, however, that if such Debt
Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made; and
(iii) Debt Securities in exchange for or in lieu of which other Debt
Securities have been authenticated and delivered, or which have been paid,
pursuant to this Indenture;
provided, however, that in determining whether the Holders of the requisite
principal amount of Debt Securities Outstanding have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Debt Securities
owned by the Company or any other obligor upon the Debt Securities or any
Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon such request, demand, authorization,
direction, notice, consent or waiver, only Debt Securities which the Trustee
knows to be so owned shall be so disregarded. Debt Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Debt Securities and that the pledgee is not the Company or
any other obligor upon the Debt Securities or any Affiliate of the Company or of
such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Debt Securities on behalf
of the Company.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Debt Securities of any
series means any place where the principal of (and premium, if any) and interest
on the Debt Securities of that series are payable as specified as contemplated
by Section 301.
"Predecessor Security" of any particular Debt Security means every previous
Debt Security evidencing all or a portion of the same debt as that evidenced by
such particular Debt Security; and, for the purposes of this definition, any
Debt Security authenticated and delivered under Section 306 in lieu of a lost,
destroyed or stolen Debt Security shall be deemed to evidence the same debt as
the lost, destroyed or stolen Debt Security.
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5
"Redemption Date", when used with respect to any Debt Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Debt Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registered Security" means any Debt Security in the form of Registered
Securities established pursuant to Section 201 which is registered in the
Security Register.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Registered Securities of any series means the date specified for that
purpose as contemplated by Section 301.
"Remarketing Entity", when used with respect to Debt Securities of any
series which are repayable at the option of the Holders thereof before their
Stated Maturity, means any person designated by the Company to purchase any such
Debt Securities.
"Repayment Date", when used with respect to any Debt Security to be repaid
upon exercise of option for repayment by the Holder, means the date fixed for
such repayment pursuant to this Indenture.
"Repayment Price", when used with respect to any Debt Security to be repaid
upon exercise of option for repayment by the Holder, means the price at which it
is to be repaid pursuant to this Indenture.
"Responsible Officer", when used with respect to the Trustee means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president (whether or not
designated by a number or a word or words added before or after the title "vice
president"), the secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any trust officer or
assistant trust officer, the controller or any assistant controller or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Debt Security or any
instalment of interest thereon, means the date specified in such Debt Security
or a coupon representing such instalment of interest as the fixed date on which
the principal of such Debt Security or such instalment of interest is due and
payable.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed, except as provided in Section
905.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Debt Securities
of any series shall mean the Trustee with respect to Debt Securities of that
series.
"United States" means the United States of America (including the District
of Columbia) and its possessions.
"United States Alien" means any Person who, for United States Federal
income tax purposes, is a foreign corporation, a non-resident alien individual,
a non-resident alien fiduciary of a foreign estate or trust, or a foreign
partnership one or more of the members of which is, for United States Federal
income tax purposes, a foreign corporation, a non-resident alien individual or a
non-resident alien fiduciary of a foreign estate or trust.
"U.S. Government Obligations" means direct obligations of the United States
for the payment of which its full faith and credit is pledged, or obligations of
a person controlled or supervised by and acting as an agency or
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6
instrumentality of the United States the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States.
"Voting Stock", as applied to the stock (or the equivalent thereof) of any
corporation, means stock (or the equivalent thereof) of any class or classes,
however designated, having ordinary voting power for the election of a majority
of the directors of such corporation, other than stock (or such equivalent)
having such power only by reason of the happening of a contingency.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture (other than the delivery of any
Debt Security to the Trustee for authentication pursuant to Section 303), the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than certificates provided
pursuant to Section 704(4)) shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he or
she has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his or her certificate or opinion is
based is erroneous. Any such certificate or Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters is erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of
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7
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing. If Debt Securities of a series are issuable in whole or in
part as Bearer Securities, any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to be given
or taken by Holders may, alternatively, be embodied in and evidenced by the
record of Holders of Debt Securities voting in favor thereof, either in person
or by proxies duly appointed in writing, at any meeting of Holders of Debt
Securities duly called and held in accordance with the provisions of Article
Fourteen, or a combination of such instruments and any such record. Except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments or record or both are delivered to the Trustee,
and, where it is hereby expressly required, to the Company. Such instrument or
instruments and any such record (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments and so voting at any such meeting. Proof of
execution of any such instrument or of a writing appointing any such agent, or
the holding by any Person of a Debt Security, shall be sufficient for any
purpose of this Indenture and (subject to Section 601) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section. The
record of any meeting of Holders of Debt Securities shall be proved in the
manner provided in Section 1406.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved in any manner which the Trustee deems sufficient.
(c) The ownership of Registered Securities shall be proved by the Security
Register.
(d) The principal amount and serial numbers of Bearer Securities held by
any Person, and the date of holding the same, may be proved by the production of
such Bearer Securities or by a certificate executed, as depositary, by any trust
company, bank, banker or other depositary, wherever situated, if such
certificate shall be deemed by the Trustee to be satisfactory, showing that at
the date therein mentioned such Person had on deposit with such depositary, or
exhibited to it, the Bearer Securities in the amount and with the serial numbers
therein described; or such facts may be proved by the certificate or affidavit
of the Person holding such Bearer Securities, if such certificate or affidavit
is deemed by the Trustee to be satisfactory. The Trustee and the Company may
assume that such ownership of any Bearer Security continues until (1) another
certificate or affidavit bearing a later date issued in respect of the same
Bearer Security is produced, or (2) such Bearer Security is produced to the
Trustee by some other Person, or (3) such Bearer Security is surrendered in
exchange for a Registered Security, or (4) such Bearer Security is no longer
Outstanding.
(e) The fact and date of execution of any such instrument or writing, the
authority of the Person executing the same and the principal amount and serial
numbers of Bearer Securities held by the Person so executing such instrument or
writing and the date of holding the same may also be proved in any other manner
which the Trustee deems sufficient; and the Trustee may in any instance require
further proof with respect to any of the matters referred to in this Section.
(f) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Debt Security shall bind every future holder
of the same Debt Security and the Holder of every Debt Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, suffered or omitted by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such Debt
Security.
(g) For purposes of determining the principal amount of Outstanding Debt
Securities of any series the Holders of which are required, requested or
permitted to give any request, demand, authorization, direction, notice,
consent, waiver or take any other Act under this Indenture, (i) each Original
Issue Discount Security shall be deemed to have the principal amount determined
by the Trustee that could be declared to be due and payable pursuant to the
terms of such Original Issue Discount Security as of the date there is delivered
to the Trustee and, where it is hereby expressly required, to the Company, such
Act by Holders of the required aggregate principal amount of the Outstanding
Debt Securities of such series and (ii) each Debt Security denominated in a
Foreign Currency or composite currency shall be deemed to have the principal
amount determined by the Exchange Rate Agent by converting the principal amount
of such Debt Security in the currency in which such Debt Security is denominated
into Dollars at the Exchange Rate as of the date such Act is delivered to the
Trustee and, where it is hereby expressly required, to the Company, by Holders
of the required aggregate principal amount of the Outstanding Debt
<PAGE>
8
Securities of such series (or, if there is no such rate on such date, such rate
on the date determined as specified as contemplated in Section 301).
(h) The Company may set a record date for purposes of determining the
identity of Holders of Debt Securities of any series entitled to vote or consent
to any action by vote or consent authorized or permitted by Section 512 or
Section 513. Such record date shall be the later of 30 days prior to the first
solicitation of such consent or the date of the most recent list of Holders of
such Debt Securities furnished to the Trustee pursuant to Section 701 prior to
such solicitation.
SECTION 105. Notices, etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of Holders or other document provided or permitted by this Indenture
to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided),
if made, given, furnished or filed in writing to or with the Trustee at its
Corporate Trust Office, Attention: Corporate Trust Department, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to the attention of its Secretary at the address of its principal
office specified in the first paragraph of this instrument or at any other
address previously furnished in writing to the Trustee by the Company.
SECTION 106. Notice to Holders: Waiver.
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of any event, (1) such notice shall be
sufficiently given to Holders of Registered Securities if in writing and mailed,
first-class postage prepaid, to each Holder of a Registered Security affected by
such event, at such Holder's address as it appears in the Security Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice; and (2) such notice shall be sufficiently given
to Holders of Bearer Securities by publication thereof in an Authorized
Newspaper in the City of New York and, if the Debt Securities of such series are
then listed on The International Stock Exchange of the United Kingdom and the
Republic of Ireland and such stock exchange shall so require, in London, and, if
the Debt Securities of such series are then listed on the Luxembourg Stock
Exchange and such stock exchange shall so require, in Luxembourg and, if the
Debt Securities of such series are then listed on any other stock exchange
outside the United States and such stock exchange shall so require, in any other
required city outside the United States or, if not practicable, in Europe on a
Business Day at least twice, the first such publication to be not earlier than
the earliest date and not later than the latest date prescribed for the giving
of such notice.
In case, by reason of the suspension of or irregularities in regular mail
service or for any other reason, it shall be impossible or impracticable to mail
notice of any event to Holders when said notice is required to be given pursuant
to any provision of this Indenture or of the Debt Securities, then any manner of
giving such notice as shall be satisfactory to the Trustee shall be deemed to be
a sufficient giving of such notice. In any case where notice to Holders of
Registered Securities is to be given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder of a
Registered Security shall affect the sufficiency of such notice with respect to
other Holders of Registered Securities or the sufficiency of any notice by
publication to Holders of Bearer Securities given as provided above.
In case, by reason of the suspension of publication of any Authorized
Newspaper, or by reason of any other cause, it shall be impossible or
impracticable to make publication of any notice to Holders of Bearer Securities
as provided above, then such method of publication or notification as shall be
made with the approval of the Trustee shall constitute a sufficient publication
of such notice. Neither failure to give notice by publication to Holders of
Bearer Securities as provided above, nor any defect in any notice so published,
shall affect the sufficiency of any notice mailed to Holders of Registered
Securities as provided above.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such
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9
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
Any request, demand, authorization, direction, notice, consent, election,
waiver or other Act required or permitted under this Indenture shall be in the
English language, except that any published notice may be in an official
language of the country of publication.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the Trust Indenture Act, such required provision shall
control.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Debt Securities or
coupons shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Debt Securities or coupons, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, any Paying Agent and the Holders, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Debt Securities and coupons shall be governed by and
construed in accordance with the laws of the State of California.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, Repayment
Date or Stated Maturity of any Debt Security shall not be a Business Day at any
Place of Payment, then (notwithstanding any other provision of this Indenture or
of the Debt Securities or coupons) payment of interest or principal (and
premium, if any) need not be made at such Place of Payment on such date, but may
be made on the next succeeding Business Day at such Place of Payment with the
same force and effect as if made on the Interest Payment Date, Redemption Date,
Repayment Date or Stated Maturity, and no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date, Repayment Date or
Stated Maturity, as the case may be.
SECTION 114. Counterparts.
This Indenture may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same Indenture.
ARTICLE TWO
DEBT SECURITY FORMS
SECTION 201. Forms Generally.
The Registered Securities, if any, and the Bearer Securities and related
coupons, if any, of each series shall be in substantially the form (including
temporary or permanent global form) as shall be established in or pursuant to a
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10
Board Resolution or in one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon, as may be required to comply with the rules of any securities exchange,
or as may, consistently herewith, be determined by the officers executing such
Debt Securities or coupons, as evidenced by their signatures on the Debt
Securities or coupons. If the form of Debt Securities of any series or coupons
(including any such Global Security) is established by action taken pursuant to
a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 303 or the authentication and delivery of such Debt
Securities or coupons.
Unless otherwise specified as contemplated by Section 301, Debt Securities
in bearer form other than Debt Securities in temporary or permanent global form
shall have coupons attached.
The definitive Debt Securities and coupons, if any, shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Debt Securities,
as evidenced by the execution of such Debt Securities and coupons.
SECTION 202. Form of Trustee's Certificate of Authentication.
This is one of the Debt Securities, of the series designated herein,
described in the within-mentioned Indenture.
BANKERS TRUST COMPANY OF CALIFORNIA,
NATIONAL ASSOCIATION
as Trustee
By _________________________________
Authorized Officer
SECTION 203. Debt Securities in Global Form.
If Debt Securities of a series are issuable in whole or in part in global
form, as specified as contemplated by Section 301, then, notwithstanding clause
(10) of Section 301 and the provisions of Section 302, such Global Security
shall represent such of the outstanding Debt Securities of such series as shall
be specified therein and may provide that it shall represent the aggregate
amount of Outstanding Debt Securities from time to time endorsed thereon and
that the aggregate amount of Outstanding Debt Securities represented thereby may
from time to time be reduced to reflect exchanges. Any endorsement of a Global
Security to reflect the amount, or any increase or decrease in the amount, of
Outstanding Debt Securities represented thereby shall be made in such manner and
upon instructions given by such Person or Persons as shall be specified therein
or in the Company Order to be delivered to the Trustee pursuant to Section 303
or Section 304.
The provisions of the last sentence of Section 303(g) shall apply to any
Debt Securities represented by a Debt Security in global form if such Debt
Security was never issued and sold by the Company and the Company delivers to
the Trustee the Debt Security in global form together with written instructions
(which need not comply with Section 102 and need not be accompanied by an
Opinion of Counsel) with regard to the reduction in the principal amount of Debt
Securities represented thereby, together with the written statement contemplated
by the last sentence of Section 303(g).
Global Securities may be issued in either registered or bearer form and in
either temporary or permanent form.
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11
ARTICLE THREE
THE DEBT SECURITIES
SECTION 301. Amount Unlimited: Issuable in Series.
The aggregate principal amount of Debt Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Debt Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of Debt Securities of any series:
(1) the title of the Debt Securities of the series (which shall
distinguish the Debt Securities of the series from all other Debt
Securities);
(2) the limit, if any, upon the aggregate principal amount of the Debt
Securities of the series which may be authenticated and delivered under
this Indenture (except for Debt Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Debt
Securities of the series pursuant to Section 304, 305, 306, 906, 1107 or
1303 and except for any Debt Securities which, pursuant to Section 303, are
deemed never to have been authenticated and delivered hereunder);
(3) the date or dates on which the principal and premium, if any, of
the Debt Securities of the series are payable;
(4) the rate or rates, if any, at which the Debt Securities of the
series shall bear interest, or the method or methods by which such rate or
rates may be determined, the date or dates from which such interest shall
accrue, the Interest Payment Dates on which such interest shall be payable,
the Regular Record Date for the interest payable on any Registered Security
on any Interest Payment Date and the circumstances, if any, in which the
Company may defer interest payments;
(5) the place or places where, subject to the provisions of Section
1002, the principal of (and premium, if any) and interest on Debt
Securities of the series shall be payable, any Registered Securities of the
series may be surrendered for registration of transfer, Debt Securities of
the series may be surrendered for exchange and notices and demands to or
upon the Company in respect of the Debt Securities of the series and this
Indenture may be served and where notices to Holders pursuant to Section
106 will be published;
(6) if applicable, the period or periods within which or the date or
dates on which, the price or prices at which and the terms and conditions
upon which Debt Securities of the series may be redeemed, in whole or in
part, at the option of the Company,
(7) the obligation, if any, of the Company to redeem, repay or
purchase Debt Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the period or
periods within which, the price or prices at which and the terms and
conditions upon which Debt Securities of the series shall be redeemed,
repaid or purchased, in whole or in part, pursuant to such obligation;
(8) whether Debt Securities of the series are to be issuable as
Registered Securities, Bearer Securities or both, whether Debt Securities
of the series are to be issuable with or without coupons or both and, in
the case of Bearer Securities, the date as of which such Bearer Securities
shall be dated if other than the date of original issuance of the first
Debt Security of such series of like tenor and term to be issued;
(9) whether the Debt Securities of the series shall be issued in whole
or in part in the form of a Global Security or Securities and, in such
case, the Depositary and Global Exchange Agent for such Global Security or
Securities, whether such global form shall be permanent or temporary and,
if applicable, the Global Exchange Date;
(10) if Debt Securities of the series are to be issuable initially in
the form of a temporary Global Security, the circumstances under which the
temporary Global Security can be exchanged for definitive Debt Securities
and whether the definitive Debt Securities will be Registered and/or Bearer
Securities and will be in global form and whether interest in respect of
any portion of such Global Security payable in respect of an Interest
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12
Payment Date prior to the Global Exchange Date shall be paid to any
clearing organization with respect to a portion of such Global Security
held for its account and, in such event, the terms and conditions
(including any certification requirements) upon which any such interest
payment received by a clearing organization will be credited to the Persons
entitled to interest payable on such Interest Payment Date if other than as
provided in this Article Three;
(11) whether, and under what conditions, additional amounts will be
payable to Holders of Debt Securities of the series pursuant to Section
1006;
(12) the denominations in which any Registered Securities of the
series shall be issuable, if other than denominations of $1,000 and any
integral multiple thereof, and the denominations in which any Bearer
Securities of such series, shall be issuable, if other than the
denomination of $5,000;
(13) if other than the principal amount thereof, the portion of the
principal amount of Debt Securities of the series which shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to
Section 502;
(14) the currency or currencies of denomination of the Debt Securities
of any series, which may be in Dollars, any Foreign Currency or any
composite currency, including but not limited to the ECU, and, if any such
currency of denomination is a composite currency other than the ECU, the
agency or organization, if any, responsible for overseeing such composite
currency;
(15) the currency or currencies in which payment of the principal of
(and premium, if any) and interest on the Debt Securities will be made, the
currency or currencies, if any, in which payment of the principal of (and
premium, if any) or the interest on Registered Securities, at the election
of each of the Holders thereof, may also be payable and the periods within
which and the terms and conditions upon which such election is to be made
and the Exchange Rate and Exchange Rate Agent;
(16) if the amount of payments of principal of (and premium, if any)
or interest on the Debt Securities of the series may be determined with
reference to an index based on a currency or currencies other than that in
which the Debt Securities are denominated or designated to be payable, the
manner in which such amounts shall be determined;
(17) if payments of principal of (and premium, if any) or interest on
the Debt Securities of the series are to be made in a Foreign Currency
other than the currency in which such Debt Securities are denominated, the
manner in which the Exchange Rate with respect to such payments shall be
determined or if the Exchange Rate is to be determined otherwise than as
provided in Section 101;
(18) any Events of Default with respect to Debt Securities of such
series, if not set forth herein;
(19) the terms and conditions, if any, pursuant to which the Company's
obligations under this Indenture may be terminated through the deposit of
money or Eligible Instruments as provided in Articles Four and Fifteen;
(20) the Person or Persons who shall be Security Registrar for the
Debt Securities of such series if other than the Trustee, and the place or
places where the Security Register for such series shall be maintained and
the Person or Persons who will be the initial Paying Agent or Agents, if
other than the Trustee; and
(21) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Debt Securities of any one series and the coupons appertaining to
Bearer Securities of such series, if any, shall be substantially identical
except, in the case of Registered Securities, as to denomination and except as
may otherwise be provided in or pursuant to such Board Resolution and set forth
in such Officers' Certificate or in any such indenture supplemental hereto.
Debt Securities of any particular series may be issued at various times,
with different dates on which the principal or any instalment of principal is
payable, with different rates of interest, if any, or different methods by which
rates of interest may be determined, with different dates on which such interest
may be payable and with
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13
different Redemption or Repayment Dates and may be denominated in different
currencies or payable in different currencies.
If any of the terms of a series of Debt Securities are established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the series.
SECTION 302. Denominations.
Debt Securities of each series shall be issuable in such form and
denominations as shall be specified in the form of Debt Security for such series
approved or established pursuant to Section 201 or in the Officers' Certificate
delivered pursuant to Section 301. In the absence of any specification with
respect to the Debt Securities of any series, the Registered Securities of such
series, if any, shall be issuable in denominations of $1,000 and any integral
multiple thereof and the Bearer Securities of such series, if any, shall be
issuable in the denomination of $5,000.
SECTION 303. Execution, Authentication, Delivery and Dating.
(a) The Debt Securities shall be executed on behalf of the Company by its
Chairman of the Board, the Chairman of the Executive Committee of the Board, a
Vice Chairman of the Board, the Chief Executive Officer, the President, the
Chief Operating Officer, a Vice Chairman or a Vice President, and by its
Treasurer or one of its Assistant Treasurers or its Secretary or one of its
Assistant Secretaries under its corporate seal reproduced thereon. The signature
of any of these officers on the Debt Securities may be manual or facsimile.
Coupons shall bear the facsimile signature of the Treasurer or any Assistant
Treasurer of the Company.
Debt Securities and coupons bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Debt
Securities or coupons of any series or did not hold such offices at the date of
such Debt Securities or coupons.
(b) At any time and from time to time after the execution and delivery of
this Indenture, Debt Securities of any series may be executed by the Company and
delivered to the Trustee for authentication, and, except as otherwise provided
in this Article Three, shall thereupon be authenticated and delivered by the
Trustee upon Company Order, without any further action by the Company; provided,
however, that, in connection with its original issuance, a Bearer Security may
be delivered only outside the United States and, except in the case of a
temporary Global Security, only if the Company or its agent shall have received
the certification required pursuant to Sections 304(b)(iii) and (iv), unless
such certification shall have been provided earlier pursuant to Section 304(b)
(v) hereof, and only if the Company has no reason to know that such
certification is false.
To the extent authorized in or pursuant to a Board Resolution and set forth
in an Officers' Certificate, or established in one or more indentures
supplemental hereto, such written Company Order may be given by any one officer
of the Company, may be electronically transmitted, and may provide instructions
as to registration of holders, principal amounts, rates of interest, maturity
dates and other matters contemplated by such Board Resolution and Officers'
Certificate or supplemental indenture to be so instructed in respect thereof.
Before authorizing and delivering the first Debt Securities of any series (and
upon request of the Trustee thereafter), the Company shall deliver to the
Trustee (i) the certificates called for under Sections 201 and 301 hereof and
(ii) an Opinion of Counsel described in the next sentence.
In authenticating such Debt Securities, and accepting the additional
responsibilities under this Indenture in relation to any Debt Securities, the
Trustee shall be entitled to receive, prior to the initial authentication of
such Debt Securities, and (subject to Section 601) shall be fully protected in
relying upon:
(i) a Board Resolution relating thereto and, if applicable, an
appropriate record of any action taken pursuant to such resolution
certified by the Secretary or an Assistant Secretary of the Company;
(ii) an executed supplemental indenture, if any, relating thereto;
(iii) an Officers' Certificate setting forth the form and terms of the
Debt Securities of such series and coupons, if any, pursuant to Sections
201 and 301 and stating that all conditions precedent provided for in this
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14
Indenture relating to the issuance of such Debt Securities have been
complied with, that no Event of Default with respect to any series of Debt
Securities has occurred and is continuing and that the issuance of such
Debt Securities is not and will not result in an Event of Default or an
event or condition which, upon the giving of notice (or the acquisition of
knowledge) or the lapse of time or both, would become an Event of Default;
and
(iv) an Opinion of Counsel stating
(A) that the form of such Debt Securities and coupons, if any,
has been established in or pursuant to a Board Resolution or by a
supplemental indenture as permitted by Section 201 in conformity with
the provisions of this Indenture;
(B) that the terms of such Debt Securities and coupons, if any,
have been established in or pursuant to a Board Resolution or by a
supplemental indenture as permitted by Section 301 in conformity with
the provisions of this Indenture;
(C) that such Debt Securities and coupons, if any, when
authenticated and delivered by the Trustee and issued by the Company
in the manner and subject to any conditions specified in such Opinion
of Counsel, will constitute valid and binding obligations of the
Company, enforceable in accordance with their terms, subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights
generally and the application of general principles of equity;
(D) that the Company has the corporate power to issue such Debt
Securities and coupons, if any, and has duly taken all necessary
corporate action with respect to such issuance;
(E) that the issuance of such Debt Securities and coupons, if
any, will not contravene the charter or by-laws of the Company or
result in any violation of any of the terms or provisions of any law
or regulation or of any indenture, mortgage or other agreement known
to such counsel by which the Company or any of its subsidiaries is
bound;
(F) that all laws and requirements in respect of the execution
and delivery by the Company of such Debt Securities and coupons, if
any, have been complied with and that authentication and delivery of
such Debt Securities by the Trustee will not violate the terms of the
Indenture; and
(G) such other matters as the Trustee may reasonably request.
(c) If the Company shall establish pursuant to Section 301 that the Debt
Securities of a series are to be issued in whole or in part in the form of one
or more Global Securities, then the Company shall execute and the Trustee shall,
in accordance with this Section and the Company Order with respect to such
series, authenticate and deliver one or more Global Securities in permanent or
temporary form that (i) shall represent and shall be denominated in an aggregate
amount equal to the aggregate principal amount of the Outstanding Debt
Securities of such series to be represented by one or more Global Securities,
(ii) shall be registered in the name of the Depositary for such Global Security
or Securities or the nominee of such Depositary and (iii) shall be delivered by
the Trustee to such Depositary or pursuant to such Depositary's instruction.
(d) The Trustee shall have the right to decline to authenticate and deliver
any Debt Securities under this Section 303 if (i) the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or (ii) the
Trustee in good faith by a committee of Responsible Officers shall determine
that such action would be unjustly prejudicial to Holders of Outstanding Debt
Securities or (iii) the issuance of such Debt Securities will adversely affect
the Trustee's own rights, duties or immunities under the Debt Securities and
this Indenture or otherwise in a manner which is not reasonably acceptable to
the Trustee.
(e) If all the Debt Securities of any series are not to be issued at one
time, it shall not be necessary to deliver an Opinion of Counsel at the time of
issuance of each Debt Security, but such Opinion of Counsel, with appropriate
modifications, may instead be delivered at or prior to the time of the first
issuance of Debt Securities of such series.
(f) Each Registered Security shall be dated the date of its authentication.
Each Bearer Security shall be dated as of the date specified as contemplated by
Section 301.
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15
(g) No Debt Security or coupon attached thereto shall be entitled to any
benefit under this Indenture or be valid or obligatory for any purpose, unless
there appears on such Debt Security a certificate of authentication
substantially in the form provided for herein executed by the Trustee, and such
certificate upon any Debt Security shall be conclusive evidence, and the only
evidence, that such Debt Security has been duly authenticated and delivered
hereunder. Except as permitted by Section 306, the Trustee shall not
authenticate and deliver any Bearer Security unless all appurtenant coupons for
interest then matured have been detached and cancelled. Notwithstanding the
foregoing, if any Debt Security or portion thereof shall have been duly
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Debt Security to the Trustee for cancellation
as provided in Section 309 together with a written statement (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
stating that such Debt Security or portion thereof has never been issued and
sold by the Company, for all purposes of this Indenture such Debt Security shall
be deemed never to have been authenticated and delivered hereunder and shall
never be entitled to the benefits of this Indenture.
(h) Each Depositary designated pursuant to Section 301 for a Global
Security in registered form must, at the time of its designation and at all
times while it serves as Depositary, be a clearing agency registered under the
Securities Exchange Act of 1934 and any other applicable statute or regulation.
SECTION 304. Temporary Debt Securities.
(a) Pending the preparation of definitive Debt Securities of any series,
the Company may execute, and upon receipt of documents required by Sections 301
and 303, together with a Company Order, the Trustee shall authenticate and
deliver, temporary Debt Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any denomination, substantially of the
tenor and terms of the definitive Debt Securities in lieu of which they are
issued in registered form or, if authorized, in bearer form with one or more
coupons or without coupons, and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Debt
Securities may determine, as evidenced by their signatures on such Debt
Securities. In the case of Debt Securities of any series issuable as Bearer
Securities, such temporary Debt Securities may be in global form, representing
all or any part of the Outstanding Debt Securities of such series.
(b) Unless otherwise provided pursuant to Section 301:
(i) Except in the case of temporary Debt Securities in global form, if
temporary Debt Securities of any series are issued, the Company will cause
definitive Debt Securities of such series to be prepared without
unreasonable delay. After the preparation of definitive Debt Securities of
such series, the related temporary Debt Securities shall be exchangeable
for such definitive Debt Securities upon surrender of the temporary Debt
Securities of such series at the office or agency of the Company in a Place
of Payment for such series, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Debt Securities of any series
(accompanied, if applicable, by all unmatured coupons and all matured
coupons in default appertaining thereto), the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Debt Securities of the same series of like
tenor and terms and of authorized denominations; provided, however, that no
Bearer Security shall be delivered in exchange for a Registered Security,
and provided, further, that a Bearer Security shall be delivered in
exchange for a Bearer Security only in compliance with the conditions set
forth in Section 305.
(ii) If Debt Securities of any series are issued in temporary global
form, any such temporary Global Security shall, unless otherwise provided
pursuant to Section 301, be delivered to the Depositary for the benefit of
Euroclear and CEDEL S.A., for credit to the respective accounts of the
beneficial owners of such Debt Securities (or to such other accounts as
they may direct).
(iii) Without unnecessary delay but in any event not later than the
date specified in, or determined pursuant to the terms of, any such
temporary Global Security (the "Global Exchange Date"), the Company shall
deliver definitive Debt Securities to the Trustee or the agent appointed by
the Company pursuant to Section 301 to effect the exchange of the temporary
Global Security for definitive Debt Securities (the "Global Exchange
Agent"), in an aggregate principal amount equal to the principal amount of
such temporary Global Security, executed by the Company. On or after the
Global Exchange Date, such temporary Global Security shall be surrendered
by the Depositary to the Global Exchange Agent, to be exchanged, in whole
or from time to time in part, for definitive Debt Securities without charge
and the Trustee or the Global Exchange Agent, if
<PAGE>
16
authorized by the Trustee pursuant to Section 614, shall authenticate and
deliver, in exchange for each portion of such temporary Global Security, an
equal aggregate principal amount of definitive Debt Securities of the same
series of authorized denominations and of like tenor and terms as the
portion of such temporary Global Security to be exchanged. Upon any
exchange of a part of such temporary Global Security for definitive Debt
Securities, the portion of the principal amount and any interest thereon
so exchanged shall be endorsed by the Global Exchange Agent on a schedule
to such temporary Global Security, whereupon the principal amount and
interest payable with respect to such temporary Global Security shall be
reduced for all purposes by the amount so exchanged and endorsed. The
definitive Debt Securities to be delivered in exchange for any such
temporary Global Security shall be in bearer form, registered form, global
registered form or global bearer form, or any combination thereof, as
specified as contemplated by Section 301, and, if any combination thereof
is so specified, as requested by the beneficial owner thereof; provided,
however, that, in the case of the exchange of the temporary Global Security
for definitive Bearer Securities (including a definitive Global Bearer
Security), upon such presentation by the Depositary, such temporary Global
Security shall be accompanied by a certificate signed by Euroclear as to
the portion of such temporary Global Security held for its account then to
be exchanged and a certificate signed by CEDEL S.A. as to the portion of
such temporary Global Security held for its account then to be exchanged,
each in the form set forth in Exhibit B to this Indenture, unless such
certificate(s) shall have been provided earlier pursuant to Section 304(b)
(v) hereof; and provided, further, that definitive Bearer Securities
(including a definitive global Bearer Security) shall be delivered in
exchange for a portion of a temporary Global Security only in compliance
with the requirements of Section 303.
(iv) The interest of a beneficial owner of Debt Securities of a series
in a temporary Global Security shall be exchanged for definitive Debt
Securities of the same series and of like tenor and terms following the
Global Exchange Date when the account holder instructs Euroclear or CEDEL
S.A., as the case may be, to request such exchange on such account holder's
behalf and, in the case of the exchange of the temporary Global Security
for definitive Bearer Securities (including a definitive Global Bearer
Security), unless such certificate(s) shall have been provided earlier
pursuant to Section 304(b)(v) hereof, the account holder delivers to
Euroclear or CEDEL S.A., as the case may be, a certificate in the form set
forth in Exhibit A-1 and, if applicable, A-2 to this Indenture, dated no
earlier than 15 days prior to the Global Exchange Date, copies of which
certificate shall be available from the offices of Euroclear and CEDEL
S.A., the Global Exchange Agent, any authenticating agent appointed for
such series of Debt Securities and each Paying Agent Unless otherwise
specified in such temporary Global Security, any such exchange shall be
made free of charge to the beneficial owners of such temporary Global
Security, except that a Person receiving definitive Debt Securities must
bear the cost of insurance, postage, transportation and the like in the
event that such Person does not take delivery of such definitive Debt
Securities in person at the offices of Euroclear and CEDEL S.A. Definitive
Debt Securities in bearer form to be delivered in exchange for any portion
of a temporary Global Security shall be delivered only outside the United
States.
(v) Until exchanged in full as hereinabove provided, the temporary
Debt Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as definitive Debt Securities of the same
series and of like tenor and terms authenticated and delivered hereunder,
except that interest payable on a temporary Global Security on an Interest
Payment Date shall be payable to Euroclear and CEDEL S.A. on such Interest
Payment Date only if there has been delivery by Euroclear and CEDEL S.A. to
the Global Exchange Agent of a certificate or certificates in the form set
forth in Exhibit B to this Indenture dated no earlier than the first
Interest Payment Date, for credit without further interest on or after such
Interest Payment Date to the respective accounts of the Persons who are the
beneficial owners of such temporary Global Security on such Interest
Payment Date and who have each delivered to Euroclear or CEDEL S.A., as the
case may be, a certificate in the form set forth in Exhibit A-1 and, if
applicable, A-2 to this Indenture dated no earlier than the first Interest
Payment Date. Any interest so received by Euroclear and CEDEL S.A. and not
paid as herein provided prior to the Global Exchange Date shall be returned
to the Global Exchange Agent which, upon expiration of two years after such
Interest Payment Date shall repay such interest to the Company in
accordance with Section 1003.
<PAGE>
17
SECTION 305. Registration; Registration of Transfer and Exchange.
The Company shall cause to be kept at one of the offices or agencies to be
maintained by the Company in accordance with the provisions of this Section 305
and Section 1002, with respect to the Debt Securities of each series which are
Registered Securities, a register (herein sometimes referred to as the "Security
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Registered Securities and of
transfers of Registered Securities. Pursuant to Section 301, the Company shall
appoint, with respect to Debt Securities of each series which are Registered
Securities, a "Security Registrar" for the purpose of registering such Debt
Securities and transfers and exchanges of such Debt Securities as herein
provided.
Upon surrender for registration of transfer of any Registered Security of
any series at the office or agency of the Company maintained for such purpose,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Registered
Securities of the same series of any authorized denomination or denominations,
of like tenor and terms and aggregate principal amount.
At the option of the Holder, Registered Securities of any series may be
exchanged for other Registered Securities of the same series of any authorized
denomination or denominations, of like tenor and terms and aggregate principal
amount, upon surrender of the Registered Securities to be exchanged at such
office or agency. Bearer Securities may not be delivered in exchange for
Registered Securities.
At the option of the Holder, Registered Securities or Bearer Securities of
any series may be issued in exchange for Bearer Securities (except as otherwise
specified as contemplated by Section 301 with respect to a Bearer Security in
global form) of the same series, of any authorized denominations and of like
tenor and terms and aggregate principal amount, upon surrender of the Bearer
Securities to be exchanged at any such office or agency, with all unmatured
coupons and all matured coupons in default thereto appertaining. If the Holder
of a Bearer Security is unable to produce any such unmatured coupon or coupons
or matured coupon or coupons in default, such exchange may be effected if the
Bearer Securities are accompanied by payment in funds acceptable to the Company
and the Trustee in an amount equal to the face amount of such missing coupon or
coupons, or the surrender of such missing coupon or coupons may be waived by the
Company and the Trustee if there be furnished to them such security or indemnity
as they may require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Security shall surrender to any Paying Agent any
such missing coupon in respect of which such a payment shall have been made,
such Holder shall be entitled to receive the amount of such payment, provided,
however, that, except as otherwise provided in Section 1002, interest
represented by coupons shall be payable only upon presentation and surrender of
those coupons at an office or agency located outside the United States.
Notwithstanding the foregoing, in case a Bearer Security of any series is
surrendered at any such office or agency in exchange for a Registered Security
of the same series and like tenor and terms after the close of business at such
office or agency on (i) any Regular Record Date and before the opening of
business at such office or agency on the relevant Interest Payment Date, or (ii)
any Special Record Date and before the opening of business at such office or
agency on the related date for payment of Defaulted Interest, such Bearer
Security shall be surrendered without the coupon relating to such Interest
Payment Date or proposed date of payment, as the case may be.
Whenever any Debt Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Debt
Securities which the Holder making the exchange is entitled to receive.
If at any time the Depositary for the Debt Securities of a series notifies
the Company that it is unwilling or unable to continue as Depositary for the
Debt Securities of such series or if at any time the Depositary for the Debt
Securities of such series shall no longer be eligible under Section 303(h), the
Company shall appoint a successor Depositary with respect to the Debt Securities
of such series. If a successor Depositary for the Debt Securities of such series
is not appointed by the Company within 90 days after the Company receives such
notice or becomes aware of such ineligibility, the Company's election pursuant
to Section 301(9) shall no longer be effective with respect to the Debt
Securities of such series and the Company will execute, and the Trustee, upon
receipt of a Company Order for the authentication and delivery of definitive
Debt Securities of such series, will authenticate and deliver, Debt Securities
of such series in definitive form in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing such series
in exchange for such Global Security or Securities.
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The Company may at any time and in its sole discretion determine that the
Debt Securities of any series issued in the form of one or more Global
Securities shall no longer be represented by such Global Security or Securities.
In such event the Company will execute, and the Trustee, upon receipt of a
Company Order for the authentication and delivery of definitive Debt Securities
of such series, will authenticate and deliver, Debt Securities of such series in
definitive form and in an aggregate principal amount equal to the principal
amount of the Global Security or Securities representing such series in exchange
for such Global Security or Securities.
If specified by the Company pursuant to Section 301 with respect to a
series of Debt Securities, the Depositary for such series of Debt Securities may
surrender a Global Security for such series of Debt Securities in exchange in
whole or in pan for Debt Securities of such series of like tenor and terms and
in definitive form on such terms as are acceptable to the Company and such
Depositary. Thereupon, the Company shall execute, and the Trustee shall
authenticate and deliver, without service charge,
(a) to each Person specified by such Depositary a new Debt Security or
Securities of the same series, of like tenor and terms and of any
authorized denomination as requested by such Person in aggregate principal
amount equal to and in exchange for such Person's beneficial interest in
the Global Security, and
(b) to such Depositary a new Global Security of like tenor and terms
and in a denomination equal to the difference, if any, between the
principal amount of the surrendered Global Security and the aggregate
principal amount of Debt Securities delivered to Holders thereof.
In any exchange provided for in any of the preceding three paragraphs, the
Company will execute and the Trustee will authenticate and deliver Debt
Securities (a) in definitive registered form in authorized denominations, if the
Debt Securities of such series are issuable as Registered Securities, (b) in
definitive bearer form in authorized denominations, with coupons attached, if
the Debt Securities of such series are issuable as Bearer Securities or (c) as
either Registered or Bearer Securities, as shall be specified by the beneficial
owner thereof, if the Debt Securities of such series are issuable in either
form; provided however, that no definitive Bearer Security shall be delivered in
exchange for a temporary Global Security unless the Company or its agent shall
have received from the person entitled to receive the definitive Bearer Security
a certificate substantially in the form set forth in Exhibit A-1 and, if
applicable, A-2 hereto; and provided further that delivery of a Bearer Security
shall occur only outside the United States; and provided further that no
definitive Bearer Security will be issued if the Company has reason to know that
any such certificate is false.
Upon the exchange of a Global Security for Debt Securities in definitive
form, such Global Security shall be cancelled by the Trustee. Registered
Securities issued in exchange for a Global Security pursuant to this Section
shall be registered in such names and in such authorized denominations as the
Depositary for such Global Security, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Registered Securities to the persons in whose names such Debt
Securities are so registered. The Trustee shall deliver Bearer Securities issued
in exchange for a Global Security pursuant to this Section to the persons, and
in such authorized denominations, as the Depositary for such Global Security,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Truster, provided however, that no definitive Bearer Security
shall be delivered in exchange for a temporary Global Security unless the
Company or its agent shall have received from the person entitled to receive the
definitive Bearer Security a certificate substantially in the form set forth in
Exhibit A-1 and, if applicable, A-2 hereto; and provided further that delivery
of a Bearer Security shall occur only outside the United States; and provided
further that no definitive Bearer Security will be issued if the Company has
reason to know that any such certificate is false.
All Debt Securities issued upon any registration of transfer or exchange of
Debt Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the Debt
Securities surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company, the Security
Registrar or the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed, by the Holder thereof or such Holder's
attorney duly authorized in writing.
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19
No service charge shall be made for any registration of transfer or
exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer, registration of transfer or exchange of Debt
Securities, other than exchanges expressly provided in this Indenture to be made
at the Company's own expense or without expense or without charge to the
Holders.
The Company shall not be required (i) to issue, register the transfer of or
exchange Debt Securities of any particular series to be redeemed for a period of
fifteen days preceding the first publication of the relevant notice of
redemption or, if Registered Securities are outstanding and there is no
publication, the mailing of the relevant notice of redemption of Debt Securities
of such series selected for redemption under Section 1103 and ending at the
close of business on the day of such mailing, or (ii) to register the transfer
of or exchange any Registered Security so selected for redemption in whole or in
part, except the unredeemed portion of such Registered Security being redeemed
in part, or (iii) to exchange any Bearer Security so selected for redemption
except that such a Bearer Security may be exchanged for a Registered Security of
like tenor and terms of that series, provided that such Registered Security
shall be simultaneously surrendered for redemption.
Notwithstanding anything herein to the contrary, the exchange of Bearer
Securities into Registered Securities shall be subject to applicable laws and
regulations in effect at the time of exchange; neither the Company, the Trustee
nor the Security Registrar shall exchange any Bearer Securities into Registered
Securities if it has received an Opinion of Counsel that as a result of such
exchanges the Company would suffer adverse consequences under the United States
federal income tax laws and regulations then in effect and the Company has
delivered to the Trustee a Company Order directing the Trustee not to make such
exchanges thereafter unless and until the Trustee receives a subsequent Company
Order to the contrary. The Company shall deliver copies of such Company Orders
to the Security Registrar.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Debt Securities.
If (i) any mutilated Debt Security or a Bearer Security with a mutilated
coupon appertaining to it is surrendered to a Paying Agent outside the United
States designated by the Company, or, in the case of any Registered Security, to
the Trustee, or (ii) the Company and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Debt Security or coupon,
and there is delivered to the Company and the Trustee such security or indemnity
as may be required by them to save each of them harmless, then, in the absence
of notice to the Company and the Trustee that such Debt Security or coupon has
been acquired by a bona fide purchaser, the Company shall execute and upon its
written request the Trustee shall authenticate and deliver, in exchange for any
such mutilated Debt Security or Bearer Security with a mutilated coupon
appertaining to it or to which a destroyed, lost or stolen coupon appertains
(with all appurtenant coupons not destroyed, lost or stolen) or in lieu of any
such destroyed, lost or stolen Debt Security, a new Debt Security of like tenor
and terms and principal amount, bearing a number not contemporaneously
outstanding, with coupons corresponding to the coupons, if any, appertaining to
such destroyed, lost or stolen Security or to the Security to which such
destroyed, lost or stolen coupon appertains; provided, however, that any such
new Bearer Security will be delivered only in compliance with the conditions set
forth in Section 305.
In case any such mutilated, destroyed, lost or stolen Debt Security or
coupon has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Debt Security, pay such Debt Security
or coupon; provided, however, that payment of principal of (and premium, if any)
and any interest on Bearer Securities shall, except as otherwise provided in
Section 1002, be payable only at an office or agency located outside the United
States; and provided, further, that, with respect to any such coupons, interest
represented thereby (but not any additional amounts payable as provided in
Section 1006), shall be payable only upon presentation and surrender of the
coupons appertaining thereto.
Upon the issuance of any new Debt Security or coupon under this Section,
the Company 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 Trustee and printing expenses)
connected therewith.
Every new Debt Security of any series, with its coupons, if any, issued
pursuant to this Section in lieu of any destroyed, lost or stolen Debt Security,
or in exchange for a Bearer Security to which a destroyed, lost or stolen
<PAGE>
20
coupon appertains, shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Debt
Security and its coupons, if any, or the destroyed, lost or stolen coupon shall
be at any time enforceable by anyone, and any such new Debt Security and
coupons, if any, shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Debt Securities of that series and
their coupons, if any, duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debt Securities or coupons.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Registered Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Registered Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest. In case a Bearer Security of any series is surrendered in
exchange for a Registered Security of such series after the close of business
(at an office or agency in a Place of Payment for such series) on any Regular
Record Date and before the opening of business (at such office or agency) on the
next succeeding Interest Payment Date, such Bearer Security shall be surrendered
without the coupon relating to such Interest Payment Date and interest will not
be payable on such Interest Payment Date in respect of the Registered Security
issued in exchange for such Bearer Security, but will be payable only to the
Holder of such coupon when due in accordance with the provisions of this
Indenture. At the option of the Company, payment of interest on any Registered
Security may be made by check in the currency designated for such payment
pursuant to the terms of such Registered Security mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register or
by wire transfer to an account in such currency designated by such Person in
writing not later than ten days prior to the date of such payment.
Any interest on any Registered Security of any series which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of his having
been such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Registered Securities of such series (or
their respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Registered Security of such series and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money and/or, to the extent such Debt Securities are
denominated and payable in Dollars only, Eligible Instruments the payments
of principal and interest on which when due (and without reinvestment and
providing no tax liability will be imposed upon the Trustee or the Holder
of such Registered Securities) will provide money in such amounts as will
(together with any money irrevocably deposited in trust with the Trustee,
without investment) be equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment
such money and/or Eligible Instruments when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as in
this Clause provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than 15
days and not less than 10 days prior to the date of the proposed payment
and not less than 10 days after the receipt by the Trustee of the notice of
the proposed payment The Trustee shall promptly notify the Company of such
Special Record Date. Unless the Trustee is acting as the Security
Registrar, promptly after such Special Record Date, the Company shall
furnish the Trustee with a list, or shall make arrangements satisfactory to
the Trustee with respect thereto, of the names and addresses of, and
principal amounts of Registered Securities of such series held by, the
Holders appearing on the Security Register at the close of business on such
Special Record Date. In the name and at the expense of the Company, the
Trustee shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder of Registered Securities of such series at
his
<PAGE>
21
address as it appears in the Security Register, not less than 10 days prior
to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been mailed
as aforesaid, such Defaulted Interest shall be paid to the Persons in whose
names the Registered Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the
following Clause (2). In case a Bearer Security of any series is
surrendered at the office or agency in a Place of Payment for such series
in exchange for a Registered Security of such series after the close of
business at such office or agency on any Special Record Date and before the
opening of business at such office or agency on the related proposed date
for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the coupon relating to such proposed date of payment
and Defaulted Interest will not be payable on such proposed date of payment
in respect of the Registered Security issued in exchange for such Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture.
(2) The Company may make payment of any Defaulted Interest on the
Registered Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Registered Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this Clause, such manner of
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Debt Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Debt Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Debt
Security.
Subject to the limitations set forth in Section 1002, the Holder of any
coupon appertaining to a Bearer Security shall be entitled to receive the
interest payable on such coupon upon presentation and surrender of such coupon
on or after the Interest Payment Date of such coupon at an office or agency
maintained for such purpose pursuant to Section 1002.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Registered Security for registration of
transfer, the Company, the Trustee and any agent of the Company or of the
Trustee may treat the Person in whose name such Registered Security is
registered as the owner of such Registered Security for the purpose of receiving
payment of principal of (and premium, if any) and (subject to Section 307)
interest on such Registered Security and for all other purposes whatsoever,
whether or not such Registered Security be overdue, and neither the Company, the
Trustee nor any agent of the Company or the Trustee shall be affected by notice
to the contrary.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the bearer of any Bearer Security and the bearer of any coupon as the
absolute owner of such Bearer Security or coupon for the purpose of receiving
payment thereof or on account thereof and for all other purposes whatsoever,
whether or not such Bearer Security or coupon be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Global Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
SECTION 309. Cancellation.
Unless otherwise provided with respect to a series of Debt Securities, all
Debt Securities and coupons surrendered for payment, redemption, repayment,
transfer, exchange or credit against any sinking fund payment pursuant to this
Indenture, shall, if surrendered to the Company or any agent of the Company, be
delivered to the Trustee and shall be promptly cancelled by it. The Company may
at any time deliver to the Trustee for cancellation any Debt Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Debt Securities so delivered shall be
promptly cancelled by the Trustee. No Debt Securities shall be authenticated in
lieu of or in exchange for any Debt Securities cancelled as provided in this
<PAGE>
22
Section, except as expressly permitted by this Indenture. All cancelled Debt
Securities and coupons held by the Trustee shall be destroyed and certification
of their destruction delivered to the Company unless by a Company Order the
Company shall direct that the cancelled Debt Securities or coupons be returned
to it.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for Debt
Securities of any series, interest on the Debt Securities of each series shall
be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 311. Certification by a Person Entitled to Delivery of a Bearer
Security.
Whenever any provision of this Indenture or a Debt Security contemplates
that certification be given by a Person entitled to delivery of a Bearer
Security, such certification shall be provided substantially in the form of
Exhibit A-1 and, if applicable, A-2 hereto, with only such changes as shall be
approved by the Company and consented to by the Trustee whose consent shall not
unreasonably be withheld.
SECTION 312. Judgments.
The Company may provide, pursuant to Section 301, for the Debt Securities
of any series that, to the fullest extent possible under applicable law and
except as may otherwise be specified as contemplated in Section 301, (a) the
obligation, if any, of the Company to pay the principal of (and premium, if any)
and interest on the Debt Securities of any series and any appurtenant coupons in
a Foreign Currency, composite currency or Dollars (the "Designated Currency") as
may be specified pursuant to Section 301 is of the essence and agrees that
judgments in respect of such Debt Securities shall be given in the Designated
Currency") the obligation of the Company to make payments in the Designated
Currency of the principal of (and premium, if any) and interest on such Debt
Securities and any appurtenant coupons shall, notwithstanding any payment in any
other currency (whether pursuant to a judgment or otherwise), be discharged only
to the extent of the amount in the Designated Currency that the Holder receiving
such payment may, in accordance with normal banking procedures, purchase with
the sum paid in such other currency (after any premium and cost of exchange) in
the country of issue of the Designated Currency in the case of Foreign Currency
or Dollars or in the international banking community in the case of a composite
currency on the Business Day immediately following the day on which such Holder
receives such payment; (c) if the amount in the Designated Currency that may be
so purchased for any reason falls short of the amount originally due, the
Company shall pay such additional amounts as may be necessary to compensate for
such shortfall and (d) any obligation of the Company not discharged by such
payment shall be due as a separate and independent obligation and, until
discharged as provided herein, shall continue in full force and effect.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Debt Securities herein expressly provided for and rights to receive payments of
principal and interest thereon and any right to receive additional amounts, as
provided in Section 1006) and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture when
(1) either
(A) all Debt Securities theretofore authenticated and delivered
and all coupons appertaining thereto (other than (i) coupons
appertaining to Bearer Securities surrendered in exchange for
Registered Securities and maturing after such exchange, surrender of
which is not required or has been waived as provided in Section 305,
(ii) Debt Securities and coupons which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section
306, (iii) coupons appertaining to Bearer Securities called for
redemption or surrendered for repayment and maturing after the
relevant Redemption Date or Repayment Date, as appropriate, surrender
of which has been waived as provided in Section 1106 or 1303 and (iv)
Debt Securities and coupons for whose payment money and/or Eligible
Instruments have
<PAGE>
23
theretofore been deposited in trust or segregated and held in trust by
the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 1003) have been delivered to the
Trustee cancelled or for cancellation; or
(B) all such Debt Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (B) (i), (B) (ii) or (B) (iii)
above, has irrevocably deposited or caused to be deposited with
the Trustee as trust funds in trust for the purpose money and/or,
to the extent such Debt Securities are denominated and payable in
Dollars only, Eligible Instruments the payments of principal and
interest on which when due (and without reinvestment and
providing no tax liability will be imposed upon the Trustee or
the Holders of Debt Securities) will provide money in such
amounts as will (together with any money irrevocably deposited in
trust with the Trustee, without investment) be sufficient to pay
and discharge the entire indebtedness on such Debt Securities and
coupons of such series for principal (and premium, if any) and
interest, and any mandatory sinking fund, repayment or analogous
payments thereon, on the scheduled due dates therefor to the date
of such deposit (in the case of Debt Securities and coupons which
have become due and payable) or to the Stated Maturity or
Redemption Date, if any, and all Repayment Dates (in the case of
Debt Securities repayable at the option of the Holders thereof);
provided, however, that in the event a petition for relief under
the Bankruptcy Reform Act of 1978 or a successor statute is filed
with respect to the Company within 91 days after the deposit, the
obligations of the Company under the Indenture with respect to
the Debt Securities of such series shall not be deemed terminated
or discharged, and in such event the Trustee shall be required to
return the deposited money and Eligible Instruments to the
Company,
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company, and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Sections 607 and, if money or
Eligible Instruments shall have been deposited with the Trustee pursuant to
Subclause (B) of Clause (1) of this Section, the obligations of the Trustee
under Section 402 and the last paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money and Eligible Instruments.
Subject to the provisions of the last paragraph of Section 1003, all money
and Eligible Instruments deposited with the Trustee pursuant to Section 401
shall be held in trust and such money and the principal and interest received on
such Eligible Instruments shall be applied by it, in accordance with the
provisions of the Debt Securities, the coupons and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal (and premium, if any) and interest for whose
payment such money or Eligible Instruments have been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Debt Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or
<PAGE>
24
be effected by operation of law, pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or governmental
body):
(1) default in the payment of any interest upon any Debt Security of
such series or a related coupon, if any, when it becomes due and payable,
and continuance of such default for a period of 30 days; or
(2) default in the payment of the principal of (or premium, if any,
on) any Debt Security of such series at its Maturity or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Debt Security of such series; or
(4) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in this Section
specifically dealt with or which has expressly been included in this
Indenture solely for the benefit of Debt Securities of a series other than
such series), and continuance of such default or breach for a period of 90
days after there has been given by registered or certified mail, to the
Company by the Trustee, or to the Company and the Trustee by the Holders of
at least 25% in principal amount of the Outstanding Debt Securities of such
series, a written notice specifying such default or breach and requiring it
to be remedied and stating that such notice is a "Notice of Default"
hereunder; or
(5) if an event of default, as defined in any mortgage, indenture or
instrument under which there may be issued, or by which there may be
secured or evidenced, any indebtedness for money borrowed of the Company
(including a default under this Indenture with respect to Debt Securities
of any series other than such series) in excess of $25,000,000, whether
such indebtedness now exists or shall hereafter be created, shall happen
and shall constitute a failure to pay at maturity or shall result in such
indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise become due and payable, and such acceleration
shall not be rescinded or annulled, or such indebtedness shall not have
been discharged, within a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal amount
of the Outstanding Debt Securities of such series a written notice
specifying such event of default and requiring the Company to cause such
acceleration to be rescinded or annulled or to cause such indebtedness to
be discharged and stating that such notice is a "Notice of Default"
hereunder provided however, that, subject to the provisions of Sections 601
and 602, in the absence of actual knowledge of a Responsible Officer of the
Trustee, as such officer, assigned to its corporate trust department, the
Trustee shall not be charged with knowledge of any event of default unless
written notice thereof shall have been given to the Trustee by the Company,
by the trustee then acting under any mortgage, indenture or other
instrument (including any other trustee acting under this Indenture for any
other series of Debt Securities) under which such event of default shall
have occurred, by the holder or an agent of any holder of such
indebtedness, or by the Holders of at least 25% in principal amount of the
Outstanding Debt Securities of such series; or
(6) the entry of a decree or order for relief in respect of the
Company or the Bank by a court having jurisdiction in the premises in an
involuntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or State bankruptcy,
insolvency or other similar law, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of
the Company or the Bank or of any substantial part of the property of
either, or ordering the winding up or liquidation of the affairs of either,
and the continuance of any such decree or order unstayed and in effect for
a period of 60 consecutive days; or
(7) the commencement by the Company or the Bank of a voluntary case
under the Federal bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal or State bankruptcy, insolvency or other similar
law, or the consent by the Company or the Bank to the entry of a decree or
order for relief in an involuntary case under any such law or to the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or other similar official of either of the foregoing or of any
substantial part of the property of either, or the making by the Company or
the Bank of an assignment for the benefit of creditors, or the admission by
the Company or the Bank in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the
Company or the Bank in furtherance of any such action, or
<PAGE>
25
(8) any other Event of Default, if any, provided with respect to Debt
Securities of such series specified as contemplated by Section 301.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Debt Securities of any series at the
time Outstanding occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of Outstanding
Debt Securities of such series may declare the principal amount (or, if the Debt
Securities of such series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of such series) of and
all accrued but unpaid interest on all the Debt Securities of such series to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by such Holders), and upon any such declaration such principal
amount (or specified amount) shall become immediately due and payable. Upon
payment of such amount, all obligations of the Company in respect of the payment
of principal of the Debt Securities of such series shall terminate.
At any time after such a declaration of acceleration with respect to Debt
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Debt Securities of such series, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue instalments of interest on all Debt Securities of
such series and any related coupons,
(B) the principal of (and premium, if any, on) any Debt
Securities of such series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates
prescribed therefor in such Debt Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue instalments of interest on each Debt Security
and any related coupons at the rate or rates prescribed therefor in
such Debt Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Debt Securities of such
series, other than the non-payment of the principal of Debt Securities of
such series which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if:
(1) default is made in the payment of any instalment of interest on
any Debt Security or any related coupon when such interest becomes due and
payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Debt Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Debt Securities and coupons, the amount then due and payable on
such Debt Securities and coupons for principal (and premium, if any) and
interest and, to the extent that payment of such interest shall be legally
enforceable, interest upon the overdue principal (and premium, if any) and, upon
overdue instalments of interest, at the rate or rates prescribed therefor in
such Debt Securities; and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
<PAGE>
26
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Debt Securities and coupons
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon such Debt
Securities and coupons, wherever situated.
If an Event of Default with respect to Debt Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Debt Securities of such
series and any related coupons by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceedings, or any voluntary or involuntary case under the Federal
bankruptcy laws as now or hereafter constituted, relative to the Company or any
other obligor upon the Debt Securities of a particular series or any related
coupons or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of such Debt
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
on the Company for the payment of overdue principal or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Debt
Securities of such series and any appurtenant coupons and to file such
other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding,
and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, custodian, liquidator, sequestrator or
other similar official in any such proceeding is hereby authorized by each
Holder to make such payments to the Trustee, and in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Debt
Securities or coupons or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding,
SECTION 505. Trustee May Enforce Claims without Possession of Debt
Securities or Coupons.
All rights of action and claims under this Indenture or the Debt Securities
or coupons may be prosecuted and enforced by the Trustee without the possession
of any of the Debt Securities or coupons or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name, as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Debt Securities
and coupons in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (and premium,
if
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27
any) or interest, upon presentation of the Debt Securities or coupons, or both,
as the case may be, and the notation thereon of the payment if only partially
paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607;
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Debt Securities and
any coupons, in respect of which or for the benefit of which such money has
been collected ratably, without preference or priority of any kind,
according to the amounts due and payable on such Debt Securities and any
coupons for principal (and premium, if any) and interest, respectively. The
Holders of each series of Debt Securities denominated in ECU, any other
composite currency or a Foreign Currency and any matured coupons relating
thereto shall be entitled to receive a ratable portion of the amount
determined by the Exchange Rate Agent by converting the principal amount
Outstanding of such series of Debt Securities and matured but unpaid
interest on such series of Debt Securities in the currency in which such
series of Debt Securities is denominated into Dollars at the Exchange Rate
as of the date of declaration of acceleration of the Maturity of the Debt
Securities; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
SECTION 507. Limitation on Suits.
No Holder of any Debt Security of any series or any related coupons shall
have any right to institute any proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Debt Securities of such
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Debt Securities of such series shall have made written request
to the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder,
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding, and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Debt Securities of such series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other such
Holders, or to obtain or to seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Debt Security or coupon shall have the right which is absolute and unconditional
to receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest on such Debt Security or payment of such coupon on the
respective Stated Maturity or Maturities expressed in such Debt Security or
coupon (or, in the case of redemption or repayment, on the Redemption Date or
the Repayment Date, as the case may be) and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case the Company, the Trustee and the
Holders shall, subject to
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28
any determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided in Section 306, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 511. Delay or Omission Nor Waiver.
No delay or omission of the Trustee or of any Holder of any Debt Security
or coupon to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
SECTION 512. Control by Holders of Debt Securities.
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the Debt
Securities of such series, provided, that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture;
(2) subject to the provisions of Section 601, the Trustee shall have
the right to decline to follow any such direction if the Trustee in good
faith shall, by a Responsible Officer or Responsible Officers of the
Trustee, determine that the proceeding so directed would be unjustly
prejudicial to the Holders of Debt Securities of such series not joining in
any such director and
(3) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series may on behalf of the Holders of all
the Debt Securities of any such series and any related coupons waive any past
default hereunder with respect to such series and its consequences, except a
default
(1) in the payment of the principal of (or premium, if any) or
interest on any Debt Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Debt Security of such series or coupon affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Debt Security
or coupon by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in
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29
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this Section shall
not apply to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Debt Securities of any series, or to any suit
instituted by any Holder for the enforcement of the payment of the principal of
(or premium, if any) or interest on any Debt Security or the payment of any
coupon on or after the respective Stated Maturity or Maturities expressed in
such Debt Security or coupon (or, in the case of redemption or repayment, on or
after the Redemption Date or Repayment Date, as the case may be).
SECTION 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law whenever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefits or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
(a) With respect to Debt Securities of any series, except during the
continuance of an Event of Default with respect to the Debt Securities of such
series,
(1) the Trustee undertakes to perform such duties as are specifically
set forth in this Indenture, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provisions
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Event of Default with respect to Debt Securities of any
series has occurred and is continuing, the Trustee shall, with respect to the
Debt Securities of such series or any coupons, as the case may be, exercise such
of the rights and powers vested in it by this Indenture, and use the same degree
of care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action taken,
suffered or omitted to be taken by it with respect to Debt Securities of
any series in good faith in accordance with the direction of the Holders of
a majority in principal amount of the Outstanding Debt Securities of such
series relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture with respect to the Debt
Securities of such series.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
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30
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(e) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder with respect
to Debt Securities of any series the Trustee shall transmit by mail to all
Holders of Debt Securities of such series, entitled to receive reports pursuant
to Section 703(c), notice of such default hereunder known to the Trustee, unless
such default shall have been cured or waived; provided however, that, except in
the case of a default in the payment of the principal of (or premium, if any) or
interest on any Debt Security of such series or any related coupons or in the
payment of any sinking fund instalment with respect to Debt Securities of such
series, the Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interest of the Holders of Debt
Securities of such series; and provided, further, that in the case of any
default of the character specified in Section 501(4) with respect to Debt
Securities of such series no such notice to Holders shall be given until at
least 30 days after the occurrence thereof. For the purpose of this Section, the
term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to Debt Securities of such
series.
SECTION 603. Certain Rights of Trustee.
Except as otherwise provided in Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders of Debt Securities of such series or any related
coupons pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses
and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon, other evidence of indebtedness or other
paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see
fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney, other than any
such books or records containing information as to the affairs of the
customers of the Company or any of its subsidiaries; provided that the
Trustee may examine such books and records relating to customers to the
extent that such books and
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31
records contain information as to any payments made to such customers in
their capacity as Holders of Debt Securities; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder"; no Exchange Rate Agent, Global Exchange Agent, Depositary or
Paying Agent shall be deemed an agent of the Trustee and the Trustee shall
not be responsible for any act or omission by any of them.
SECTION 604. Not Responsible for Recitals or Issuance of Debt Securities.
The recitals contained herein and in the Debt Securities, except the
Trustee's certificates of authentication, and in any coupons, and the
information in any registration statement, including all attachments thereto,
except information provided by the Trustee therein, shall be taken as the
statements of the Company, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Debt Securities of any series or any
coupons. The Trustee shall not be accountable for the use or application by the
Company of any Debt Securities or the proceeds thereof. The Trustee shall not be
responsible for and makes no representations to the Company's ability or
authority to issue Bearer Securities or the lawfulness thereof.
SECTION 605. May Hold Debt Securities or Coupons.
The Trustee, any Paying Agent, the Security Registrar or any other agent of
the Company or the Trustee, in its individual or any other capacity, may become
the owner or pledgee of Debt Securities and coupons, and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Paying Agent, Security Registrar or such agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee or any Paying Agent in trust hereunder need not
be segregated from other funds except to the extent required by law. Neither the
Trustee nor any Paying Agent shall be under any liability for interest on any
money received by it hereunder except as otherwise agreed with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration
of this trust or performance of its duties hereunder, including the costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
As security for the performance of the obligations of the Company under
this Section the Trustee shall have a claim prior to the Debt Securities and any
coupons upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the payment of principal of (and premium, if any)
or interest on particular Debt Securities or any coupons.
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32
SECTION 608. Disqualification; Conflicting Interests.
(a) If the Trustee has or shall acquire any conflicting interest, as
defined in this Section with respect to the Debt Securities of any series then,
within 90 days after ascertaining that it has such conflicting interest, and if
the default (as defined in this Section) to which such conflicting interest
relates has not been cured or duly waived or otherwise eliminated before the end
of such 90-day period, the Trustee shall either eliminate such conflicting
interest or, except as otherwise provided below in this Section, resign with
respect to the Debt Securities of such series in the manner and with the effect
hereinafter specified in this Article and the Company shall take prompt steps to
have a successor appointed in the manner provided herein.
(b) (1) In the event that the Trustee shall fail to comply with the
provisions of Subsection (a) of this Section with respect to the Debt Securities
of any series, the Trustee shall, within 10 days after the expiration of such
90-day period, transmit, in the manner and to the extent provided in Section
703(c), to all Holders of Debt Securities of such series notice of such failure.
(2) Subject to the provisions of Section 514, unless the Trustee's duty to
resign is stayed as provided in Subsection (f) of this Section, any Holder who
has been a bona fide Holder of Debt Securities of any series referred to in
Subsection (a) of this Section for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of such Trustee, and the appointment of a successor, if such
Trustee fails, after written request thereof by such Holder to comply with the
provisions of Subsection (a) of this Section.
(c) For the purposes of this Section, the Trustee shall be deemed to have a
conflicting interest with respect to the Debt Securities of any series, if an
Event of Default (as defined in this Indenture), but exclusive of any period of
grace or requirement of notice, has occurred with respect to such Debt
Securities and
(1) the Trustee is trustee under this Indenture with respect to the
Outstanding Debt Securities of any series other than that series or is
trustee under another indenture under which any other securities, or
certificates of interest or participation in any other securities, of the
Company are outstanding, unless such other indenture is a collateral trust
indenture under which the only collateral consists of Debt Securities
issued under this Indenture, provided that there shall be excluded from the
operation of this paragraph (A) this Indenture with respect to the Debt
Securities of any series; (B) the following indentures dated as of the
dates indicated between the Company and Wells Fargo Bank, National
Association, as amended or supplemented from time to time and as to which
the Trustee was appointed as successor trustee: indenture dated as of
December 1, 1973, under which the Company's 7 7/8% Debentures due December
1, 2003 were issued, indenture dated as of February 15, 1975, under which
the Company's 8 7/8% Debentures due December 15, 2005 were issued,
indenture dated as of May 1, 1976, under which the Company's 8 3/4%
Debentures due May 1, 2001 were issued, indenture dated as of May 15, 1977,
under which the Company's 8.35% Debentures due May 15, 2007 were issued,
indenture dated as of November 1, 1981, indenture dated as of April 13,
1982, under which the Company's Money Multiplier Notes due 1992 were
issued, and indenture dated as of May 31, 1982, under which the Company's
Money Multiplier Notes due 1993 were issued; (C) the indenture dated as of
November 1, 1983, between the Company and The Bank of California, National
Association, as amended and supplemented from time to time, and as to which
the Trustee was appointed as successor trustee, under which the Company's
Three Year Extendible Notes due November 15, 1995, Three Year Extendible
Notes due February 1,1996, Extendible Notes due May 1, 1994 and Medium Term
Notes, Series C, were issued; (D) the indenture between the Company and the
Trustee dated as of July 15, 1988, under which the Company's Medium Term
Notes, Series D were issued, and the First Supplemental Indenture to such
indenture dated as of November 1, 1990, pursuant to which the Company's
Medium Term Notes, Series E, were issued; and (E) any other indenture or
indentures hereafter qualified under the Trust Indenture Act under which
other securities, or certificates of interest or participation in other
securities, of the Company are outstanding, and
(i) this Indenture and such other indenture or indentures (and
all series of securities issuable thereunder) are wholly unsecured and
rank equally, unless the Commission shall have found and declared by
order pursuant to Section 305(b) or Section 307(c) of the Trust
Indenture Act that differences exist between the provisions of this
Indenture with respect to the Debt Securities of such series and one
or more other series or the provisions of such other indenture or
indentures which are so likely to involve a material
<PAGE>
33
conflict of interest as to make it necessary in the public interest or
for the protection of investors to disqualify the Trustee from acting
as such under this Indenture with respect to the Debt Securities of
such series and such other series or under such other indenture or
indentures, or
(ii) the Company shall have sustained the burden of proving, on
application to the Commission and after opportunity for hearing
thereon, that trusteeship under this Indenture with respect to the
Debt Securities of such series and such other series or such other
indenture or indentures is not so likely to involve a material
conflict of interest as to make it necessary in the public interest or
for the protection of investors to disqualify the Trustee from acting
as such under this Indenture with respect to the Debt Securities of
such series and such other series or under such other indenture or
indentures;
(2) the Trustee or any of its directors or executive officers is an
underwriter for the Company;
(3) the Trustee directly or indirectly controls or is directly or
indirectly controlled by or is under direct or indirect common control with
the Company or an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee or representative of the
Company, or of an underwriter (other than the Trustee itself) for the
Company who is currently engaged in the business of underwriting, except
that (i) one individual may be a director or an executive officer, or both,
of the Trustee and a director or an executive officer, or both of the
Company but may not be at the same time an executive officer of both the
Trustee and the Company; (ii) if and so long as the number of directors of
the Trustee in office is more than nine, one additional individual may be a
director or an executive officer, or both, of the Trustee and a director of
the Company, and (iii) the Trustee may be designated by the Company or by
any underwriter for the Company to act in the capacity of transfer agent,
registrar, custodian, paying agent, fiscal agent, escrow agent, or
depositary, or in any other similar capacity, or, subject to the provisions
of paragraph (1) of this Subsection, to act as trustee, whether under an
indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by the Company or by any director, partner, or
executive officer thereof, or 20% or more of such voting securities is
beneficially owned, collectively, by any two or more of such persons; or
10% or more of the voting securities of the Trustee is beneficially owned
either by an underwriter for the Company or by any director, partner or
executive officer thereof, or is beneficially owned, collectively, by any
two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), (i) 5% or more of the voting securities, or 10% or
more of any other class of security, of the Company not including the Debt
Securities issued under this Indenture and securities issued under any
other indenture under which the Trustee is also trustee, or (ii) 10% or
more of any class of security of an underwriter for the Company;
(7) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 5% or more of the voting securities of any person who,
to the knowledge of the Trustee, owns 10% or more of the voting securities
of, or controls directly or indirectly or is under direct or indirect
common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 10% or more of any class of security of any person
who, to the knowledge of the Trustee, owns 50% or more of the voting
securities of the Company;
(9) the Trustee owns, on the date an Event of Default (as defined
herein, but exclusive of any period of grace or requirement of notice) has
occurred upon the Debt Securities of any series or any anniversary of such
default while such default upon such Debt Securities remains outstanding,
in the capacity of executor, administrator, testamentary or inter vivos
trustee, guardian, committee or conservator, or in any other similar
capacity, an aggregate of 25% or more of the voting securities, or of any
class of security, of any person, the beneficial ownership of a specified
percentage of which would have constituted a conflicting interest under
paragraph (6), (7) or (8) of this Subsection. As to any such securities of
which the Trustee acquired ownership through becoming executor,
administrator or testamentary trustee of an estate which included
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34
them, the provisions of the preceding sentence shall not apply, for a
period of two years from the date of such acquisition, to the extent that
such securities included in such estate do not exceed 25% of such voting
securities or 25% of any such class of security. Promptly after the dates
of any such Event of Default upon the Debt Securities of any series and
annually in each succeeding year that such Event of Default upon such Debt
Securities continues, the Trustee shall make a check of its holdings of
such securities in any of the above-mentioned capacities as of such dates.
If the Company fails to make payments in full of the principal of (or
premium, if any), or interest on, any of the Debt Securities or coupons
when and as the same becomes due and payable, and such failure continues
for 30 days thereafter, the Trustee shall make a prompt check of its
holdings of such securities in any of the above-mentioned capacities as of
the date of the expiration of such 30-day period, and after such date,
notwithstanding the foregoing provisions of this paragraph, all such
securities so held by the Trustee, with sole or joint control over such
securities vested in it, shall, but only so long as such failure shall
continue, be considered as though beneficially owned by the Trustee for the
purposes of paragraphs (6), (7) and (8) of this Subsection; or
(10) except under the circumstances described in paragraphs (1), (3),
(4), (5) or (6) of Section 613(b), the Trustee shall be or shall become a
creditor of the Company.
For purposes of paragraph (1) of this Subsection, and of Sections 512 and
513, the term "series" means a series, class or group of securities issuable
under an indenture or this Indenture pursuant to whose terms holders of one such
series may vote to direct the trustee, or otherwise take action pursuant to a
vote of such holders, separately from holders of another such series; provided
that "series" shall not include any series of securities issuable under an
indenture (including any series of Debt Securities issuable under this
Indenture) if all such series rank equally and are wholly unsecured.
The specifications of percentages on paragraphs (5) to (9), inclusive, of
this Subsection shall not be construed as indicating that the ownership of such
percentages of the securities of a person is or is not necessary or sufficient
to constitute direct or indirect control for the purpose of paragraph (3) or (7)
of this Subsection.
For the purposes of paragraphs (6), (7), (8) and (9) of this Subsection
only, (i) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not include
any note or other evidence of indebtedness issued to evidence an obligation to
repay moneys lent to a person by one or more banks, trust companies or banking
firms, or any certificate of interest or participation in any such note or
evidence of indebtedness; (ii) an obligation shall be deemed to be "in default"
when a default in payment of principal shall have continued for 30 days or more
and shall not have been cured; and (iii) the Trustee shall not be deemed to be
the owner or holder of (A) any security which it holds as collateral security,
as trustee or otherwise, for an obligation which is not in default as defined in
Clause (ii) above, or (B) any security which it holds as collateral security
under this Indenture, irrespective of any default hereunder, or (C) any security
which it holds as agent for collection, or as custodian, escrow agent or
depositary, or in any similar representative capacity.
(d) For the purposes of this Section:
(1) The term "underwriter" when used with reference to the Company
means every person who, within one year prior to the time as of which the
determination is made, has purchased from the Company with a view to, or
has offered or sold for the Company in connection with, the distribution of
any security of the Company outstanding at such time, or has participated
or has had a direct or indirect participation in any such undertaking, or
has participated or has had a participation in the direct or indirect
underwriting of any such undertaking, but such term shall not include a
person whose interest was limited to a commission from an underwriter or
dealer not in excess of the usual and customary distributors' or sellers'
commission.
(2) The term "director" means any director of a corporation, or any
individual performing similar functions with respect to any organization
whether incorporated or unincorporated.
(3) The term "person" means an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, an
unincorporated organization, or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only a
trust where the interest or interests of the beneficiary or beneficiaries
are evidenced by a security.
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35
(4) The term "voting security" means any security presently entitling
the Owner or holder thereof to vote in the direction or management of the
affairs of a person, or any security issued under or pursuant to any trust,
agreement or arrangement whereby a trustee or trustees or agent or agents
for the owner or holder of such security are presently entitled to vote in
the direction of management of the affairs of a person.
(5) The term "Company" means any obligor upon the Debt Securities of
any series or any related coupons.
(6) The term "executive officer" means the president, every vice
president, every trust officer, the cashier, the secretary, and the
treasurer of a corporation, and any individual customarily performing
similar functions with respect to any organization, whether incorporated or
unincorporated, but shall not include the chairman of the board of
directors.
(e) The percentages of voting securities and other securities specified in
this Section shall be calculated in accordance with the following provisions:
(1) A specified percentage of the voting securities of the Trustee,
the Company or any other person referred to in this Section (each of whom
is referred to as a "person" in this paragraph) means such amount of the
outstanding voting securities of such person as entitles the holder or
holders thereof to cast such specified percentage of the aggregate votes
which the holders of all the outstanding voting securities of such person
are entitled to cast in the direction or management of the affairs of such
person.
(2) A specified percentage of a class of securities of a person means
such percentage of the aggregate amount of securities of the class
outstanding.
(3) The term "amount", when used in regard to securities, means the
principal amount if relating to evidences of indebtedness, the number of
shares if relating to capital shares, and the number of units if relating
to any other kind of security.
(4) The term "outstanding" means issued and not held by or for the
account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund relating to
securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating to
another class of securities of the issuer, if the obligation evidenced
by such other class of securities is not in default as to principal or
interest or otherwise;
(iii) securities pledged by the issuer thereof as security for an
obligation of the issuer not in default as to principal or interest or
otherwise; and
(iv) securities held in escrow if placed in escrow by the issuer
thereof;
provided however, that any voting securities of an issuer shall be deemed
outstanding if any person other than the issuer is entitled to exercise the
voting rights thereof.
(5) A security shall be deemed to be of the same class as another
security if both securities confer upon the holder or holders thereof
substantially the same rights and privileges; provided, however, that in
the case of secured evidences of indebtedness, all of which are issued
under a single indenture, differences in the interest rates or maturity
dates of various series thereof shall not be deemed sufficient to
constitute such series different classes and provided, further, that, in
the case of unsecured evidences of indebtedness, differences in the
interest rates or maturity dates thereof shall not be deemed sufficient to
constitute them securities of different classes, whether or not they are
issued under a single indenture.
(f) Except in the case of an Event of Default in the payment of the
principal of or interest on any Debt Securities of any series, or in the payment
of any sinking or purchase fund installment, the Trustee shall not be required
to resign as provided by this Section if the Trustee shall have sustained the
burden of proving, on application to the Commission and after opportunity for
hearing thereon, that (i) the Event of Default under this Indenture may be cured
or waived during a reasonable period and under the procedures described in such
application, and (ii) a stay of the Trustee's duty to resign will not be
inconsistent with the interests of Holders of
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36
such Debt Securities. The filing of such an application shall automatically stay
the performance of the duty to resign until the Commission orders otherwise.
(g) If Section 310(b) of the Trust Indenture Act is amended at any time
after the date of this Indenture to change the circumstances under which a
Trustee shall be deemed to have a conflicting interest with respect to the Debt
Securities of any series or to change any of the definitions in connection
therewith, this Section 608 shall be automatically amended to incorporate such
changes, unless such changes would cause any Trustee then acting as Trustee
hereunder with respect to any Outstanding Debt Securities to be deemed to have a
conflicting interest, in which case such changes shall be incorporated herein
only to the extent that such changes (i) would not cause the Trustee to be
deemed to have a conflicting interest or (ii) are required by law.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States,
any State thereof or the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $5,000,000, and subject to supervision or examination by Federal or State
authority, provided however, that if Section 310(a) of the Trust Indenture Act
or the rules and regulations of the Commission under the Trust Indenture Act at
any time permit a corporation organized and doing business under the laws of any
other jurisdiction to serve as trustee of an indenture qualified under the Trust
Indenture Act, this Section 609 shall be automatically wended to permit a
corporation organized and doing business under the laws of any such other
jurisdiction to serve as Trustee hereunder. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. Neither the Company nor any person directly or
indirectly controlling, controlled by or under common control with the Company
may serve as Trustee. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(b) The Trustee may resign at any time with respect to the Debt Securities
of one or more series by giving written notice thereof to the Company. If an
instrument of acceptance by a successor Trustee shall not have been delivered to
the Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Debt Securities of such
series.
(c) The Trustee may be removed at any time with respect to the Debt
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Debt Securities of such series, delivered to the Trustee and
to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608(a) with respect
to the Debt Securities of any series after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a Debt Security
of such series for at least six months, unless the Trustee's duty to resign
has been stayed as provided in Section 608(f) or
(2) the Trustee shall cease to be eligible under Section 609 with
respect to any series of Debt Securities and shall fail to resign after
written request therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting with respect to any
series of Debt Securities or a decree or order for relief by a court having
jurisdiction in the premises shall have been entered in respect of the
Trustee in an involuntary case under the Federal bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal or State bankruptcy,
insolvency or similar law; or a decree or order by a court having
jurisdiction in the premises shall have been entered for the appointment of
a receiver, custodian, liquidator,
<PAGE>
37
assignee, trustee, sequestrator or other similar official of the Trustee or
of its property or affairs, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation, winding up or liquidation, or
(4) the Trustee shall commence a voluntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or State bankruptcy, insolvency or similar law or shall consent to
the appointment of or taking possession by a receiver, custodian,
liquidator, assignee, trustee, sequestrator or other similar official of
the Trustee or its property or affairs, or shall make an assignment for the
benefit of creditors, or shall admit in writing its inability to pay its
debts generally as they become due, or shall take corporate action in
furtherance of any such action,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to such series or (ii) subject to Section 514, any Holder
who has been a bona fide Holder of a Debt Security of any series for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Trustee for the Debt
Securities of such series and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of acting
with respect to any series of Debt Securities, or if a vacancy shall occur in
the office of Trustee for any cause, with respect to the Debt Securities or one
or more series, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee or Trustees with respect to the Debt Securities of that or
those series (it being understood that any such successor Trustee may be
appointed with respect to the Debt Securities of one or more or all of such
series and that at any time there shall be only one Trustee with respect to the
Debt Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Debt Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Debt Securities of
such series delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Trustee with respect to the Debt Securities of such series
and to that extent supersede the successor Trustee appointed by the Company. If
no successor Trustee with respect to the Debt Securities of any series shall
have been so appointed by the Company or the Holders and accepted appointment in
the manner hereinafter provided, any Holder who has been a bona fide Holder of a
Debt Security of such series for at least six months may, subject to Section
514, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee with
respect to the Debt Securities of such series.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Debt Securities of any series and each
appointment of a successor Trustee with respect to the Debt Securities of any
series by mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of Registered Securities, if any, of such series as
their names and addresses appear in the Security Register and, if Debt
Securities of such series are issuable as Bearer Securities, by publishing
notice of such event once in an Authorized Newspaper in each Place of Payment
located outside the United States. Each notice shall include the name of the
successor Trustee with respect to the Debt Securities of such series and the
address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
(a) In the case of an appointment hereunder of a successor Trustee with
respect to all Debt Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on request of
the Company or the successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Debt Securities of one or more (but not all) series, the Company,
the retiring Trustee upon payment of its charges and each successor Trustee
<PAGE>
38
with respect to the Debt Securities of one or more series shall execute and
deliver an indenture supplemental hereto wherein each successor Trustee shall
accept such appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Debt Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee is
not retiring with respect to all Debt Securities, shall contain such provisions
as shall be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to the Debt
Securities of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Trustee; and upon the execution and delivery of such supplemental
indenture, the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Debt Securities of that or those series to which the appointment of such
successor Trustee relates; but, on the request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Debt Securities of that or those series to which the
appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in
paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the executing or filing of any paper or any further act on the
part of any of the parties hereto. In case any Debt Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Debt Securities so authenticated with the
same effect as if such successor Trustee had itself authenticated such Debt
Securities. In case any Debt Securities shall not have been authenticated by
such predecessor Trustee, any such successor Trustee may authenticate and
deliver such Debt Securities, in either its own name or that of its predecessor
Trustee, with the full force and effect which this Indenture provides for the
certificate of authentication of the Trustee.
SECTION 613. Preferential Collection of Claims Against Company.
(a) Subject to Subsection (b) of this Section, if the Trustee shall be or
shall become a creditor, directly or indirectly, secured or unsecured, of the
Company within three months prior to a default, as defined in Subsection (c) of
this Section, or subsequent to such a default, then, unless and until such
default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually, the Holders of the Debt
Securities and coupons and the holders of other indenture securities (as defined
in Subsection (c) of this Section):
(1) an amount equal to any and all reductions in the amount due and
owing upon any claim as such creditor in respect of principal or interest,
effected after the beginning of such three-month period and valid as
against the Company and its other creditors, except any such reduction
resulting from the receipt or disposition of any property described in
paragraph (2) of this Subsection, or from the exercise of any right of
set-off which the Trustee could have exercised if a voluntary or
involuntary case had been commenced in respect of the
<PAGE>
39
Company under the Federal bankruptcy laws, as now or hereafter constituted,
or any other applicable Federal or State bankruptcy, insolvency or other
similar law upon the date of such default; and
(2) all property received by the Trustee in respect of any claim as
such creditor, either as security therefor, or in satisfaction or
composition thereof, or otherwise, after the beginning of such three-month
period, or an amount equal to the proceeds of any such property, if
disposed of, subject, however, to the rights, if any, of the Company and
its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account of any
such claim by any Person (other than the Company) who is liable thereon,
and (ii) the proceeds of the bona fide sale of any such claim by the
Trustee to a third Person, and (iii) distributions made in cash, securities
or other property in respect of claims filed against the Company in
bankruptcy or receivership or in proceedings for reorganization pursuant to
the Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency or other similar law;
(B) to realize, for its own account, upon any property held by it as
security for any such claim, if such property was so held prior to the
beginning of such three-month period;
(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned, upon any property held by it as security for
any such claim, if such claim was created after the beginning of such
three-month period and such property was received as security therefor
simultaneously with the creation thereof, and if the Trustee shall sustain
the burden of proving that at the time such property was so received the
Trustee had no reasonable cause to believe that a default as defined in
Subsection (c) of this Section would occur within three months; or
(D) to receive payment on any claim referred to in paragraph (B) or
(C), against the release of any property held as security for such claim as
provided in paragraph (B) or (C), as the case may be, to the extent of the
fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted after
the beginning of such three-month period for property held as security at the
time of such substitution shall, to the extent of the fair value of the property
released, have the same status as the property released, and, to the extent that
any claim referred to in any of such paragraphs is created in renewal of or in
substitution for or for the purpose of repaying or refunding any preexisting
claim of the Trustee as such creditor, such claim shall have the same status as
such pre-existing claim.
If the Trustee shall be required to account, the funds and property held in
such special account and the proceeds thereof shall be apportioned among the
Trustee, the Holders and the holders of other indenture securities in such
manner that the Trustee, the Holders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or State bankruptcy, insolvency or other similar law, the same
percentage of their respective claims, figured before crediting to the claim of
the Trustee anything on account of the receipt by it from the Company of the
funds and property in such special account and before crediting to the
respective claims of the Trustee and the Holders and the holders of other
indenture securities dividends on claims filed against the Company in bankruptcy
or receivership or in proceedings for reorganization pursuant to the Federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or State bankruptcy, insolvency or other similar law, but after
crediting thereon receipts on account of the indebtedness represented by their
respective claims from all sources other than from such dividends and from the
funds and property so held in such special account As used in this paragraph,
with respect to any claim, the term "dividends" shall include any distribution
with respect to such claim, in bankruptcy or receivership or proceedings for
reorganization pursuant to the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or State bankruptcy, insolvency or
other similar law, whether such distribution is made in cash, securities, or
other property, but shall not include any such distribution with respect to the
secured portion, if any, of such claim. The court in which such bankruptcy,
receivership or proceedings for reorganization is pending shall have
jurisdiction (i) to apportion among the Trustee and the Holders and the holders
of other indenture securities, in accordance with the provisions of this
paragraph,
<PAGE>
40
the funds and property held in such special account and proceeds thereof, or
(ii) in lieu of such apportionment, in whole or in part, to give to the
provisions of this paragraph due consideration in determining the fairness of
the distributions to be made to the Trustee and the Holders and the holders of
other indenture securities with respect to their respective claims, in which
event it shall not be necessary to liquidate or to appraise the value of any
securities or other property held in such special account or as security for any
such claim, or to make a specific allocation of such distributions as between
the secured and unsecured portions of such claims, or otherwise to apply the
provisions of this paragraph as a mathematical formula.
Any Trustee which has resigned or been removed after the beginning of such
three-month period shall be subject to the provisions of this Subsection as
though such resignation or removal had not occurred. If any Trustee has resigned
or been removed prior to the beginning of such three-month period, it shall be
subject to the provisions of this Subsection if and only if the following
conditions exist
(i) the receipt of property or reduction of claim, which would have
given rise to the obligation to account, if such Trustee had continued as
Trustee, occurred after the beginning of such three-month period; and
(ii) such receipt of property or reduction of claim occurred within
three months after such resignation or removal.
(b) There shall be excluded from the operation of Subsection (a) of this
Section a creditor relationship arising from
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year or
more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction or by this Indenture, for the purpose of preserving
any property which shall at any time be subject to the lien of this
Indenture or of discharging tax liens or other prior liens or encumbrances
thereon, if notice of such advances and of the circumstances surrounding
the making thereof is given to the Holders at the time and in the manner
provided in this Indenture;
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
(4) an indebtedness created as a result of services rendered or
premises rented, or an indebtedness created as a result of goods or
securities sold in a cash transaction as defined in Section (c) of this
Section;
(5) the ownership of stock or of other securities of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve Act,
as amended, which is directly or indirectly a creditor of the Company; or
(6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fail within the
classification of self-liquidating paper as defined in Subsection (c) of
this Section.
(c) For the purposes of this Section only;
(1) The term "default" means any failure to make payment in full of
the principal of or interest on any of the Debt Securities or upon the
other indenture securities when and as such principal or interest becomes
due and payable.
(2) The term "other indenture securities" means securities upon which
the Company is an obligor outstanding under any other indenture (i) under
which the Trustee is also trustee, (ii) which contains provisions
substantially similar to the provisions of this Section, and (iii) under
which a default exists at the time of the apportionment of the- funds and
property held in such special account
(3) The term "cash transaction" means any transaction in which full
payment for goods or securities sold is made seven days after delivery of
the goods or securities in currency or in checks or other orders drawn upon
banks and payable upon demand.
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41
(4) The term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing tide to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security is
received by the Trustee simultaneously with the creation of the creditor
relationship with the Company arising from the making, drawing, negotiating
or incurring of the draft, bill of exchange, acceptance or obligation.
(5) The term "Company" means any obligor upon the Debt Securities.
SECTION 614. Authenticating Agent.
The Trustee shall upon Company request appoint one or more authenticating
agents (including, without limitation, the Company or any Affiliate thereof
with respect to one or more series of Debt Securities which shall be authorized
on behalf of the Trustee in authenticating Debt Securities of such series in
connection with the issue, delivery, registration of transfer, exchange, partial
redemption or repayment of such Debt Securities. Wherever reference is made in
this Indenture to the authentication of Debt Securities by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication on behalf of the Trustee by an authenticating agent and a
certificate of authentication executed on behalf of the Trustee by an
authenticating agent. Each authenticating agent must be acceptable to the
Company and must be a corporation organized and doing business under the laws of
the United States or of any State, having a principal office in the State of
California or the Borough of Manhattan, The City of New York, having a combined
capital surplus of at least $1,000,000, authorized under such laws to do a trust
business and subject to supervision or examination by Federal or State
authorities or the equivalent foreign authority in the case of an authenticating
agent who is not organized and doing business under the laws of the United
States or of any State thereof or the District of Columbia.
Any corporation succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any paper or any further act on the part of the Trustee
or such authenticating agent.
An authenticating agent may at any time resign with respect to one or more
series of Debt Securities by giving written notice of resignation to the Trustee
and to the Company. The Trustee may at any time terminate the agency of an
authenticating agent with respect to one or more series of Debt Securities by
giving written notice of termination to such authenticating agent and to the
Company. Upon receiving such a notice of resignation or upon such a termination,
or in case at any time an authenticating agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee promptly may appoint
a successor authenticating agent. Any successor authenticating agent upon
acceptance of its appointment hereunder shall become vested with all rights,
powers and duties of its predecessor hereunder, with like effect as if
originally named as an authenticating agent herein. No successor authenticating
agent shall be appointed unless eligible under the provisions of this Section.
The Trustee agrees to pay to each authenticating agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 607.
The provisions of Sections 104, 111, 306, 309, 603, 604 and 605 shall be
applicable to any authenticating agent.
Pursuant to each appointment made under this Section, the Debt Securities
of each series covered by such appointment may have endorsed thereon, in lieu of
the Trustee's certificate of authentication, an alternate certificate of
authentication in substantially the following form:
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This is one of the Debt Securities, of the series designated herein,
described in the within-mentioned Indenture.
BANKERS TRUST COMPANY OF CALIFORNIA, NATIONAL ASSOCIATION
By ______________________________________
As Authenticating Agent for the Trustee
By_____________________________________
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee with
respect to Debt Securities of each series for which it acts as Trustee:
(1) semi-annually, not more than 15 days after the Regular Record Date
in respect of the Debt Securities of such series or on June 30 and December
31 of each year with respect to each series of Debt Securities for which
there are no Regular Record Dates, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Registered
Securities as of such Regular Record Date or June 15 or December 15, as the
case may be, and
(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Security
Registrar, no such list need be furnished.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders of Registered Securities
contained in the most recent list furnished to the Trustee as provided in
Section 701 and the names and addresses of Holders of Registered Securities
received by the Trustee in its capacity as Paying Agent or Security Registrar,
if so acting. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished. The Trustee shall preserve
for at least two years the names and addresses of Holders of Bearer Securities
filed with the Trustee pursuant to Section 703(c).
(b) If three or more Holders of Debt Securities of any series (hereinafter
referred to as "applicants") apply in writing to the Trustee, and furnish to the
Trustee proof that each such applicant has owned a Debt Security for a period of
at least six months preceding the date of such application, and such application
states that the applicants desire to communicate with other Holders of Debt
Securities of such series (in which case the applicants must hold Debt
Securities of such series) or with all Holders of Debt Securities with respect
to their rights under this Indenture or under the Debt Securities and is
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, at its election, either
(i) afford such applicants access to the information preserved at the
time by the Trustee in accordance with Section 702(a), or
(ii) inform such applicants as to the approximate number of Holders of
Debt Securities of such series or of all Debt Securities, as the case may
be, whose names and addresses appear in the information preserved at the
time by the Trustee in accordance with Section 702(a), and as to the
approximate cost of mailing to such Holders the form of proxy or other
communication, if any, specified in such application.
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43
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder whose name and address appear in the information preserved
at the time by the Trustee in accordance with Section 702(a), a copy of the form
of proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five days after such tender, the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the best interests of the Holders
or would be in violation of applicable law. Such written statement shall specify
the basis of such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed, shall enter an
order refusing to sustain any of such objections or if, after the entry of an
order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all the objections so sustained
have been met and shall enter an order so declaring, the Trustee shall mail
copies of such material to all such Holders with reasonable promptness after the
entry of such order and the renewal of such tender, otherwise the Trustee shall
be relieved of any obligation or duty to such applicants respecting their
application.
(c) Every Holder of Debt Securities or coupons, by receiving and holding
the same, agrees with the Company and the Trustee that neither the Company nor
the Trustee shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders in accordance with
Section 702(b), regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under Section 702(b).
SECTION 703. Reports by Trustee.
(a) Within 60 days after May 15 of each year commencing with the year 1992,
the Trustee shall transmit by mail to all Holders of Debt Securities of any
series with respect to which it acts as Trustee, as provided in Subsection (c)
of this Section, a brief report dated as of such May 15 with respect to any of
the following events which may have occurred within the previous twelve months
(but if no such event has occurred within such period, no report need be
transmitted):
(1) any change to its eligibility under Section 609 and its
qualifications under Section 608.
(2) the creation of or any material change to a relationship specified
in paragraphs (1) through (10) of Section 608(c);
(3) the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making thereof) made
by the Trustee (as such) which remain unpaid on the date of such report,
and for the reimbursement of which it claims or may claim a lien or charge,
prior to that of the Debt Securities of such series or any related coupons,
on any property or funds held or collected by it as Trustee, except that
the Trustee shall not be required (but may elect) to report such advances
if such advances so remaining unpaid aggregate not more than 1/2 of 1% of
the principal amount of the Outstanding Debt Securities of such series on
the date of such report;
(4) the mount, interest rate and maturity date of all other
indebtedness owing by the Company (or any other obligor on the Debt
Securities of such series) to the Trustee in its individual capacity, on
the date of such report, with a brief description of any property held as
collateral security therefor, except an indebtedness based upon a creditor
relationship arising in any manner described in Section 613(b) (2), (3),
(4) or (6);
(5) any change to the property and funds, if any, physically in the
possession of the Trustee as such on the date of such report;
(6) any additional issue of Debt Securities which the Trustee has not
previously reported and
(7) any action taken by the Trustee in the performance of its duties
hereunder which it has not previously reported and which in its opinion
materially affects the Debt Securities, except action in respect of a
default, notice of which has been or is to be withheld by the Trustee in
accordance with Section 602;
<PAGE>
44
provided, however, that if the Trust Indenture Act is amended subsequent to the
date hereof to eliminate the requirement of the Trustee's brief report, the
report required by this Section need not be transmitted to any Holders.
(b) The Trustee shall transmit by mail to all Holders of Debt Securities of
any series for which it acts as the Trustee, as provided in Subsection (c) of
this Section, a brief report with respect to the character and amount of any
advances (and if the Trustee elects so to state, the circumstances surrounding
the making thereof) made by the Trustee (as such) since the date of the last
report transmitted pursuant to Subsection (a) of this Section (or if no such
report has yet been so transmitted, since the date of execution of this
instrument) for the reimbursement of which it claims or may claim a right or
charge, prior to that of the Debt Securities of such series, on property or
funds held or collected by it as Trustee, and which it has not previously
reported pursuant to this Subsection, except that the Trustee for each series
shall not be required (but may elect) to report such advances if such advances
remaining unpaid at any time aggregate 10% or less of the principal amount of
the Debt Securities of such series Outstanding at such time, such report to be
transmitted within 90 days after such time.
(c) Reports pursuant to this Section shall be transmitted by mail:
(1) to all Holders of Registered Securities, as the names and
addresses of such Holders appear in the Security Register.
(2) to such Holders of Bearer Securities as have, within the two years
preceding such transmission, filed their names and addresses with the
Trustee for that purpose; and
(3) except in the case of reports pursuant to Subsection (b) of this
Section, to each Holder of a Debt Security whose name and address is
preserved at the time by the Trustee, as provided in Section 702(a).
(d) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any Debt
Securities of such series are listed, with the Commission and also with the
Company. The Company will notify the Trustee when any series of Debt Securities
are listed on any stock exchange.
SECTION 704. Reports by Company.
The Company will:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or, if the Company is not required to file
information, documents or reports pursuant to either of said Sections, then
it will file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a National Securities
Exchange as may be prescribed from time to time in such rules and
regulations;
(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(3) transmit by mail to all Holders of Debt Securities, in the manner
and to the extent provided in Section 703(c) with respect to reports
pursuant to Section 703(a), within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2) of
this Section as may be required by rules and regulations prescribed from
time to time by the Commission.
<PAGE>
45
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other corporation
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, unless:
(1) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer,
or which leases, the properties and assets of the Company substantially as
an entirety shall be a corporation organized and existing under the laws of
the United States of America, any political subdivision thereof or any
State thereof and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of (and premium, if
any) and interest (including all additional amounts, if any, payable
pursuant to Section 1006) on all the Debt Securities and any related
coupons and the performance of every covenant of this Indenture on the part
of the Company to be performed or observed,
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing;
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that such consolidation, merger,
conveyance, transfer or lease and, such supplemental indenture comply with
this Article and that all conditions precedent herein provided for relating
to such transaction have been met.
SECTION 802. Successor Corporation Substituted.
Upon any consolidation with or merger into any other corporation, or any
conveyance, transfer or lease of the properties and assets of the Company
substantially as an entirety in accordance with Section 801, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor had been named as the
Company herein, and thereafter, except in the case of a lease, the Company
(which term for this purpose shall mean the Person named as the "Company" in the
first paragraph of this instrument or any successor corporation which shall
theretofore have become such in the manner presented in this Article) shall be
relieved of all obligations and covenants under this Indenture and the Debt
Securities and coupons.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to evidence the succession of another corporation to the Company,
and the assumption by such successor of the covenants of the Company herein
and in the Debt Securities contained; or
(2) to add to the covenants of the Company, for the benefit of the
Holders of all or any series of Debt Securities or coupons (and if such
covenants are to be for the benefit of less than all series of Debt
Securities, or coupons stating that such covenants are expressly being
included solely for the benefit of such series), to convey, transfer,
assign, mortgage or pledge any property to or with the Trustee, or to
surrender any right or power herein conferred upon the Company, or
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46
(3) to add to any additional Events of Default (and if such Events of
Default are to be applicable to less than all series of Debt Securities,
stating that such Events of Default are expressly being included solely to
be applicable to such series); or
(4) to add to, change or eliminate any of the provisions of this
Indenture to provide that Bearer Securities may be registrable as to
principal, to change or eliminate any restrictions on the payment of
principal (or premium, if any) on Registered Securities or of principal (or
premium, if any) or any interest on Bearer Securities, to permit Bearer
Securities to be issued in exchange for Registered Securities, to permit
Bearer Securities to be issued in exchange for Bearer Securities of other
authorized denominations or to permit or facilitate the issuance of Debt
Securities in uncertificated form, provided any such action shall not
adversely affect the interests of the Holders of Debt Securities of any
series or any related coupons in any material respect; or
(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination (a) shall become effective
only when there is no Debt Security Outstanding of any series created prior
to the execution of such supplemental indenture which is entitled to the
benefit of such provision or (b) shall not apply to any Debt Security
Outstanding; or
(6) to establish the form or terms of Debt Securities of any series as
permitted by Sections 201 and 301; or
(7) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Debt Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 611(b); or
(8) to evidence any changes to Section 608, 609 or 703(a) permitted by
the terms thereof; or
(9) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent with
any provision of this Indenture, provided such other provisions shall not
adversely affect the interests of the Holders of Debt Securities of any
series or any related coupons in any material respect; or
(10) to add to or change or eliminate any provision of this Indenture
as shall be necessary or desirable in accordance with any amendments to the
Trust Indenture Act, provided such action shall not adversely affect the
interest of Holders of Debt Securities of any series or any appurtenant
coupons in any material respect.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than 66 2/3% in principal
amount of the Outstanding Debt Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders under this Indenture of such Debt Securities of such series and any
related coupons provided however, that an indenture supplemental hereto which
changes the required ownership set forth in the definition of Controlled
Subsidiary in Section 101 hereof from 80% to a majority but does not change any
other provision of this Indenture or modify in any other manner the rights of
the Holders of all the Debt Securities under this Indenture may be entered into
with the consent of the Holders of at least a majority in principal amount of
the Outstanding Debt Securities of each series; and provided further, that no
such supplemental indenture shall, without the consent of the Holder of each
Outstanding Debt Security or coupon affected thereby,
(1) change the Stated Maturity of the principal or any instalment of
principal of, or any instalment of interest on, any Debt Security, or
reduce the principal amount thereof or the interest thereon or any premium
payable upon redemption or repayment thereof, or change any obligation of
the Company to pay additional amounts pursuant to Section 1006 (except as
contemplated by Section 801(1) and permitted by Section 901(1)), or reduce
the amount of the principal of an Original Issue Discount Security that
would be due
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47
and payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 502, or change any Place of Payment, or the coin or
currency in which any Debt Security or the interest thereon or any coupon
is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the case
of redemption or repayment, on or after the Redemption Date or Repayment
Date, as the case may be), or
(2) reduce the percentage in principal amount of the Outstanding Debt
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or reduce the requirements of Section 1404 for quorum or voting,
or
(3) modify any of the provisions of this Section, Section 513 or
Section 1008, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Debt Security
affected thereby; provided, however, that this clause shall not be deemed
to require the consent of any Holder with respect to changes in the
references to "the Trustee" and concomitant changes in this Section and
Section 1008, or the deletion of this proviso, in accordance with the
requirements of Section 611(b) and 901(7); or
(4) adversely affect the right to repayment, if any, of Debt
Securities of any series at the option of the Holders thereof.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Debt Securities, or which modifies
the rights of the Holders of Debt Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Debt Securities of any other series.
It shall not be necessary for any Act of Holders of the Debt Securities
under this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Debt Securities theretofore or thereafter authenticated and delivered
hereunder and of any coupons appertaining thereto shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Debt Securities to Supplemental Indentures.
Debt Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Debt Securities of any series and any appurtenant coupons so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated
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48
and delivered by the Trustee in exchange for Outstanding Debt Securities of such
series and any appurtenant coupons.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal. Premium and interest.
The Company covenants and agrees for the benefit of each series of Debt
Securities and any appurtenant coupons that it will duly and punctually pay the
principal of (and premium, if any) and interest on the Debt Securities and any
appurtenant coupons in accordance with the terms of the Debt Securities, any
appurtenant coupons and this Indenture. Any interest due on Bearer Securities on
or before Maturity, other than additional amounts, if any, payable as provided
in Section 1006 in respect of principal of (or premium, if any, on) such a Debt
Security, shall be payable only upon presentation and surrender of the several
coupons for such interest instalments as are evidenced thereby as they severally
mature.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of Debt
Securities an office or agency where Debt Securities (but, except as otherwise
provided below, unless such Place of Payment is located outside the United
States, not Bearer Securities) may be presented or surrendered for payment,
where Debt Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Debt Securities and this Indenture may be served. If Debt Securities of a series
are issuable as Bearer Securities, the Company will maintain, subject to any
laws or regulations applicable thereto, an office or agency in a Place of
Payment for such series which is located outside the United States where Debt
Securities of such series and the related coupons may be presented and
surrendered for payment (including payment of any additional amounts payable on
Debt Securities of such series pursuant to Section 1006); provided, however,
that if the Debt Securities of such series are listed on The Stock Exchange of
the United Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange
or any other stock exchange located outside the United States and such stock
exchange shall so require, the Company will maintain a Paying Agent in London or
Luxembourg or any other required city located outside the United States, as the
case may be, so long as the Debt Securities of such series are listed on such
exchange. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of any such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee its agent to receive all presentations, surrenders, notices and demands,
except that Bearer Securities of that series and the related coupons may be
presented and surrendered for payment (including payment of any additional
amounts payable on Bearer Securities of that series pursuant to Section 1006) at
the place specified for the purpose pursuant to Section 301(5).
No payment of principal of, premium or interest on Bearer Securities shall
be made at any office or agency of the Company in the United States or by check
mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States; provided however, payment
of principal of and any premium and interest denominated in Dollars (including
additional amounts payable in respect thereof) on any Bearer Security may be
made at an office or agency of, and designated by, the Company located in the
United States if (but only if) payment of the full amount of such principal,
premium, interest or additional amounts in Dollars at all offices outside the
United States maintained for the purpose by the Company in accordance with this
Indenture is illegal or effectively precluded by exchange controls or other
similar restrictions and the Trustee receives an Opinion of Counsel that such
payment within the United States is legal. Unless otherwise provided as
contemplated by Section 301 with respect to any series of Debt Securities, at
the option of the Holder of any Bearer Security or related coupon, payment may
be made by check in the currency designated for such payment pursuant to the
terms of such Bearer Security presented or mailed to an address outside the
United States or by transfer to an account in such currency maintained by the
payee with a bank located outside the United States.
<PAGE>
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The Company may also from time to time designate one or more other offices
or agencies (in or outside of such Place of Payment) where the Debt Securities
of one or more series and any appurtenant coupons (subject to the preceding
paragraph) may be presented or surrendered for any or all such purposes, and may
from time to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in each Place of Payment for any
series of Debt Securities, for such purposes. The Company will give prompt
written notice to the Trustee of any such designation and any change in the
location of any such other office or agency.
SECTION 1003. Money for Debt Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Debt Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Debt Securities of
such series and any appurtenant coupons, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the principal
(and premium, if any) or interest so becoming due until such sums shall be paid
to such Persons or otherwise disposed of as herein provided, and will promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents with respect to
any series of Debt Securities, it will, prior to each due date of the principal
of (and premium, if any) or interest on any Debt Securities of such series and
any appurtenant coupons, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act
The Company will cause each Paying Agent with respect to any series of Debt
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Debt Securities of such series and any
appurtenant coupons in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Debt Securities of such series or any appurtenant
coupons) in the making of any payment of principal of (and premium, if any)
or interest on the Debt Securities of such series or any appurtenant
coupons; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of terminating its obligations
under this Indenture with respect to Debt Securities of any series or for any
other purpose, pay, or by Company Order direct any Paying Agent to pay, to the
Trustee all sums held in trust by the Company or such Paying Agent, such sums to
be held by the Trustee upon the same trusts as those upon which such sums were
held by the Company or such Paying Agent; and, upon such payment by any Paying
Agent to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any principal and interest received on the Eligible Instruments deposited
with the Trustee or any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of (and
premium, if any) or interest on any Debt Security of any series or any
appurtenant coupons or any money on deposit with the Trustee or any Paying Agent
representing amounts deducted from the Redemption Price or Repayment Price with
respect to unmatured coupons not presented upon redemption or exercise of the
Holder's option for repayment pursuant to Section 1106 or 1303 and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Debt Security or any coupon appertaining thereto shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money (including the principal and interest received on
Eligible Instruments deposited with the Trustee), and all liability of the
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Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in an Authorized
Newspaper of general circulation in each of the City and County of San Francisco
and the Borough of Manhattan, The City of New York, and each Place of Payment or
mailed to each such Holder, or both, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication or mailing, any unclaimed balance of such
money then remaining will be repaid to the Company.
SECTION 1004. Limitation on Mortgages and Liens.
So long as any of the Debt Securities shall be outstanding, the Company
shall not create, assume, incur or suffer to exist, as security for indebtedness
for borrowed money, any mortgage, pledge, encumbrance or lien or charge of any
kind upon the Voting Stock of the Bank (other than directors' qualifying shares)
without effectively providing that the Debt Securities shall be secured equally
and ratably with (or prior to) such indebtedness; provided, however, that the
Company may create, assume, incur or suffer to exist any such mortgage, pledge,
encumbrance or lien or charge without regard to the foregoing provisions so long
as after giving effect thereto, the Company will own at least 80% of the Voting
Stock of the Bank then issued and outstanding, free and clear of any such
mortgage, pledge, encumbrance or lien or charge.
SECTION 1005. Limitation on Disposition of Voting Stock of and Merger and
Sale of Assets by the Bank.
The Company will not:
(1) sell, transfer or otherwise dispose of any shares of Voting Stock
of the Bank or permit the Bank to issue, sell, or otherwise dispose of any
shares of its Voting Stock, unless, after giving effect to any such
transaction, the Bank remains a Controlled Subsidiary; or
(2) permit the Bank to
(a) merge or consolidate, unless the surviving corporation is a
Controlled Subsidiary; or
(b) convey or transfer its properties and assets substantially as
an entirety to any Person, except to a Controlled Subsidiary.
SECTION 1006. Payment of Additional Amounts.
If the Debt Securities of a series provide for the payment of additional
amounts, the Company will pay to the Holder of any Debt Security of any series
or any coupon appertaining thereto additional amounts upon the terms and subject
to the conditions provided therein. Whenever in this Indenture there is
mentioned, in any context, the payment of the principal of (or premium, if any)
or interest on, or in respect of, any Debt Security of any series or any related
coupon or the net proceeds received on the sale or exchange of any Debt Security
of any series, such mention shall be deemed to include mention of the payment of
additional amounts provided for in the terms of such Debt Securities and this
Section to the extent that, in such context, additional amounts are, were or
would be payable in respect thereof pursuant to the provisions of this Section
and express mention of the payment of additional amounts (if applicable) in any
provisions hereof shall not be construed as excluding additional amounts in
those provisions hereof where such express mention is not made.
If the Debt Securities of a series provide for the payment of additional
amounts, at least 10 days prior to the first Interest Payment Date with respect
to that series of Debt Securities (or if the Debt Securities of that series will
not bear interest prior to Maturity, the first day on which a payment of
principal (and premium, if any) is made), and at least 10 days prior to each
date of payment of principal (and premium, if any) or interest if there has been
any change with respect to the matters set forth in the below-mentioned
Officers' Certificate, the Company will furnish the Trustee and the Company's
principal Paying Agent or Paying Agents, if other than the Trustee, with an
Officers' Certificate instructing the Trustee and such Paying Agent or Paying
Agents whether such payment of principal of (and premium, if any) or interest on
the Debt Securities of that series shall be made to Holders of Debt Securities
of that series or the related coupons who are United States Aliens without
withholding for or on account of any tax, assessment or other governmental
charge described in the Debt Securities of that series. If any such withholding
shall be required, then such Officers' Certificate shall specify by country the
amount, if any, required to
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be withheld on such payments to such Holders of Debt Securities or coupons and
the Company will pay to the Trustee or such Paying Agent the additional amounts,
if any, required by the terms of such Debt Securities and the first paragraph of
this Section. The Company covenants to indemnify the Trustee and any Paying
Agent for, and to hold them harmless against, any loss, liability or expense
reasonably incurred without 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
Officers' Certificate furnished pursuant to this Section.
SECTION 1007. Officers' Certificate as to Default.
The Company will deliver to the Trustee, on or before a date not more than
four months after the end of each fiscal year of the Company (which on the date
hereof is the calendar year) ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture, and, if the Company shall be in
default, specifying all such defaults and the nature thereof of which they may
have knowledge.
The Company will deliver written notice to the Trustee promptly after any
officer of the Company has knowledge of the occurrence of any event which with
the giving of notice or the lapse of time or both would become an Event of
Default under Clause (5) of Section 501.
SECTION 1008. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any covenant
or condition set forth in Sections 1004 and 1005, with respect to the Debt
Securities of any series if, before the time for such compliance the Holders of
at least 66 2/3% in principal amount of the Debt Securities of such series at
the time Outstanding shall, by Act of such Holders, either waive such compliance
in such instance or generally waive compliance with such covenant or condition,
but no such waiver shall extend to or affect such covenant or condition except
to the extent so expressly waived, and, until such waiver shall become
effective, the obligations of the Company and the duties of the Trustee in
respect of any such covenant or condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF DEBT SECURITIES
SECTION 1101. Applicability of Article.
Debt Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Debt Securities of any
series) in accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Debt Securities shall be
evidenced by an Officers' Certificate authorized by or pursuant to a Board
Resolution. In case of any redemption at the election of the Company of less
than all of the Debt Securities of any series, the Company shall, at least 45
days prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date and of the principal amount and the tenor and terms of the Debt Securities
of any series to be redeemed. In the case of any redemption of Debt Securities
prior to the expiration of any restriction on such redemption provided in the
terms of such Debt Securities or elsewhere in this Indenture, the Company shall
furnish the Trustee with an Officers' Certificate evidencing compliance with
such restriction.
SECTION 1103. Selection by Trustee of Debt Securities to Be Redeemed.
Except as otherwise specified as contemplated by Section 301 for Debt
Securities of any series, if less than all the Debt Securities of any series
with like tenor and terms are to be redeemed, the particular Debt Securities to
be redeemed shall be selected not more than 60 days prior to the Redemption Date
by the Trustee, from the Outstanding Debt Securities of such series with like
tenor and terms not previously called for redemption, by such method as the
Trustee shall deem fair and appropriate and which may provide for the selection
for redemption of portions (equal to the minimum authorized denomination for
Debt Securities of such series or any integral multiple
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52
thereof which is also an authorized denomination) of the principal amount of
Registered Securities or Bearer Securities (if issued in more than one
authorized denomination) of such series of a denomination larger than the
minimum authorized denomination for Debt Securities of such series.
The Trustee shall promptly notify the Company in writing of the Debt
Securities selected for redemption and, in the case of any Debt Securities
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Debt Securities shall relate, in
the case of any Debt Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Debt Security which has been or is to be
redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given in the manner provided in Section 106
not less than 30 nor more than 60 days prior to the Redemption Date, to each
Holder of Debt Securities to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Debt Securities of any series are to
be redeemed, the identification (and, in the case of partial redemption,
the principal amounts) of the particular Debt Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Debt Security to be redeemed, and that interest
thereon shall cease to accrue on and after said date,
(5) the Place or Places of Payment where such Debt Securities,
together in the case of Bearer Securities with all coupons, if any,
appertaining thereto maturing after the Redemption Date, are to be
surrendered for payment of the Redemption Price,
(6) that Bearer Securities may be surrendered for payment only at such
place or places which are outside the United States, except as otherwise
provided in Section 1002,
(7) that the redemption is for a sinking fund, if such is the case,
and
(8) the CUSIP number, if any.
A notice of redemption published as contemplated by Section 106 need not
identify particular Registered Securities to be redeemed.
Notice of redemption of Debt Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money and/or, to the extent the Debt Securities to be redeemed are denominated
and payable in Dollars only, Eligible Instruments the payments of principal and
interest on which when due (and without reinvestment and providing no tax
liability will be imposed upon the Trustee or the Holders of the Debt Securities
to be redeemed) will provide money on or prior to the Redemption Date in such
amounts as will (together with any money irrevocably deposited in trust with the
Trustee, without investment) be sufficient to pay the Redemption Price of, and
(except if the Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Debt Securities or portions thereof which are to be
redeemed on that date provides however, that deposits with respect to Bearer
Securities shall be made with a Paying Agent or Paying Agents located outside
the United States except as otherwise provided in Section 1002, unless otherwise
specified as contemplated by Section 301.
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SECTION 1106. Debt Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Debt Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Debt Securities shall cease to bear interest and the coupons for
such interest appertaining to any Bearer Securities so to be redeemed, except to
the extent provided below, shall be void. Upon surrender of any such Debt
Security for redemption in accordance with said notice, such Debt Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that instalments of interest on
Bearer Securities whose Stated Maturity is on or prior to the Redemption Date
shall be payable only upon presentation and surrender of coupons for such
interest (at an office or agency located outside the United States except as
otherwise provided in Section 1002), and provided further, that instalments of
interest on Registered Securities whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Debt Securities, or one
or more Predecessor Securities, registered as such on the relevant Record Dates
according to their terms and the provisions of Section 307.
If any Bearer Security surrendered for redemption shall not be accompanied
by all appurtenant coupons maturing after the Redemption Date, such Bearer
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Bearer
Security shall surrender to the Trustee or any Paying Agent any such missing
coupon in respect of which a deduction shall have been made from the Redemption
Price, such Holder shall be entitled to receive the amount so deducted without
interest thereon; provided however, that interest represented by coupons shall
be payable only upon presentation and surrender of those coupons at an office or
agency located outside of the United States except as otherwise provided in
Section 1002.
If any Debt Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Debt Security.
SECTION 1107. Debt Securities Redeemed in Part.
Any Registered Security which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company, the Security
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Debt Security without
service charge, a new Registered Security or Registered Securities of the same
series and of like tenor and terms, of any authorized denominations as requested
by such Holder in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Debt Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Debt Securities of a series except as otherwise specified as
contemplated by Section 301 for Debt Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Debt Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
term of Debt Securities of any series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of Debt Securities of any
series, the amount of any sinking fund payment may be subject to reduction as
provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Debt Securities of any series as provided for by the terms of Debt
Securities of such series.
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SECTION 1202. Satisfaction of Sinking Fund Payments with Debt Securities.
The Company (1) may deliver Outstanding Debt Securities of a series (other
than any previously called for redemption), together in the case of any Bearer
Securities of such series with all unmatured coupons appertaining thereto, and
(2) may apply as a credit Debt Securities of a series which have been redeemed
either at the election of the Company pursuant to the terms of such Debt
Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Debt Securities, in each case in
satisfaction of all or any part of any sinking fund payment with respect to the
Debt Securities of such series required to be made pursuant to the terms of such
Debt Securities as provided for by the terms of such series; provided that such
Debt Securities have not been previously so credited. Such Debt Securities shall
be received and credited for such purpose by the Trustee at the Redemption Price
specified in such Debt Securities for redemption through operation of the
sinking fund and the amount of such sinking fund payment shall be reduced
accordingly. If as a result of the delivery or credit of Debt Securities in lieu
of cash payments pursuant to this Section 1202, the principal amount of Debt
Securities to be redeemed in order to exhaust the aforesaid cash payment shall
be less than $100,000, the Trustee need not call Debt Securities for redemption,
except upon Company Request, and such cash payment shall be held by the Trustee
or a Paying Agent and applied to the next succeeding sinking fund payment,
provided, however, that the Trustee or such Paying Agent shall at the request of
the Company from time to time pay over and deliver to the Company any cash
payment so being held by the Trustee or such Paying Agent upon delivery by the
Company to the Trustee of Debt Securities purchased by the Company having an
unpaid principal amount equal to the cash payment requested to be released to
the Company.
SECTION 1203. Redemption of Debt Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Debt Securities (unless a shorter period shall be satisfactory to the
Trustee), the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if any, which is to
be satisfied by payment of cash, the portion thereof, if any, which is to be
satisfied by crediting Debt Securities of that series pursuant to Section 1202
and the basis for any such credit and, prior to or concurrently with the
delivery of such Officers' Certificate, will also deliver to the Trustee any
Debt Securities to be so credited and not theretofore delivered to the Trustee.
Not less than 30 days (unless a shorter period shall be satisfactory to the
Trustee) before each such sinking fund payment date the Trustee shall select the
Debt Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 1103 and cause notice of the redemption thereof to be given
in the name of and at the expense of the Company in the manner provided in
Section 1104. Such notice having been duly given, the redemption of such Debt
Securities shall be made upon the terms and in the manner stated in Sections
1105, 1106 and 1107.
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. Applicability of Article.
Debt Securities of any series which are repayable at the option of the
Holders thereof before their Stated Maturity shall be repaid in accordance with
their terms and (except as otherwise specified pursuant to Section 301 for Debt
Securities of such series) in accordance with this Article.
SECTION 1302. Repayment of Debt Securities.
Each Debt Security which is subject to repayment in whole or in part at the
option of the Holder thereof on a Repayment Date shall be repaid at the
applicable Repayment Price together with interest accrued to such Repayment Date
as specified pursuant to Section 301.
SECTION 1303. Exercise of Option; Notice.
Each Holder desiring to exercise such Holder's option for repayment shall,
as conditions to such repayment, surrender the Debt Security to be repaid in
whole or in part together with written notice of the exercise of such option at
any office or agency of the Company in a Place of Payment, not less than 30 nor
more than 45 days prior to
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the Repayment Date; provided however, that surrender of Bearer Securities
together with written notice of exercise of such option shall be made at an
office or agency located outside the United States except as otherwise provided
in Section 1002. Such notice, which shall be irrevocable, shall specify the
principal amount of such Debt Security to be repaid, which shall be equal to the
minimum authorized denomination for such Debt Security or an integral multiple
thereof, and shall identify the Debt Security to be repaid and, in the case of a
partial repayment of the Debt Security shall specify the denomination or
denominations of the Debt Security or Debt Securities of the same series to be
issued to the Holder for the portion of the principal of the Debt Security
surrendered which is not to be repaid.
If any Bearer Security surrendered for repayment shall not be accompanied
by all unmatured coupons and all matured coupons in default, such Bearer
Security may be paid after deducting from the Repayment Price an amount equal to
the face amount of all such missing coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Bearer
Security shall surrender to the Trustee or any Paying Agent any such missing
coupon in respect of which a deduction shall have been made from the Repayment
Price, such Holder shall be entitled to receive the amount so deducted without
interest thereon; provided, however, that interest represented by coupons shall
be payable only at an office or agency located outside the United States except
as otherwise provided in Section 1002.
The Company shall execute and the Trustee shall authenticate and deliver
without service charge to the Holder of any Registered Security so surrendered a
new Registered Security or Securities of the same series, of any authorized
denomination specified in the foregoing notice, in an aggregate principal amount
equal to any portion of the principal of the Registered Security so surrendered
which is not to be repaid.
The Company shall execute and the Trustee shall authenticate and deliver
without service charge to the Holder of any Bearer Security so surrendered a new
Registered Security or Securities or new Bearer Security or Securities (and all
appurtenant unmatured coupons and matured coupons in default) or any combination
thereof of the same series of any authorized denomination or denominations
specified in the foregoing notice, in an aggregate principal amount equal to any
portion of the principal of the Debt Security so surrendered which is not to be
paid, provided, however, that the issuance of a Registered Security therefor
shall be subject to applicable laws and regulations, including provisions of the
United States federal income tax laws and regulations in effect at the time of
the exchange; neither the Company, the Trustee nor the Security Registrar shall
issue Registered Securities for Bearer Securities if it has received an Opinion
of Counsel that as a result of such issuance the Company would suffer adverse
consequences under the United States federal income tax laws then in effect and
the Company has delivered to the Trustee a Company Order directing the Trustee
not to make such issuances thereafter unless and until the Trustee receives a
subsequent Company Order to the contrary. The Company shall deliver copies of
such Company Order to the Security Registrar.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the repayment of Debt Securities shall relate, in the
case of any Debt Security repaid or to be repaid only in part, to the portion of
the principal of such Debt Security which has been or is to be repaid.
SECTION 1304. Election of Repayment by Remarketing Entities.
The Company may elect, with respect to Debt Securities of any series which
are repayable at the option of the Holders thereof before their Stated Maturity,
at any time prior to any Repayment Date to designate one or more Remarketing
Entities to purchase, at a price equal to the Repayment Price, Debt Securities
of such series from the Holders thereof who give notice and surrender their Debt
Securities in accordance with Section 1303.
SECTION 1305. Securities Payable on the Repayment Date.
Notice of exercise of the option of repayment having been given and the
Debt Securities so to be repaid having been surrendered as aforesaid, such Debt
Securities shall, unless purchased in accordance with Section 1304, on the
Repayment Date become due and payable at the price therein specified and from
and after the Repayment Date such Debt Securities shall cease to bear interest
and shall be paid on the Repayment Date, and the coupons for such interest
appertaining to Bearer Securities so to be repaid, except to the extent provided
above, shall be void, unless the Company shall default in the payment of such
price, in which case the Company shall continue to be obligated
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for the principal amount of such Debt Securities and shall be obligated to pay
interest on such principal amount at the rate borne by such Debt Securities from
time to time until payment in full of such principal amount.
ARTICLE FOURTEEN
MEETINGS OF HOLDERS OF DEBT SECURITIES
SECTION 1401. Purposes for Which Meetings May Be Called.
If Debt Securities of a series are issuable in whole or in part as Bearer
Securities, a meeting of Holders of Debt Securities of such series may be called
at any time and from time to time pursuant to this Article to make, give or take
any request, demand, authorization, direction, notice, consent, waiver or other
Act provided by this Indenture to be made, given or taken by Holders of Debt
Securities of such series.
SECTION 1402. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of Debt
Securities of any series issuable as Bearer Securities for any purpose specified
in Section 1401, to be held at such time and at such place in the City and
County of San Francisco, the Borough of Manhattan, The City of New York, or in
London as the Trustee shall determine. Notice of every meeting of Holders of
Debt Securities of any series, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be given, in the manner provided in Section 106, not less than 21 nor more
than 180 days prior to the date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board Resolution, or the
Holders of at least 10% in principal amount of the Outstanding Debt Securities
of any series shall have requested the Trustee to call a meeting of the Holders
of Debt Securities of such series for any purpose specified in Section 1401, by
written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have made the first publication
of the 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 Company or the Holders of Debt Securities of such series in the amount
above specified, as the case may be, may determine the time and the place in the
City and County of San Francisco, the Borough of Manhattan, The City of New
York, or in London for such meeting and may call such meeting for such purposes
by giving notice thereof as provided in subsection (a) of this Section.
SECTION 1403. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Debt Securities of any
series, a Person shall be (1) a Holder of one or more Outstanding Debt
Securities of such series, or (2) a Person appointed by an instrument in writing
as proxy for a Holder or Holders of one or more Outstanding Debt Securities of
such series by such Holder or Holders. The only Persons who shall be entitled to
be present or to speak at any meeting of Holders of Debt Securities of any
series shall be the Persons entitled to vote at such meeting and their counsel,
any representatives of the Trustee and its counsel and any representatives of
the Company and its counsel.
SECTION 1404. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
Outstanding Debt Securities of a series shall constitute a quorum for a meeting
of Holders of Debt Securities of such series provided, however, that if any
action is to be taken at such meeting with respect to a consent or waiver which
this Indenture expressly provides may be given by the Holders of not less than
66 2/3% in principal amount of the Outstanding Debt Securities of a series, the
Persons entitled to vote 66 2/3% in principal amount of the Outstanding Debt
Securities of such series shall constitute a quorum. 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 Holders of Debt Securities of such series, be
dissolved. In the absence of a quorum in any other case the meeting may 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 meeting. In the absence of a quorum
at any such adjourned meeting, such adjourned meeting may be further adjourned
for a period of not less than 10 days as determined by the chairperson 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
1402(a), except that such notice need be given only once not less than five days
prior to the date on which the meeting is scheduled to be reconvened.
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Notice of the reconvening of an adjourned meeting shall state expressly the
percentage, as provided above, of the principal amount of the Outstanding Debt
Securities of such series which shall constitute a quorum.
Except as limited by the provisos to Section 902, any resolution presented
to a meeting or adjourned meeting duly reconvened at which a quorum is present
as aforesaid may be adopted only by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Debt Securities of that series;
provided, however, that, except as limited by the provisos to Section 902, any
resolution with respect to any consent or waiver which this Indenture expressly
provides may be given by the Holders of not less than 66 2/3% in principal
amount of the Outstanding Debt Securities of a series may be adopted at a
meeting or an adjourned meeting duly reconvened and at which a quorum is present
as aforesaid only by the affirmative vote of the Holders of 66 2/3% in principal
amount of the Outstanding Debt Securities of that series; and provided, further,
that, except as limited by the provisos to Section 902, any resolution with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other Act which this Indenture expressly provides may be made, given
or taken by the Holders of a specified percentage, which is less than a
majority, in principal amount of the Outstanding Debt Securities of a series may
be adopted at a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid by the affirmative vote of the Holders of such
specified percentage in principal amount of the Outstanding Debt Securities of
that series.
Any resolution passed or decision taken at any meeting of Holders of Debt
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Debt Securities of such series and the related
coupons, whether or not present or represented at the meeting.
SECTION 1405. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any other provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Holders of Debt Securities of such series in regard to proof of the holding of
Debt Securities of such series 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 otherwise permitted or required by any such regulations,
the holding of Debt Securities shall be proved in the manner specified in
Section 104 and the appointment of any proxy shall be proved in the manner
specified in Section 104 or, in the case of Bearer Securities, by having the
signature of the person executing the proxy witnessed or guaranteed by any trust
company, bank or banker authorized by Section 104 to certify to the holding of
Bearer Securities. Such regulations may provide that written instruments
appointing proxies, regular on their face, may be presumed valid and genuine
without the proof specified in Section 104 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairperson of the meeting, unless the meeting shall have been called by the
Company or by Holders of Debt Securities as provided in Section 1402(b), in
which case the Company or the Holders of Debt Securities of the series calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairperson. A permanent chairperson and a permanent secretary of the meeting
shall be elected by vote of the Persons entitled to vote a majority in principal
amount of the Outstanding Debt Securities of such series represented at the
meeting.
(c) At any meeting each Holder of a Debt Security of such series or proxy
shall be entitled to one vote for each $1,000 principal amount (or the
equivalent in ECU, any other composite currency or a Foreign Currency) of Debt
Securities of such series held or represented by him; provided however, that no
vote shall be cast or counted at any meeting in respect of any Debt Security
challenged as not Outstanding and ruled by the chairperson of the meeting not to
be Outstanding. The chairperson of the meeting shall have no right to vote,
except as a Holder of a Debt Security of such series or proxy.
(d) Any meeting of Holders of Debt Securities of any series duly called
pursuant to Section 1402 at which a quorum is present may be adjourned from time
to time by Persons entitled to vote a majority in principal amount of the
Outstanding Debt Securities of such series represented at the meeting, and the
meeting may be held as so adjourned without further notice.
<PAGE>
58
SECTION 1406. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of Debt
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Debt Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Debt Securities of such series 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 Debt Securities of
any series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors 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 given as provided in Section 1402 and, if
applicable, Section 1404. Each copy shall be signed and verified by the
affidavits of the permanent chairperson and secretary of the meeting and one
such copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter 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.
ARTICLE FIFTEEN
DEFEASANCE
Section 1501. Termination of Company's Obligations.
With respect to any series of Debt Securities, if the Company deposits
irrevocably in trust with the Trustee money and/or, to the extent such Debt
Securities are denominated and payable in Dollars only, Eligible Instruments the
payments of principal and interest on which when due (and without reinvestment
and providing no tax liability will be imposed upon the Trustee or the Holders
of such Debt Securities) will provide money in such amounts as will (together
with any money irrevocably deposited in trust with the Trustee, without
investment) be sufficient to pay principal (and premium, if any) and interest
when due on the Debt Securities of such series and any coupons appertaining
thereto and any mandatory sinking fund, repayment or analogous payments thereon
on the scheduled due dates therefor at the Stated Maturity thereof, the
Company's obligations under Sections 1004 and 1005 shall terminate with respect
to the Debt Securities of the series for which such deposit was made; provided
however, that (i) no Event of Default with respect to the Debt Securities of
such series under Section 501(6) or 501(7) or event that with notice or lapse of
time or both would constitute such an Event of Default shall have occurred and
be continuing on such date and (ii) such termination shall not relieve the
Company of its obligations under the Debt Securities of such series and this
Indenture to pay when due the principal of (and premium, if any) and interest
and additional amounts on such Debt Securities and any coupons appertaining
thereto if such Debt Securities or coupons are not paid (or payment is not
provided for) when due from the money and Eligible Instruments (and the proceeds
thereof) so deposited.
It shall be a condition to the deposit of cash and/or Eligible Instruments
and the termination of the Company's obligations with respect to the Debt
Securities of any series under Sections 1004 and 1005 pursuant to the provisions
of this Section that the Company deliver to the Trustee (i) an opinion of
nationally recognized independent tax counsel to the effect that (a) Holders of
Debt Securities of such series and any coupons appertaining thereto will not
recognize income, gain or loss for Federal income tax purposes as a result of
such deposit and termination and (b) such Holders (and future Holders) will be
subject to tax in the same amount, manner and timing as if such deposit and
termination has not occurred and (ii) an Officers' Certificate to the effect
that under the laws in effect on the date such money and/or Eligible Instruments
are deposited with the Trustee, the amount thereof will be sufficient, after
payment of all Federal, state and local taxes in respect thereof payable by the
Trustee, to pay principal (and premium, if any) and interest when due on the
Debt Securities of such series and any coupons appertaining thereto.
It shall be an additional condition to the deposit of cash and/or Eligible
Instruments and the termination of the Company's obligations under Sections 1004
and 1005 pursuant to the provisions of this Section, with respect to the Debt
Securities of any series then listed on the New York Stock Exchange, that the
Company deliver an Opinion of
<PAGE>
59
Counsel that the Debt Securities of such series will not be delisted from the
New York Stock Exchange as a result of such deposit and termination.
After a deposit as provided herein, the Trustee shall, upon Company
Request, acknowledge in writing the discharge of the Company's obligations with
respect to the Debt Securities of such series under Sections 1004 and 11005
pursuant to the provisions of this Section.
SECTION 1502. Repayment to Company.
The Trustee and any Paying Agent shall promptly pay to the Company upon
Company Request any money or Eligible Instruments not required for the payment
of the principal of (and premium, if any) and interest on the Debt Securities of
any series and any related coupons for which money or Eligible Instruments have
been deposited pursuant to Section 1501 held by them at any time.
The Trustee and any Paying Agent shall pay to the Company upon Company
Request any money held by them for the payment of principal (and premium, if
any) and interest that remains unclaimed for two years after the Maturity of the
Debt Securities for which a deposit has been made pursuant to Section 1301.
After such payment to the Company, the Holders of the Debt Securities of such
series and any related coupons shall thereafter, as unsecured general creditors,
look only to the Company for the payment thereof.
SECTION 1503. Indemnity for Eligible Instruments.
The Company shall pay and shall indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the deposited Eligible
Instruments or the principal or interest received on such Eligible Instruments.
* * * * *
<PAGE>
60
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
BANKAMERICA CORPORATION
By RICHARD LAIDERMAN
-------------------------------------
Senior Vice President
[CORPORATE SEAL]
Attest:
CHERYL SOROKIN
- ----------------------------------------
Secretary
BANKERS TRUST COMPANY OF CALIFORNIA,
NATIONAL ASSOCIATION
By LAWRENCE J. BELL
-------------------------------------
Assistant Vice President
[CORPORATE SEAL]
Attest:
JAMES J. McGRAW
- ----------------------------------------
Assistant Secretary
<PAGE>
61
STATE OF CALIFORNIA )
) ss.
CITY AND COUNTY OF SAN FRANCISCO )
On this 21st day of January, 1992 before me, a notary public in and for
said State, personally appeared RICHARD LAIDERMAN, known to me to be a senior
vice president of BANKAMERICA CORPORATION, one of the corporations that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
[NOTARIAL SEAL]
ELIZABETH A. PROSEK
----------------------------------------
NOTARY PUBLIC
In and for the State of California with
principal office in the City and County
of San Francisco.
My Commission Expires June 8, 1992
<PAGE>
62
STATE OF CALIFORNIA )
CITY AND COUNTY OF SAN FRANCISCO ) ss.
)
On this 21st day of January, 1992 before me, a notary public in and for
said State, personally appeared LAWRENCE J. BELL, known to me to be an assistant
vice president of Bankers Trust Company of California, National Association, one
of the corporations that executed the within instrument, and also known to me to
be the person who executed it on behalf of said corporation, and acknowledged to
me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
[NOTARIAL SEAL]
GLENN W. ANDERSEN
----------------------------------------
NOTARY PUBLIC
In and for the State of California with
principal office in the City and County
of San Francisco.
My Commission Expires July 18, 1992
<PAGE>
A-I
EXHIBIT A-l
[Form of Certificate of Beneficial Ownership by a
Non-United States Person or by Certain Other Persons]
Certificate
BANKAMERICA CORPORATION
[Insert title or sufficient description of
Debt Securities to be delivered]
Reference is hereby made to the Indenture dated as of November 1, 1991 (the
"Indenture") between BankAmerica Corporation and Bankers Trust Company of
California, National Association, as trustee (the "Trustee") covering the
above-captioned Debt Securities. This is to certify that as of the date hereof,
_____________________________ principal amount of Debt Securities credited to
you for our account (i) is owned by persons that are not United States Persons,
as defined below; (ii) is owned by United States Persons that are (a) foreign
branches of United States financial institutions (as defined in U.S. Treasury
Regulations Section 1.165-12(c)(1)(v)) ("financial institutions") purchasing for
their own account or for resale, or (b) United States Persons who acquired the
Notes through foreign branches of United States financial institutions and who
hold the Notes through such United States financial institutions on the date
hereof (and in either case (a) or (b), each such United States financial
institution encloses herewith a certificate in the form of Exhibit A-2 to the
Indenture); or (iii) is owned by United States or foreign financial institutions
for purposes of resale during the restricted period (as defined in U.S. Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)), which United States or foreign
financial institutions described in clause (iii) above (whether or not also
described in clause (i) or (ii)) certify that they have not acquired the Notes
for purposes of resale directly or indirectly to a United States Person or to a
person within the United States or its possessions.
[Insert if certificate does not relate to an interest payment--We undertake
to advise you by tested telex followed by written confirmation if the above
statement as to beneficial ownership is not correct on the date of delivery of
the above-captioned Debt Securities in bearer form as to all of such Debt
Securities with respect to such of said Debt Securities as then appear in your
books as being held for our account.] We understand that this certificate is
required in connection with United States tax laws. We irrevocably authorize you
to produce this certificate or a copy hereof to any interested party in any
administrative or legal proceedings with respect to the matters covered by this
certificate. "United States Person" shall mean a citizen or resident of the
United States of America (including the District of Columbia), a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof or an estate or trust that is
subject to United States federal income taxation regardless of the source of its
income.
<PAGE>
A-2
[This certificate excepts and does not relate to _______ principal amount
of Debt Securities credited to you for our account and to which we are not now
able to make the certification set forth above. We understand that definitive
Debt Securities cannot be delivered and interest cannot be paid until we are
able to so certify with respect to such principal amount of Debt Securities.]*
Dated___________________________________
[To be dated on or after
______________________________ (the
date determined as provided in the
Indenture)]
[Name of Person Entitled to Receive
Bearer Security]
________________________________________
(Authorized Signatory)
Name____________________________________
Title___________________________________
- ----------
* Delete if inappropriate
<PAGE>
A-3
EXHIBIT A-2
(Form of Certificate of Status as a
Foreign Branch of a United States Financial Institution]
Certificate
BANKAMERICA CORPORATION
[Insert title or sufficient description of Debt Securities to be delivered]
Reference is hereby made to the Indenture dated as of November 1, 1991 (the
"Indenture"), between BankAmerica Corporation and Bankers Trust Company of
California, National Association, as trustee, relating to the offering of the
above-captioned Debt Securities (the "Debt Securities"). Unless herein defined,
terms used herein have the same meaning as given to them in the Indenture.
The undersigned represents that it is a branch located outside the United
States of a United States securities clearing organization, bank or other
financial institution (as defined in U.S. Treasury Regulation Section
l.165-12(c)(1)(v)) that holds customers' securities in the ordinary course of
its trade or business and agrees, and authorizes you to advise the issuer or the
issuer's agent, that it will comply with the requirements of Section
1650)(3)(A), (B) or (C) of the Internal Revenue Code of 1986 and the regulations
thereunder and is not purchasing for resale directly or indirectly to a United
States Person or to a person within the United States or its possessions. We
undertake to advise you by tested telex followed by written confirmation if the
statement in the immediately preceding sentence is not correct on the date of
delivery of the above-captioned Debt Securities in bearer form.
We understand that this certificate is required in connection with the
United States tax laws. We irrevocably authorize you to produce this certificate
or a copy hereof to any interested party in any administrative or legal
proceedings with respect to the matters covered by this certificate.
Dated___________________________________
[To be dated on or after
______________________________ (the
date determined as provided in the
Indenture)]
[Name of Person Entitled to Receive
Bearer Security]
________________________________________
(Authorized Signatory)
Name____________________________________
Title___________________________________
<PAGE>
B-1
EXHIBIT B
[Form of Certificate to be Given by Euroclear and Cedel S.A.
in Connection with the Exchange of All or a Portion of
a Temporary Global Security or to Obtain Interest Prior to Exchange]
Certificate
BANKAMERICA CORPORATION
[Insert title or sufficient description of Debt Securities to be delivered]
We refer to that portion, _________________ of the Global Security
representing the above-captioned issue [which is herewith submitted to be
exchanged for definitive Debt Securities]* [for which we are seeking to obtain
payment of interest]* (the "Submitted Portion"). This is to certify, pursuant to
the Indenture dated as of November 1, 1991 (the "Indenture") between BankAmerica
Corporation and Bankers Trust Company of California, National Association, as
trustee (the "Trustee"), that we have received in writing, by tested telex or by
electronic transmission from member organizations with respect to each of the
persons appearing in our records as being entitled to a beneficial interest in
the Submitted Portion a Certificate of Beneficial Ownership by a Non-United
States Person or by Certain Other Persons [and, in some cases, a Certificate of
Status as a Foreign Branch of a United States Financial Institution, authorizing
us to inform the issuer or the issuer's agent that it will comply with the
requirements of Section 165(j) (3) (A), (B) or (C) of the Internal Revenue Code
of 1986 and the regulations thereunder] substantially in the form of Exhibit A-1
[and A-2]* to the Indenture.
We hereby request that you deliver to the office of ___________________ in
__________________ definitive Bearer Securities in the denominations on the
attached Schedule A.
We further certify that as of the date hereof we have not received any
notification from any of the persons giving such certificates to the effect that
the statements made by them with respect to any part of the Submitted Portion
are no longer true and cannot be relied on as of the date hereof.
Dated:______________________________
(MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, BRUSSELS OFFICE, as
Operator of the Euroclear System]
[CEDEL S.A.]
By______________________________________
- ----------
* Delete if inappropriate.
<PAGE>
BANKAMERICA CORPORATION
TO
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION
Trustee
----------
FIRST SUPPLEMENTAL INDENTURE
Dated as of August 1, 1994
----------
Supplemental to Indenture
Dated as of November 1, 1991
<PAGE>
FIRST SUPPLEMENTAL INDENTURE
First Supplemental Indenture (the "Indenture"), dated as of August 1, 1994,
between BankAmerica Corporation, a Delaware corporation (hereinafter called the
"Company"), having its principal office at Bank of America Center, 555
California Street, San Francisco, California 94104, and First Trust of
California, National Association, a national banking association (hereinafter
called "Trustee"), having its principal corporate trust office at 101 California
Street, San Francisco, California 94111.
The Company has previously executed and delivered to the Trustee's
predecessor in interest an Indenture dated as of November 1, 1991 (hereinafter
called the "Original Indenture"), providing for the issuance from time to time
of one or more series of securities (herein called the "Debt Securities").
The Company desires and has requested the Trustee pursuant to Section
901(5) of the Original Indenture to join with it in the execution and delivery
of this Indenture in order to amend the Original Indenture in a First
Supplemental Indenture as set forth herein with respect solely to series of Debt
Securities created and issued on or after the date hereof.
Section 901(5) of the Original Indenture provides that a supplemental
indenture may be entered into by the Company and the Trustee without the consent
of any Holders to change or eliminate any of the provisions of the Original
Indenture, provided that any such change or elimination (a) shall become
effective only when there is no Debt Security Outstanding of any series created
prior to the execution of such supplemental indenture which is entitled to the
benefit of such provision or (b) shall not apply to any Debt Security
Outstanding.
All things necessary to make this Indenture a valid agreement of the
Company and the Trustee and a valid amendment to the Original Indenture have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Debt
Securities of any series created and issued on or after the date hereof by the
Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Debt Securities of any such series:
(a) that Subsection (5) of Section 501, ."Events of Default", is
hereby deleted; and
(b) that nothing in this Indenture shall: (i) apply to, or alter the
rights and remedies conferred by the Original
<PAGE>
Indenture upon, Debt Securities of any series created and issued prior to
the date hereof or (ii) affect the rights, remedies and duties of the
Trustee under the Original Indenture with respect to such Debt Securities.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
BANKAMERICA CORPORATION
By: /s/ SHAUN M. MCGUIRE
------------------------------------
Senior Vice President
[Corporate Seal]
Attest:
/s/ Cheryl Sorokin
- ----------------------------------
Secretary
FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION
By: /s/ LISA D. JONES
------------------------------------
Senior Vice President
[Corporate Seal]
Attest:
/s/ [ILLEGIBLE]
- ----------------------------------
Secretary
<PAGE>
STATE OF CALIFORNIA )
) ss.
CITY AND COUNTY OF SAN FRANCISCO )
On this 19th day of August, 1994 before me, a notary public in and for said
State, personally appeared SHAUN M. MAGUIRE, known to me to be a senior vice
president of BANKAMERICA CORPORATION, one of the corporations that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ JANET E. SULLIVAN
---------------------------------------
[NOTARIAL SEAL] NOTARY PUBLIC
In and for the State of California with
principal office in the City and County
of San Francisco.
My Commission Expires 6/21/96.
[SEAL]
- ----------------------------------------
JANET E. SULLIVAN
Comm. # 967863
NOTARY PUBLIC - CALIFORNIA
City and County of San Francisco
My Comm. Expires Jun. 21, 1996
- ----------------------------------------
<PAGE>
STATE OF CALIFORNIA )
) ss.
CITY AND COUNTY OF SAN FRANCISCO )
On this 19th day of August, 1994 before me, a notary public in and for said
State, personally appeared Lisa D. Jones, known to me to be a vice president of
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ JANET E. SULLIVAN
---------------------------------------
[NOTARIAL SEAL] NOTARY PUBLIC
In and for the State of California with
principal office in the City and County
of San Francisco.
My Commission Expires 6/21/96.
[SEAL]
- ----------------------------------------
JANET E. SULLIVAN
Comm. # 967863
NOTARY PUBLIC - CALIFORNIA
City and County of San Francisco
My Comm. Expires Jun. 21, 1996
- ----------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
BankAmerica Corporation
NationsBank (DE) Corporation
- --------------------------------------------------------------------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of September 30, 1998
Supplementing the Indenture, dated
as of November 1, 1991, between
BankAmerica Corporation and
U.S. Bank Trust National Association
(successor to Bankers Trust Company of California,
National Association, and First Trust
of California, National Association),
as Trustee
- --------------------------------------------------------------------------------
<PAGE>
SECOND SUPPLEMENTAL INDENTURE, dated as of September 30, 1998 (the
"Second Supplemental Indenture"), among NationsBank (DE) Corporation, a Delaware
corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of
NationsBank Corporation, a North Carolina corporation ("NationsBank"),
BankAmerica Corporation, a Delaware corporation ("BankAmerica"), and U.S. Bank
Trust National Association (successor to Bankers Trust Company of California,
National Association, and First Trust of California, National Association), as
Trustee (the "Trustee") under the Indenture referred to herein;
WHEREAS, BankAmerica and the Trustee heretofore executed and delivered
an Indenture, dated as of November 1, 1991, as amended by the First Supplemental
Indenture dated as of August 1, 1994 (the "Indenture"); and
WHEREAS, pursuant to the Indenture BankAmerica issued and the Trustee
authenticated and delivered one or more series of BankAmerica's Notes (the
"Securities"); and
WHEREAS, NationsBank and BankAmerica have entered into the Agreement and
Plan of Reorganization, dated as of April 10, 1998, pursuant to which (i)
NationsBank will merge (the "Reincorporation Merger") with and into NationsBank
(DE), in accordance with the terms and conditions of the Plan of Reincorporation
Merger by and between NationsBank and NationsBank (DE), dated as of August 3,
1998, with NationsBank (DE) as the surviving corporation in the Reincorporation
Merger, and (ii) BankAmerica will thereafter merge (the "Merger," and together
with the Reincorporation Merger, the "Reorganization")with and into NationsBank
(DE), with NationsBank (DE) as the surviving corporation in the Merger; and
WHEREAS, the Reorganization is expected to be consummated on September
30, 1998; and
WHEREAS, Section 801 of the Indenture provides that in the case of the
Reorganization, NationsBank (DE) shall expressly assume by supplemental
indenture all the obligations under the Securities and the Indenture on the part
of BankAmerica to be performed or observed; and
WHEREAS, Section 901(1) of the Indenture provides that BankAmerica and
the Trustee may amend the Indenture and the Securities without notice to or
consent of any Holders of the Securities in order to comply with Article Eight
of the Indenture; and
WHEREAS, this Second Supplemental Indenture has been duly authorized by
all necessary corporate action on the part of each of NationsBank (DE) and
BankAmerica.
NOW, THEREFORE, NationsBank (DE), BankAmerica and the Trustee agree as
follows for the equal and ratable benefit of the Holders of the Securities:
2
<PAGE>
ARTICLE I
ASSUMPTION BY SUCCESSOR CORPORATION
SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby
expressly assumes the due and punctual payment of the principal of (and premium,
if any) and interest (including all additional amounts, if any, payable pursuant
to Section 1006) on the Securities and any related coupons and the performance
of every covenant of the Indenture on the part of BankAmerica to be performed or
observed.
SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this
Second Supplemental Indenture and agrees to perform the same under the terms and
conditions set forth in the Indenture.
ARTICLE II
MISCELLANEOUS
SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur
of (i) the execution and delivery of this Second Supplemental Indenture by
NationsBank (DE), BankAmerica and the Trustee and (ii) the consummation of the
Reorganization, the Indenture shall be supplemented in accordance herewith, and
this Second Supplemental Indenture shall form a part of the Indenture for all
purposes, and every Holder of Securities heretofore or hereafter authenticated
and delivered under the Indenture shall be bound thereby.
SECTION 2.2. Indenture Remains in Full Force and Effect. Except as
supplemented hereby, all provisions in the Indenture shall remain in full force
and effect.
SECTION 2.3. Indenture and Supplemental Indenture Construed Together.
This Second Supplemental Indenture is an indenture supplemental to and in
implementation of the Indenture, and the Indenture and this Second Supplemental
Indenture shall henceforth be read and construed together.
SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture
as supplemented by this Second Supplemental Indenture is in all respects
confirmed and preserved.
SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this
Second Supplemental Indenture limits, qualifies or conflicts with any provision
of the Trust Indenture Act ("TIA") that is required under the TIA to be part of
and govern any provision of this Second Supplemental Indenture, the provision of
the TIA shall control. If any provision of this Second Supplemental Indenture
modifies or excludes any provision of the TIA that may be so modified or
excluded, the provision of the TIA shall be deemed to apply to the Indenture as
so modified or to be excluded by this Second Supplemental Indenture, as the case
may be.
3
<PAGE>
SECTION 2.6. Severability. In case any provision in this Second
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Indenture.
SECTION 2.8. Headings. The Article and Section headings of this Second
Supplemental Indenture have been inserted for convenience of reference only, are
not to be considered part of this Supplemental Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 2.9. Benefits of Second Supplemental Indenture, etc. Nothing in
this Second Supplemental Indenture or the Securities, express or implied, shall
give to any Person, other than the parties hereto and thereto and their
successors hereunder and thereunder and the Holders of the Securities, any
benefit of any legal or equitable right, remedy or claim under the Indenture,
this Second Supplemental Indenture or the Securities.
SECTION 2.10. Successors. All agreements of NationsBank (DE) in this
Second Supplemental Indenture shall bind its successors. All agreements of the
Trustee in this Second Supplemental Indenture shall bind its successors.
SECTION 2.11. Trustee Not Responsible for Recitals. The recitals
contained herein shall be taken as the statements of BankAmerica and NationsBank
(DE), and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to, and shall not be responsible for, the
validity or sufficiency of this Second Supplemental Indenture.
SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In
entering into this Second Supplemental Indenture, the Trustee shall be entitled
to the benefit of every provision of the Indenture relating to the conduct or
affecting the liability or affording protection to the Trustee, whether or not
elsewhere herein so provided.
SECTION 2.13. Governing Law. This Second Supplemental Indenture shall be
governed by, and construed in accordance with, the laws of the jurisdiction
which govern the Indenture and its construction.
SECTION 2.14. Counterpart originals. The parties may sign any number of
copies of this Second Supplemental Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement.
4
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Second Supplemental
Indenture to be duly executed as of the date first written above.
NationsBank (DE) Corporation
By: /s/ John E. Mack
---------------------------------
Name: John E. Mack
Title: Senior Vice President
Attest:
/s/ James W. Kiser
- ----------------------------
Secretary
BankAmerica Corporation
By: /s/ S.M. Maguire
---------------------------------
Name: S.M. Maguire
Title: Senior Vice President and
Assistant Treasurer
Attest:
/s/ Cheryl Sorokin
- ----------------------------
Secretary
U.S. Bank Trust National Association, as
Trustee
By: /s/ Judy P. Manansala
---------------------------------
Name: Judy P. Manansala
Title: Trust Officer
Attest:
[illegible signature]
- ----------------------------
5
DATED AS OF NOVEMBER 15, 1996
BANKAMERICA CORPORATION
as Issuer
-and-
FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION
as Agent
-------------------------------------
SECOND AMENDED AND RESTATED AGENCY AGREEMENT
in respect of a
EURO MEDIUM-TERM NOTE PROGRAMME
-------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Clause Page
- ------ ----
<S> <C>
1. Definitions and interpretation.......................................................2
2. Appointment of Agent and Paying Agents...............................................5
3. Issue of Temporary Global Notes......................................................6
4. Issue of Permanent Global Notes......................................................7
5. Issue of Definitive Notes............................................................8
6. Exchanges............................................................................8
7. Terms of Issue.......................................................................9
8. Payments............................................................................11
9. Determinations and notifications in respect of Notes................................12
10. Notice of any withholding or deduction..............................................15
11. Duties of the Agent in connection with early redemption.............................16
12. Publication of notices..............................................................16
13. Cancellation of Notes, Receipts, Coupons and Talons.................................16
14. Exchange; Issue of new and replacement Notes, Receipts, Coupons and Talons..........18
15. Copies of this Agreement and each Pricing Supplement available for inspection.......20
16. Commissions and expenses............................................................20
17. Indemnity...........................................................................20
18. Repayment by the Agent..............................................................21
19. Conditions of appointment...........................................................21
20. Communication between the parties...................................................22
<PAGE>
21. Changes in Agent and Paying Agents..................................................22
22. Merger and consolidation............................................................24
23. Notifications.......................................................................25
24. Change of specified office..........................................................25
25. Notices.............................................................................25
26. Taxes and stamp duties..............................................................26
27. Currency indemnity..................................................................26
28. Amendments; Meetings of Holders.....................................................26
29. Calculation Agency Agreement........................................................29
30. Descriptive Headings................................................................29
31. Governing Law.......................................................................29
32. Counterparts........................................................................30
APPENDIX A
Terms and Conditions.......................................................................A-1
APPENDIX B
Forms of Global and Definitive Notes, Coupons,
Receipts and Talons........................................................................B-1
APPENDIX C
Form of Calculation Agency Agreement.......................................................C-1
APPENDIX D
Form of Operating & Administrative Procedures
Memorandum.................................................................................D-1
APPENDIX E
Form of the Notes..........................................................................E-1
</TABLE>
<PAGE>
SECOND AMENDED AND RESTATED AGENCY AGREEMENT
in respect of a
EURO MEDIUM-TERM NOTE PROGRAMME
THIS SECOND AMENDED AND RESTATED AGREEMENT is made as of November 15, 1996
BETWEEN:
(1) BankAmerica Corporation of San Francisco, California, U.S.A.
(the "Company"); and
(2) First Trust of New York, National Association ("First
Trust"), of New York, U.S.A. (the "Agent," which expression shall include Union
Bank of Switzerland, London Branch, in its capacity as First Trust's agent with
respect to First Trust's obligations as issuing and principal paying agent under
this Agreement, and any successor agent appointed in accordance with Clause 21),
and it amends and restates the Amended and Restated Agency Agreement dated as of
November 16, 1994 (the "Prior Agency Agreement").
WHEREAS:
(A) The Company has entered into a Second Amended and Restated
Programme Agreement (the "Programme Agreement") dated November 15, 1996 with
Bank of America International Limited, BA Asia Limited, Goldman Sachs
International, Lehman Brothers International (Europe), Merrill Lynch
International, PaineWebber International (U.K.) Ltd., and Salomon Brothers
International Limited (the "Dealers") pursuant to which the Company may issue
notes (the "Notes") in an aggregate principal amount of up to
U.S.$10,000,000,000 (or its equivalent in other currencies or currency units)
outstanding at any time;
(B) Clause 28(1) of the Prior Agency Agreement provides that such
Agreement may be amended by the Company and the Agent, without the consent of
the holder of any Note, Receipt or Coupon, to make any further modifications of
the terms of such Agreement necessary or desirable to allow for the issuance of
any additional Notes (which modifications shall not be materially adverse to
holders of outstanding Notes);
(C) The Company desires and has requested the Agent pursuant to
Clause 28(1) of the Prior Agency Agreement to join with it in the execution and
delivery of this Agreement in order to amend and restate the Prior Agency
Agreement as set forth herein solely with respect to Notes issued on or after
the date hereof; and
<PAGE>
(D) The Notes to be issued on or after the date hereof will be
issued subject to, and with the benefit of, this Agreement.
<PAGE>
IT IS HEREBY AGREED as follows:
1. Definitions and interpretation
(1) The following expressions shall have the following meanings:
"Cedel Bank" means Cedel Bank, societe anonyme;
"Conditions" means, in respect of any Series of Notes, the terms
and conditions of the Notes of such Series, such terms and conditions being in
the form or substantially in the form set out in Appendix A hereto or in such
other form, having regard to the terms of the relevant Series, as may be agreed
between the Company, the Agent and the relevant Purchaser or Purchasers from
time to time;
"Dealer" means Bank of America International Limited, BA Asia
Limited, Goldman Sachs International, Lehman Brothers International (Europe),
Merrill Lynch International, PaineWebber International (U.K.) Ltd. and Salomon
Brothers International Limited, and includes any other entities appointed as
dealers from time to time pursuant to the Programme Agreement, and excludes any
entity whose appointment has been terminated pursuant to the Programme
Agreement;
"Definitive Note" means a Note in definitive form substantially
in the form set out in Part 3 of Appendix B hereto (or in such other form as may
be agreed between the Company, the Agent and the relevant Purchaser or
Purchasers) issued or to be issued by the Company pursuant to this Agreement in
exchange for the whole, but not for a part, of a Permanent Global Note;
"Dual Currency Notes" means Notes in respect of which principal
and/or interest is payable in one or more Specified Currencies other than the
Specified Currency in which they are denominated.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System;
"Global Note" means a Temporary Global Note or a Permanent Global
Note;
"Issue Date" means, in respect of any Note, the date of issue and
purchase of such Note pursuant to Section 2 of the Programme Agreement, being in
the case of any Note in the form of a Permanent Global Note or a Definitive
Note, the same date as the date of issue of the Temporary Global Note which
initially represented such Note;
<PAGE>
"Listing Rules" means in the case of Notes which are, or are to
be, listed on a Stock Exchange, the listing rules and regulations for the time
being in force for such Stock Exchange;
"Note" means any note issued or to be issued by the Company
pursuant to the Programme Agreement, which Note may be represented by a Global
Note or a Definitive Note;
"Noteholders" means the several persons who are for the time
being holders of outstanding Notes save that for so long as any of the Notes are
represented by a Global Note, each person who is for the time being shown in the
records of Euroclear and/or Cedel Bank (in which regard any certificate or other
document issued by Euroclear and/or Cedel Bank as to the principal amount of
such Notes standing to the account of any person shall be conclusive and binding
for all purposes save in the case of manifest error) as the holder of a
particular principal amount of such Notes (other than Cedel Bank if Cedel Bank
shall be an account holder of Euroclear and other than Euroclear if Euroclear
shall be an account holder of Cedel Bank), shall be treated by the Company, the
Agent and any other Paying Agent as a holder of such principal amount of such
Notes for all purposes other than for the payment of principal and interest on
such Notes, the right to which shall be vested, as against the Company, the
Agent and any other Paying Agent, solely in the bearer of the Global Note in
accordance with and subject to its terms (and the expressions "Noteholder,"
"holder of Notes" and related expressions shall be construed accordingly);
"Offering Circular" means the Offering Circular relating to the
Programme as revised, supplemented, amended or updated from time to time,
including in relation to each Tranche of Notes, the Pricing Supplement relating
to such Tranche and such other documents as are from time to time incorporated
therein by reference;
"outstanding" means, in relation to the Notes, all the Notes
issued other than (a) those which have been redeemed in full in accordance with
this Agreement or the Conditions, (b) those in respect of which the date for
redemption in accordance with the Conditions has occurred and the redemption
moneys (including all interest (if any) accrued thereon to the date for such
redemption and any interest (if any) payable under the Conditions after such
date) have been duly paid to the Agent as provided herein (and, where
appropriate, notice has been given to the Noteholders in accordance with
Condition 16) and remain available for payment against presentation of Notes,
(c) those which have become void under Condition 15, (d) those which have been
purchased and cancelled as provided in Condition 5, (e) those Notes which have
been surrendered in exchange for new or replacement Notes pursuant to Condition
14, (f) (for the
<PAGE>
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 14 and (g) Temporary Global Notes to the
extent that they shall have been duly exchanged for Permanent Global Notes and
Permanent Global Notes to the extent that they shall have been duly exchanged
for Definitive Notes, in each case pursuant to their respective provisions;
"Paying Agents" means, in relation to all Series of the Notes,
the several institutions (including, where the context permits or requires, the
Agent) at their respective specified offices named as such at the end of the
Conditions or such other or further paying agents at their respective specified
offices for all or any Series of the Notes as may from time to time be appointed
in respect thereof by the Company and notice of whose appointment is given to
the Noteholders pursuant to Clause 21 or Clause 23 and in accordance with
Condition 16.
"Permanent Global Note" means a permanent global note
substantially in the form set out in Part 2 of Appendix B hereto (or in such
other form as may be agreed between the Company, the Agent and the relevant
Purchaser or Purchasers) comprising Notes issued or to be issued by the Company
in exchange for the whole or part of a Temporary Global Note issued in respect
of the Notes of the same Tranche;
"Pricing Supplement" means the pricing supplement issued in
relation to each Tranche of Notes (substantially in the form of Annex D to the
Procedures Memorandum) as a supplement to the Offering Circular and giving
details of that Tranche;
"Programme" means the Euro Medium-Term Note Programme established
by the Programme Agreement;
"Programme Agreement" means the second amended and restated
agreement of even date herewith between the Company and the Dealers concerning
the purchase of Notes to be issued by the Company and includes any amendment or
supplement thereto;
"Purchaser" means a Dealer or any third party other than a dealer
(as defined in Section 2(12) of the United States Securities Act of 1933), who
agrees to purchase Notes pursuant to the Programme Agreement and references to a
relevant Purchaser or Purchasers mean in relation to any Note, the Purchaser or
Purchasers to whom the Company has agreed to issue and sell such Note;
"Series" means all Notes which are denominated in the same
currency and which have the same Maturity Date or Redemption
<PAGE>
Month or Redemption Date (as the case may be) and Interest/Payment Basis and
Interest Payment Dates (if any) (all as indicated in the applicable Pricing
Supplement) and the terms of which (except for the Issue Date or Interest
Commencement Date (as the case may be) and/or the Issue Price (except in the
case of Zero Coupon Notes) (all as indicated as aforesaid)) are otherwise
identical (including whether or not the Notes are listed and whether the Notes
are Senior Notes or Subordinated Notes); and the expressions "Notes of the
relevant Series" and "holders of Notes of the relevant Series" and related
expressions shall be construed accordingly;
"Specified Currency" means the currency (which expression shall
include European Currency Units ("ECUs")) in which Notes are denominated and, in
the case of Dual Currency Notes, the currency or currencies in which payment in
respect of the Notes is to be made;
"Stock Exchange" means the Luxembourg Stock Exchange or such
other stock exchange(s) on which any Notes may from time to time be listed and
references in this Agreement to the "relevant Stock Exchange" shall, in relation
to any Notes, be references to the Stock Exchange on which such Notes are from
time to time, or will be, listed;
"Temporary Global Note" means a temporary global note
substantially in the form set out in Part 1 of Appendix B hereto (or in such
other form as may be agreed between the Company, the Agent and the relevant
Purchaser or Purchasers) comprising Notes issued or to be issued by the Company
pursuant to the Programme Agreement and issued in respect of the Notes of the
same Tranche;
"Tranche" means all Notes of the same Series with the same Issue
Date, Interest Commencement Date and Issue Price; and
"U.S.$" and "U.S. dollars" means the coin or currency of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts in the United States of America.
(2) Terms and expressions (including the definitions of
currencies or composite currencies) defined in the Conditions or Appendix E or
used in the applicable Pricing Supplement shall have the same meanings in this
Agreement, except where the context requires otherwise.
(3) Any references to Notes shall, unless the context otherwise
requires, include any Temporary Global Notes, Permanent Global Notes and
Definitive Notes.
(4) Any reference herein to Euroclear and/or Cedel
<PAGE>
Bank shall, whenever the context so permits, be deemed to include a reference to
any additional or alternative clearance system approved by the Company and the
Agent.
(5) Nothing in this Agreement shall apply to, or alter the rights
and remedies conferred by the Prior Agency Agreement upon, Notes created and
issued prior to the date hereof.
2. Appointment of Agent and Paying Agents
(1) The Agent is hereby appointed as agent of the Company, to act
as issuing and principal paying agent, upon the terms and subject to the
conditions set out below, for the purposes of, INTER ALIA:
(a) completing, authenticating and issuing Notes;
(b) exchanging Temporary Global Notes for Permanent Global Notes
and exchanging Permanent Global Notes for Definitive Notes in accordance with
the terms of such Global Notes;
(c) paying sums due on Global Notes and Definitive Notes,
Receipts and Coupons;
(d) determining the interest and/or other amounts payable in
respect of the Notes in accordance with the Conditions and Clause 9 hereof;
(e) arranging on behalf of the Company for notices to be
communicated to the Noteholders and the relevant Stock Exchanges;
(f) ensuring that all necessary action is taken to comply with
the periodic reporting requirements of the Bank of England, the German Central
Bank and the Ministry of Finance of Japan with respect to the Notes to be issued
under the Programme;
(g) receiving notice from Euroclear and/or Cedel Bank relating to
the certificates of non-U.S. beneficial ownership of the Notes;
(h) notifying the relevant Dealer or Dealers of the end of the
restricted period in respect of each Series of Notes based upon the
determinations and certifications of such Dealer(s); and
(i) performing all other obligations and duties imposed upon it
by the Conditions and this Agreement.
(2) The Company hereby appoints each of the Agent at c/o Union
Bank of Switzerland, London Branch, P.O. Box
<PAGE>
428, 100 Liverpool Street, London EC2M 2RH and Kredietbank S.A. Luxembourgeoise,
43 Boulevard Royal, L-2955, Luxembourg (together with the Agent, the "Paying
Agents," which expression shall include any additional or successor paying agent
appointed in accordance with Clause 21 and "Paying Agent" shall mean any of the
Paying Agents) as paying agent of the Company upon the terms and subject to the
conditions set out below, for the purposes of paying sums due on Notes, Receipts
and Coupons.
3. Issue of Temporary Global Notes
(1) Subject to subclause (2), following receipt of confirmation
(the "Confirmation") from the Company in respect of an issue of Notes in
accordance with the provisions of the Procedures Memorandum set out in Appendix
D hereto (as from time to time varied, with the prior approval of the Agent, by
the Company and the relevant Purchaser or Purchasers in respect of a Tranche or
Series of Notes of such issue) the Agent will take the steps required of the
Agent in the Procedures Memorandum. For this purpose the Agent is authorized on
behalf of the Company:
(a) to prepare a Temporary Global Note or Temporary Global Notes
containing the relevant Conditions and to complete, in accordance with such
Confirmation, the necessary details on such Temporary Global Note(s);
(b) to authenticate such Temporary Global Note(s); and
(c) to deliver such Temporary Global Note(s) to the specified
common depositary of Euroclear and Cedel Bank in accordance with the
Confirmation against receipt from the common depositary of confirmation that
such common depositary is holding the Temporary Global Note(s) in safe custody
for the account of Euroclear and/or Cedel Bank and to instruct Euroclear or
Cedel Bank or both of them (as the case may be) to credit the Notes represented
by such Temporary Global Note(s), unless otherwise agreed in writing between the
Agent and the Company, to the Agent's distribution account (or in the case of a
syndicated note issue, the lead manager's account).
(2) The Agent shall only be required to perform its obligations
under subclause (1) if it holds a master Temporary Global Note duly executed by
a person or persons authorized to execute the same on behalf of the Company,
which may be used by the Agent for the purpose of preparing Temporary Global
Notes in accordance with paragraph (a) of that subclause.
(3) The Agent shall provide Euroclear and/or Cedel Bank with the
notifications, instructions or other information to be given by the Agent to
Euroclear and/or Cedel Bank.
<PAGE>
4. Issue of Permanent Global Notes
(1) Subject to subclause (2), upon the occurrence of any event
which pursuant to the terms of a Temporary Global Note requires the issue of a
Permanent Global Note, the Agent shall issue a Permanent Global Note in
accordance with the terms of the Temporary Global Note. For this purpose the
Agent is authorized on behalf of the Company:
(a) to prepare a Permanent Global Note containing the relevant
Conditions and to complete, in accordance with the terms of the Temporary Global
Note, the necessary details on such Permanent Global Note and attach a copy of
the applicable Pricing Supplement to such Permanent Global Note;
(b) to authenticate such Permanent Global Note; and
(c) to deliver such Permanent Global Note to the specified common
depositary that is holding the Temporary Global Note for the time being on
behalf of Euroclear and/or Cedel Bank in exchange for such Temporary Global Note
or, in the case of a partial exchange, after noting the details of such exchange
in the appropriate spaces on 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 Bank.
(2) The Agent shall only be required to perform its obligations
under subclause (1) if it holds a master Permanent Global Note duly executed by
a person or persons authorized to execute the same on behalf of the Company,
which may be used by the Agent for the purpose of preparing Permanent Global
Notes in accordance with paragraph (a) of that subclause.
(3) The Agent shall provide Euroclear and/or Cedel Bank with the
notifications, instructions or other information to be given by the Agent to
Euroclear and/or Cedel Bank.
5. Issue of Definitive Notes
(1) Upon notice from Euroclear or Cedel Bank pursuant to the
terms of a Permanent Global Note requiring the issue of one or more Definitive
Note(s), the Agent shall deliver the relevant Definitive Note(s) in accordance
with the terms of the Permanent Global Note. For this purpose the Agent is
hereby authorized on behalf of the Company:
(a) to authenticate (if so instructed by the Company) such
Definitive Note(s); and
<PAGE>
(b) to deliver such Definitive Note(s) to or to the order of
Euroclear and/or Cedel Bank.
The Agent shall notify the Company forthwith upon receipt of a
request for issue of any Definitive Note(s) in accordance with the provisions of
a Permanent Global Note (and shall state the aggregate principal amount of such
Permanent Global Note to be exchanged in connection therewith).
(2) The Company undertakes to deliver to the Agent, pursuant to a
request for the issue of Definitive Notes under the terms of the relevant
Permanent Global Note, sufficient numbers of executed Definitive Notes to enable
the Agent to comply with its obligations under this Clause 5.
6. Exchanges
Upon any exchange of all or a portion of an interest in a
Temporary Global Note for an interest in a Permanent Global Note or upon any
exchange of all, but not a portion, of an interest in a Permanent Global Note
for Definitive Notes, the Global Note shall be endorsed to reflect the reduction
of its principal amount by the aggregate principal amount so exchanged. Until
exchanged in full, the holder of an interest in any Global Note shall in all
respects be entitled to the same benefits as the holder of Notes, Receipts and
Coupons authenticated and delivered hereunder, subject as set out in the
Conditions. The Agent is hereby authorized on behalf of the Company (i) to
endorse or to arrange for the endorsement of the relevant Global Note to reflect
the reduction in the principal amount represented thereby by the amount so
exchanged and, if appropriate, to endorse the Permanent Global Note to reflect
any increase in the principal amount represented thereby, and in either case, to
sign in the relevant space on the relevant Global Note recording such exchange
or increase and (ii) in the case of a total exchange, to cancel or arrange for
the cancellation of the relevant Global Note.
7. 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 Conditions.
(2) Subject to the procedures set out in the Procedures
Memorandum, for the purposes of subclause (1) the Agent is entitled to treat a
telephone, telex or facsimile
<PAGE>
communication from a person purporting to be (and who the Agent, after
ascertaining that such person appears on the list of persons described in Clause
19(7), believes in good faith to be) the authorized representative of the
Company named in the list referred to in, or notified pursuant to, Clause 19(7)
as sufficient instructions and authority of the Company for the Agent to act in
accordance with subclause (1).
(3) In the event that a person who has signed on behalf of the
Company a master Temporary Global Note, a master Permanent Global Note or
Definitive Notes not yet issued but held by the Agent in accordance with Clause
5(2) ceases to be authorized as described in Clause 19(7), the Agent shall
(unless the Company gives notice to the Agent that Notes signed by that person
do not constitute valid and binding obligations of the Company or otherwise
until replacements have been provided to the Agent) continue to have authority
to issue any such Notes, and the Company hereby warrants to the Agent that such
Notes shall, unless notified as aforesaid, be valid and binding obligations of
the Company. Promptly upon such person ceasing to be authorized, the Company
shall provide the Agent with replacement master Temporary Global Notes, master
Permanent Global Notes and Definitive Notes and the Agent shall cancel and
destroy the master Temporary Global Notes, master Permanent Global Notes and
Definitive Notes held by it which are signed by such person and shall provide to
the Company a confirmation of destruction in respect thereof specifying the
Notes so cancelled and destroyed.
(4) Unless otherwise agreed in writing between the Company and
the Agent, each Note credited to the Agent's distribution account with Euroclear
or Cedel Bank following the delivery of a Temporary Global Note or Permanent
Global Note to a common depositary pursuant to Clause 3(1)(c) or 4(1)(c),
respectively, shall be held to the order of the Company. The Agent shall procure
that the principal amount of Notes which the relevant Purchaser has agreed to
purchase is:
(a) debited from the Agent's distribution account; and
(b) credited to the securities account of such Purchaser with
Euroclear or Cedel Bank (as specified in the Confirmation),
in each case only upon receipt by the Agent on behalf of the Company of the
purchase price due from the relevant Purchaser in respect of such Notes.
(5) If on the relevant Issue Date a Purchaser 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
<PAGE>
Cedel Bank after such Issue Date, the Agent will continue to hold the Defaulted
Note to the order of the Company. The Agent shall notify the Company forthwith
of the failure of the Purchaser to pay the full purchase price due from it in
respect of any Defaulted Note and, subsequently, shall notify the Company
forthwith upon receipt from the Purchaser of the full purchase price in respect
of such Defaulted Note.
(6) If the Agent pays an amount (the "Advance") to the Company on
the basis that a payment (the "Payment") will be received from a Purchaser and
if the Payment is not received by the Agent on the date the Agent pays the
Company, the Agent shall notify the Company by tested telex or facsimile that
the Payment has not been received and the Company 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).
(7) In the event of an issue of Notes and subject to receipt of a
Confirmation from the Company in accordance with the terms of the Procedures
Memorandum, the Agent will promptly, and in any event prior to the Issue Date in
respect of such issue, send the Pricing Supplement to the Company, relevant
Stock Exchange and the relevant Dealers.
8. Payments
(1) The Agent shall advise the Company, no later than ten
Business Days (as defined below) immediately preceding the date on which any
payment is to be made to the Agent with respect to Notes pursuant to this
subclause (1), of the payment amount, payment date, whether the Notes are Senior
Notes or Subordinated Notes and payment instructions which shall provide for
separate accounts for Senior Notes and Subordinated Notes and the Company shall
on each date on which any payment in respect of any Notes becomes due, transfer
to the account(s) specified by the Agent not later than the Payment Time such
amounts 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
Company may agree. As used in this subclause (1), the term "Payment Time" means
2:00 p.m. local time in the principal financial center of the country of the
currency in which the payment is to be made (which in the case of payment in ECU
is Brussels).
(2) No later than the third Business Day immediately preceding
the date on which any payment is to be made to the Agent pursuant to subclause
(1), the Agent shall receive a
<PAGE>
confirmation from the Company that payment will be made. For the purposes of
this Clause 8, "Business Day" means a day which is:
(a) a day (other than a Saturday or a Sunday) on which commercial
banks and foreign exchange markets settle payments in London;
(b) either (i) 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, and which, if the Specified
Currency is Australian dollars, shall be Sydney and if the Specified Currency is
New Zealand dollars, shall be Auckland) or (ii) in relation to a payment to be
made in ECU, an ECU Settlement Day (as defined in the 1991 ISDA Definitions
published by the International Swaps and Derivatives Association, Inc.
as amended and updated at the Issue Date of the Notes,); and
(c) a day (other than a Saturday or a Sunday) on which banks
settle payments in the relevant place of business of the Agent.
(3) Subject to the Agent being satisfied in its sole discretion
that payment will be duly made as provided in subclause (1), 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 Company in the manner provided in the Conditions.
If any payment provided for in subclause (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.
(4) If for any reason the Agent considers in its sole discretion
that the amounts to be received by the Agent pursuant to subclause (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
either the Senior Notes or the Subordinated Notes, the Agent shall then
forthwith notify the Company of such insufficiency and, until such time as the
Agent has received the full amount of all such payments, neither the Agent nor
any Paying Agent shall be obliged to pay any such claims; provided that in the
event that payments are received in the account for payment of Senior Notes
which are sufficient to pay the Senior Notes, payments shall be made on the
Senior Notes and all payments on the Subordinated Notes shall be made in
accordance with Condition 2 of the Conditions.
(5) Without prejudice to subclauses (3) and (4), if the Agent
pays any amounts to the holders of Notes, Receipts or
<PAGE>
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 subclause (1) (the
excess of the amounts so paid over the amounts so received being the
"Shortfall"), the Company shall, in addition to paying amounts due under
subclause (1), pay to the Agent on demand interest (at a rate which represents
the Agent's actual overnight cost of funding the Shortfall) on the Shortfall (or
the unreimbursed portion thereof) until the receipt in full by the Agent of the
Shortfall. The Agent shall notify the Company by tested telex or facsimile as
soon as practicable, it being understood that the Company shall have the right
to make such payment subsequently with good value as of such Business Day.
(6) 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 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 on
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.
9. Determinations and notifications in respect of Notes
(1) The Agent shall make all such determinations and calculations
(howsoever described) as it is required to do under the Conditions, all subject
to and in accordance with the Conditions and Clause 29 hereof.
(2) The Agent shall not be responsible to the Company or to any
third party (except in the event of negligence, wilful default or bad faith) as
a result of the Agent having acted on any quotation given by any Reference Bank
which subsequently may be found to be incorrect.
(3) The Agent shall promptly notify the Company, any other Paying
Agent 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 Conditions as soon as practicable
after the determination thereof and of any subsequent amendment thereto pursuant
to the Conditions.
(4) The Agent 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 Conditions to
be published as
<PAGE>
required in accordance with the Conditions as soon as possible after their
determination or calculation.
(5) If the Agent 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 9, it shall forthwith notify the
Company and the other Paying Agents of such fact.
(6) At the end of each calendar month, the Agent shall, if
required, provide (i) the Bank of England with information on the amount,
interest rate and other terms of each issue of Sterling-denominated Notes during
the month, and such other information as the Bank of England may require from
time to time, (ii) the Japanese Ministry of Finance with information on the
amount, interest rate and other terms of each issue of Yen-denominated Notes
during the month, and such other information as the Japanese Ministry of Finance
may require from time to time, and (iii) the German Central Bank with
information on the amount, interest rate and other terms of each issue of
Deutsche Mark-denominated Notes during the month, and such other information as
the German Central Bank may require from time to time.
(7) For purposes of monitoring the aggregate principal amount of
Notes issued under the Programme, 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 Indexed Notes, each issue of
Zero Coupon Notes and each issue of Partly Paid Notes, as follows:
(a) the U.S. dollar equivalent of the principal amount of Notes
denominated in a currency other than U.S. dollars shall be determined by the
Agent by reference to a spot rate displayed on a page on the Reuters Monitor
Money Rates Service or the appropriate Associated Press-Dow Jones Telerate
Service or such other service as is agreed between the Agent and the Company
from time to time and such Notes shall be revalued at least monthly and the most
recent valuation used;
(b) the U.S. dollar equivalent of the principal amount of Dual
Currency Notes and Indexed Notes shall be determined in the manner specified
above by reference to the original principal amount of such Notes, and if Notes
are payable in alternate currencies or currency equivalents at the option of the
holder, the largest amount payable shall be used;
(c) the U.S. dollar equivalent of the principal amount of Zero
Coupon Notes and other Notes sold for 90% or less of their principal amount at
stated maturity shall be calculated at least monthly, and the proceeds received
or to be received, plus
<PAGE>
any portion of original issue discount which is amortized from the date of issue
to the date of the most recent valuation, without adjustment for any
underwriting, placement agent or similar discount, fee or charge, or any other
payment, receipt, or expense, shall be used for the valuation instead of their
principal amount at stated maturity; and
(d) the U.S. dollar equivalent of the principal amount of Partly
Paid Notes shall be the principal amount regardless of the amount paid up on
such Notes.
(8) The Agent will determine the Rate of Interest pursuant to
Condition 4(b)(iv) in the event that the Relevant Screen Page is not available
or if, in the case of subclause (x) thereof, no offered quotation appears or, in
the case of subclause (y) thereof, fewer than three of such offered quotations
appear, at the time specified in Condition 4(b)(iv), as follows:
(a) the Rate of Interest for the applicable Interest Period
shall, subject as provided below, be 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), of which the Agent is
advised by all Reference Banks (as defined below) as at 11:00 a.m. (London time)
on the Interest Determination Date plus or minus (as specified in the applicable
Pricing Supplement) the Margin (if any), all as determined by the Agent;
(b) if on the Interest Determination Date to which subclause
(8)(a) applies, two or three only of the Reference Banks advise the Agent of
such offered quotations, the Rate of Interest for the next Interest Period shall
be determined as in subclause (8)(a) on the basis of the rates of those
Reference Banks advising such offered quotations;
(c) if on the Interest Determination Date to which subclause
(8)(a) applies, one only or none of the Reference Banks advises the Agent of
such rates, the Rate of Interest for the next Interest Period shall be whichever
is the higher of:
(1) the Rate of Interest in effect for the last preceding
Interest Period to which subclause (8)(a) shall have applied (plus or
minus (as specified in the applicable Pricing Supplement), where a
different Margin is to be applied to the next Interest Period than that
which applied to the last preceding Interest Period, the Margin relating
to the next Interest Period in place of the Margin relating to the last
preceding Interest Period); or
(2) the reserve interest rate (the "Reserve
<PAGE>
Interest Rate") which shall be the rate per annum which the Agent
determines to be either (x) the arithmetic mean (rounded, if necessary,
to the fifth decimal place with 0.000005 being rounded upwards) of the
lending rates for the Specified Currency which banks selected by the
Agent in the principal financial center of the country of the Specified
Currency (which, if Australian dollars, shall be Sydney and, if New
Zealand dollars, shall be Auckland) are quoting on the relevant Interest
Determination Date for the next Interest Period to the Reference Banks
or those of them (being at least two in number) to which such quotations
are, in the opinion of the Agent, being so made, plus or minus (as
specified in the applicable Pricing Supplement) the Margin (if any), or
(y) in the event that the Agent can determine no such arithmetic mean,
the lowest lending rate for the Specified Currency which banks selected
by the Agent in the principal financial center of the country of the
Specified Currency (which, if Australian dollars, shall be Sydney and,
if New Zealand dollars, shall be Auckland) are quoting on such Interest
Determination Date to leading European banks for the next Interest
Period, plus or minus (as specified in the applicable Pricing
Supplement) the Margin (if any), provided that if the banks selected as
aforesaid by the Agent are not quoting as mentioned above, the Rate of
Interest shall be the Rate of Interest specified in (1) above; and
(d) unless otherwise specified in the applicable Pricing
Supplement, the Reference Banks will be Barclays Bank PLC, National Westminster
Bank PLC, Bankers Trust Company and The Bank of Tokyo, Ltd. So long as any
Floating Rate Note to which subclause (8)(a) is applicable remains outstanding,
in the case of any bank being unable or unwilling to continue to act as a
Reference Bank, the Company shall specify the London office of some other
leading bank engaged in the Eurodollar market to act as such in its place.
The Agent shall promptly notify the Company of each determination
made as aforesaid.
10. Notice of any withholding or deduction
If the Company is, in respect of any payments, compelled to
withhold or deduct any amount for or on account of taxes, duties, assessments or
governmental charges as specifically contemplated under the Conditions, the
Company 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.
<PAGE>
11. Duties of the Agent in connection with early redemption
(1) If the Company decides to redeem any Notes 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 Conditions, the
Company shall give notice of such decision to the Agent not less than 40 days
before the relevant redemption date.
(2) If only some of the Notes of like tenor and of the same
Series are to be redeemed on such date the Agent (or, in the case of a Global
Note, Euroclear and/or Cedel Bank) shall make the required drawing in accordance
with the Conditions.
(3) The Agent shall publish the notice required in connection
with any such redemption and shall at the same time also publish a separate list
of 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 Conditions.
12. Publication of notices
On behalf of and at the request and expense of the Company, the
Agent shall cause to be published all notices required to be given by the
Company in accordance with the Conditions.
<PAGE>
13. Cancellation of Notes, Receipts, Coupons and Talons
(1) Any Notes which are purchased pursuant to the Conditions by
or on behalf of the Company, together (in the case of Notes in definitive form)
with all unmatured Receipts, Coupons or Talons (if any) attached thereto or
surrendered therewith, may, at the Company's option, be surrendered to the Agent
for cancellation. Where any Notes, Receipts, Coupons or Talons are purchased and
surrendered to the Agent for cancellation as aforesaid, the Company shall
procure that all relevant details are promptly given to the Agent and that all
Notes, Receipts, Coupons or Talons to be so cancelled are delivered to the
Agent. All Notes which are redeemed, all Receipts or Coupons which are paid and
all Talons which are exchanged shall be cancelled by the Agent or Paying Agent
by which they are redeemed, paid or exchanged. Each of the Paying Agents shall
give to the Agent details of all payments made by it and shall deliver all
cancelled Notes, Receipts, Coupons and Talons to the Agent or to any Paying
Agent authorized from time to time in writing by the Agent to accept delivery of
cancelled Notes, Receipts, Coupons and Talons (an "Authorized Agent").
(2) A certificate stating:
(a) the aggregate principal amount of Notes which have been
redeemed and the aggregate amount paid in respect thereof;
(b) the number of Notes cancelled together (in the case of Notes
in definitive form) 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 cancelled; and
(e) the serial numbers of such Notes,
shall be given to the Company by the Agent as soon as reasonably practicable and
in any event within 30 days after the date of such repayment or, as the case may
be, payment or exchange.
(3) Subject to being duly notified in due time, the Agent shall
give a certificate to the Company, within three months of the date of purchase
and cancellation of Notes as aforesaid, stating:
<PAGE>
(a) the principal amount of Notes so purchased and cancelled;
(b) the serial numbers of such Notes; and
(c) the total number by maturity date of the Receipts, Coupons
and Talons (if any) appertaining thereto and surrendered therewith or attached
thereto.
(4) The Agent or an Authorized Agent shall destroy all cancelled
Notes, Receipts, Coupons and Talons (unless otherwise instructed by the Company)
and, forthwith upon destruction, furnish the Company and, in the case of an
Authorized Agent, the Agent with a certificate of the serial numbers of the
Notes and the number by maturity date of Receipts, Coupons and Talons so
destroyed.
(5) Without prejudice to the obligations of the Agent pursuant to
subclause (2), 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 14) and of all new or replacement
Notes, Receipts, Coupons or Talons issued in substitution for exchanged or
mutilated, defaced, destroyed, lost or stolen Notes, Receipts, Coupons or
Talons. The Agent shall at all reasonable times make such record available to
the Company and any person authorized by the Company for inspection and for the
taking of copies thereof or extracts therefrom.
(6) All records and certificates made or given pursuant to this
Clause 13 and Clause 14 shall make a distinction between Notes, Receipts,
Coupons and Talons of each Series.
14. Exchange; Issue of new and replacement Notes, Receipts,
Coupons and Talons
(1) The Company will cause a sufficient quantity of additional
forms of Notes, Receipts, Coupons and Talons to be available, upon request, to
the Agent at its specified office for the purpose of issuing Notes, Receipts,
Coupons and Talons as provided below.
(2) Notes (together with any Receipts, Coupons and Talons
appertaining thereto) may be exchanged for Notes of the same Series in any
authorized denominations and of like tenor and terms and aggregate principal
amount, upon surrender of the Notes to be exchanged with all unmatured Receipts,
Coupons and Talons appertaining thereto at the specified office of the Agent, in
accordance with all applicable laws and regulations, upon payment, if the
Company shall so require, of the costs incurred in connection therewith. If the
Noteholder is unable to produce
<PAGE>
any of the Receipts, Coupons and Talons appertaining to such Note, such new Note
will only have attached to it Receipts, Coupons and Talons corresponding to
those (if any) attached to the Note which is presented for exchange, unless the
surrender of such missing Receipts, Coupons or Talons is waived by the Company
upon the condition that the Noteholder furnish such indemnity as the Company may
require. Whenever any Notes are so surrendered for exchange, the Company shall
execute, and the Agent shall authenticate and deliver, each Note which the
Noteholder making the exchange is entitled to receive.
(3) The Agent will, subject to and in accordance with the
Conditions and the following provisions of this Clause 14, cause to be delivered
any replacement Notes, Receipts, Coupons and Talons which the Company may
determine to issue in place of Notes, Receipts, Coupons and Talons which have
been lost, stolen, mutilated, defaced or destroyed. In the case of a mutilated
or defaced Note, the Agent shall ensure that (unless otherwise covered by such
indemnity as the Company may 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 Agent shall not issue any replacement Note, Receipt,
Coupon or Talon unless and until the applicant therefor shall have:
(a) paid such costs as may be incurred in connection therewith;
(b) furnished it with such evidence (including evidence as to the
serial number of such Note, Receipt, Coupon or Talon) and indemnity (which may
include a bank guarantee) as the Company may reasonably require; and
(c) in the case of any mutilated or defaced Note, Receipt, Coupon
or Talon, surrendered the same to the Agent.
(5) The Agent shall cancel any Notes (and the Receipts, Coupons
and Talons appertaining thereto) presented for exchange or any mutilated or
defaced Notes, Receipts, Coupons and Talons in respect of which new or
replacement Notes, Receipts, Coupons and Talons, as the case may be, have been
issued pursuant to this Clause 14 and shall furnish the Company with a
certificate stating the serial numbers of the Notes, Receipts, Coupons and
Talons so cancelled and, unless otherwise instructed by the Company in writing,
shall destroy such cancelled Notes, Receipts, Coupons and Talons and furnish the
Company with a destruction certificate containing the information specified in
Clause 13(4).
<PAGE>
(6) The Agent shall, on issuing any new or replacement Note,
Receipt, Coupon or Talon, forthwith inform the Company and the Paying Agents of
the serial number of such new or 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 new or replacement Note, Receipt, Coupon or Talon has
been issued. Whenever new or replacement Receipts, Coupons or Talons are issued
pursuant to the provisions of this Clause 14, the Agent shall also notify the
Paying Agents of the maturity dates of the exchanged or lost, stolen, mutilated,
defaced or destroyed Receipts, Coupons or Talons and of the new or replacement
Receipts, Coupons or Talons issued.
(7) The Agent shall keep a full and complete record of all new
and replacement Notes, Receipts, Coupons and Talons issued and shall make such
record available all at reasonable times to the Company and any persons
authorized by the Company for inspection and for the taking of copies thereof or
extracts therefrom.
(8) Whenever any Note, Receipt, Coupon or Talon for which a new
or 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 Company and the Agent.
15. Copies of this Agreement and each Pricing Supplement
available for inspection
The Agent and the Paying Agents shall, for as long as any Note
remains outstanding, hold copies of this Agreement, each Pricing Supplement, the
Company's Certificate of Incorporation as amended and restated from time to time
and the latest annual and any interim reports of the Company available for
inspection. For this purpose, the Company shall furnish the Agent and the Paying
Agents with sufficient copies of each of such documents.
16. Commissions and expenses
(1) The Company shall pay to the Agent such fees and commissions
as the Company and the Agent may separately agree in respect of the services of
the Agent and the Paying Agents hereunder together with any reasonable
out-of-pocket expenses (including legal, printing, postage, tax, cable and
advertising expenses required in connection with the Notes issued hereunder)
incurred by the Agent and the Paying Agents in connection with their said
services.
(2) The Agent shall make payment of the fees and commissions due
hereunder to the Paying Agents and shall
<PAGE>
reimburse their expenses promptly after the receipt of the relevant moneys from
the Company. The Company shall not be responsible for any such payment or
reimbursement by the Agent to the Paying Agents.
17. Indemnity
(1) The Company shall indemnify the Agent and each of the Paying
Agents against any direct losses, liabilities, costs, claims, actions, demands
or expenses (including, but not limited to, all reasonable costs, legal fees,
charges and expenses paid or incurred in disputing or defending any of the
foregoing but excluding loss of profits) which it may incur or which may be made
against the Agent or any Paying Agent as a result of or in connection with its
appointment by the Company or the exercise of its powers and duties hereunder
except such as may result from its own wilful default, negligence or bad faith
or that of its officers, directors or employees or the breach by it of the terms
of this Agreement.
(2) The Agent and the Paying Agents shall not be liable for any
action taken or omitted hereunder except for their own wilful default,
negligence or bad faith or that of their respective officers, directors or
employees or the breach by any of them of the terms of this Agreement.
(3) Neither the Agent nor any of the Paying Agents shall be
responsible for the acts or failure to act of any other of them and each of the
Agent and the Paying Agents shall indemnify the Company against any loss,
liability, cost, claim, action, demand or expense (including, but not limited
to, all reasonable costs, legal fees, charges and expenses paid or incurred in
disputing or defending any of the foregoing but excluding loss of profits) which
the Company may incur or which may be made against it as a result of the breach
by the Agent or any such Paying Agent of the terms of this Agreement or its
wilful default, negligence or bad faith or that of its officers, directors or
employees.
18. Repayment by the Agent
The Agent shall, forthwith on demand, upon the Company being
discharged from its obligation to make payments in respect of any Notes under
the Conditions, provided that there is no outstanding, bona fide and proper
claim in respect of any such payments, pay to the Company sums equivalent to any
amounts paid to it by the Company in respect of such Notes.
<PAGE>
19. Conditions of appointment
(1) The Agent shall be entitled to deal with money paid to it by
the Company 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 subclause (2) below; and
(c) that it shall not be liable to account to the Company for any
interest thereon except as otherwise agreed between the Company and the Agent.
(2) In acting hereunder and in connection with the Notes, the
Agent and the Paying Agents shall act solely as agents of the Company 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, except that all funds held by the Agent or the Paying Agents for payment
to the Noteholders shall be held in trust, to be applied as set forth herein,
but need not be segregated from other funds except as required by law; provided,
however, that monies paid by the Company to the Agent for the payment of
principal or interest on Notes remaining unclaimed at the end of one year after
such principal or interest shall become due and payable shall be repaid to the
Company as provided and in the manner set forth in the Notes where upon all
liability of the Agent with respect thereto shall cease.
(3) The Agent and the Paying Agents hereby undertake to the
Company to perform such obligations and duties, and shall be obliged to perform
such duties and only such duties, as are herein, in the 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.
(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 Company or
any notice,
<PAGE>
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 Company.
(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 transaction with the Company and may act on, or as depositary, trustee or
agent for, any committee or body of holders of Notes or Coupons or in connection
with any other obligations of the Company as freely as if the Agent or the
relevant Paying Agent, as the case may be, were not appointed hereunder.
(7) The Company shall provide the Agent with a certified copy of
the list of persons authorized to execute documents and take action on behalf of
the Company 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 a certified copy of the revised list of
persons authorized to execute documents and take action on behalf of the
Company.
20. Communication between the parties
A copy of all communications relating to the subject matter of
this Agreement between the Company and any holders of Notes, Receipts or Coupons
and any of the Paying Agents shall be sent to the Agent by the relevant Paying
Agent.
21. Changes in Agent and Paying Agents
(1) The Company agrees that, until no 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 (whichever is the later):
(a) so long as any Notes are listed on a Stock Exchange, there
will at all times be a Paying Agent (or the Agent) having a specified office in
each location required by the rules and regulations of the relevant Stock
Exchange;
(b) there will at all times be a Paying Agent (or the Agent) with
a specified office in a city approved by the Company and the Agent in
continental Europe; and
<PAGE>
(c) there will at all times be an Agent.
In addition, the Company shall appoint a Paying Agent having a
specified office in New York City in the circumstances described in the final
paragraph of Condition 6(b). Any variation, termination, appointment or change
shall only take effect (other than in the case of insolvency, 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 Agent and the Noteholders in accordance
with Condition 16.
(2) The Agent may (subject as provided in subclause (4)) at any
time resign as Agent by giving written notice to the Company 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 Company unless the Company agrees to accept
less notice.
(3) The Agent may (subject as provided in subclause (4)) be
removed at any time by the filing with it of an instrument in writing signed on
behalf of the Company specifying such removal and the date when it shall become
effective.
(4) Any resignation under subclause (2) or removal under
subclause (3) shall only take effect upon the appointment by the Company 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 23. If, by the day falling 10 days
before the expiry of any notice under subclause (2), the Company has not
appointed a successor Agent, then the Agent shall be entitled, on behalf of the
Company, to appoint as a successor Agent in its place such 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 action 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 if an administrator, liquidator or administrative or other receiver of it or
all or a substantial part of its property is appointed, or it admits in writing
its inability to pay or meet its debts as they become due, or if an 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 any officer
takes charge or control of it or of its property or affairs for the purpose of
rehabilitation,
<PAGE>
administration or liquidation, a successor Agent may be appointed by the Company
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 23 the Agent so superseded shall cease to be
the Agent hereunder.
(6) Subject to subclause (1), the Company may, after prior
consultation with the Agent, terminate the appointment of any of the Paying
Agents at any time and/or 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.
(7) Subject to subclause (1), all or any of the Paying Agents may
resign their respective appointments hereunder at any time by giving the Company
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 forthwith transfer all moneys held by it hereunder and,
in the case of the Agent, the records referred to in Clauses 13(5) and 14(7) to
the successor Agent hereunder; and
(b) shall be entitled to the payment by the Company of its
commissions and fees for the services theretofore rendered hereunder in
accordance with the terms of Clause 16 and to the reimbursement of all
reasonable out-of-pocket expenses (including legal fees and together with any
applicable value added tax or similar tax thereon) incurred in connection
therewith.
(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, trust, immunities, duties and
obligations of such predecessor with like effect as if originally named as Agent
or (as the case may be) a Paying Agent hereunder.
<PAGE>
22. Merger and consolidation
Any corporation into which the Agent or any Paying Agent may be
merged, or any corporation with which the Agent or any of the Paying Agents may
be consolidated, or any corporation resulting from any merger 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, 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 Company, 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.
Notice of any such merger, consolidation or transfer shall forthwith be given to
the Company by the relevant Agent or Paying Agent.
23. Notifications
Following receipt of notice of 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 Agent or on giving notice to terminate the
appointment of any Agent or, as the case may be, Paying Agent, the Company shall
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 Conditions.
24. Change of specified office
If the Agent or any Paying Agent determines to change its
specified office it shall give to the Company 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 of the Company) 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 21 on or prior to the date of 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 Conditions.
<PAGE>
25. Notices
Any notice or communication given hereunder shall be sufficiently
given or served:
(a) if delivered in person to the relevant address specified on
the signature pages hereof and, if so delivered, shall be deemed to have been
delivered at time of receipt; or
(b) if sent by facsimile (and followed by delivery to the
relevant address) or telex to the relevant number specified on the signature
pages hereof and, if so sent, shall be deemed to have been delivered upon
transmission provided such transmission is confirmed by the answer back of the
recipient (in the case of telex) or when an acknowledgement of receipt is
received (in the case of facsimile).
26. Taxes and stamp duties
The Company agrees to pay any and all stamp and other documentary
taxes or duties (other than any interest or penalties arising as a result of a
failure by any other person to account promptly to the relevant authorities for
any such duties or taxes after such person shall have received from the Company
the full amount payable in respect thereof) which may be payable in connection
with the execution, delivery, performance and enforcement of this Agreement.
27. Currency indemnity
If, under any applicable law and whether pursuant to a judgment
being made or registered against the Company or for any other reason, any
payment under or in connection with this Agreement is made or is 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 Agent or the relevant Paying Agent 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
Agent or the relevant Paying Agent falls short of the amount due under the terms
of this Agreement, the Company shall, as a separate and independent obligation,
indemnify and hold harmless the Agent against the amount of such shortfall.
<PAGE>
For the purposes of this Clause 27, "rate of exchange" means the
rate at which the Agent 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.
28. Amendments; Meetings of Holders
(1) This Agreement, the Notes and any Receipts and Coupons
attached to the Notes may be amended by the Company and the Agent, without
consent of the holder of any Note, Receipt or Coupon (i) for the purpose of
curing any ambiguity, or of curing, correcting or supplementing any defective
provision contained herein or therein, or to evidence the succession of another
corporation to the Company as provided in Condition 11, (ii) to make any further
modifications of the terms of this Agreement necessary or desirable to allow for
the issuance of any additional Notes (which modifications shall not be
materially adverse to holders of outstanding Notes) or (iii) in any manner which
the Company (and, in the case of this Agreement, the Agent) may deem necessary
or desirable and which shall not materially adversely affect the interests of
the holders of the Notes, Receipts and Coupons. In addition, (a) with the
consent of the holders of not less than a majority in aggregate principal amount
of the Senior Notes then outstanding affected thereby, or by a resolution
adopted by a majority in aggregate principal amount of such outstanding Senior
Notes affected thereby present or represented at a meeting of such holders at
which a quorum is present, this Agreement with respect to such Senior Notes and
the terms and conditions of such Senior Notes, Receipts and Coupons may be
modified or amended by the parties hereto, and future compliance and past
defaults in respect thereto waived, and (b) with the consent of the holders of
not less than a majority in aggregate principal amount of the Subordinated Notes
then outstanding affected thereby, or by a resolution adopted by a majority in
aggregate principal amount of such outstanding Subordinated Notes affected
thereby present or represented at a meeting of such holders at which a quorum is
present, this Agreement with respect to such Subordinated Notes and the terms
and conditions of such Subordinated Notes, Receipts and Coupons may be modified
or amended by the parties hereto, and future compliance and past defaults in
respect thereto waived, in each case as provided in Conditions 12 and 13 and
subject to the limitations therein provided.
(2) The holders of Senior Notes and Subordinated Notes will have
separate meetings and vote as separate classes of Notes. A meeting of holders of
Senior or Subordinated Notes may be called by the holders of at least 10 per
cent. in principal amount of the outstanding Senior or Subordinated Notes,
respectively, at any time and from time to time to make, give or
<PAGE>
take any request, demand authorization, direction, notice, consent, waiver or
other action provided by this Agreement or such Notes to be made, given or taken
by holders of such Notes.
(3) The Agent may at any time call a meeting of holders of Senior
or Subordinated Notes for any purpose specified in subclause (1) to be held at
such time and at such place in The City of New York or in London, as the Agent
and the Company shall determine. Notice of every meeting of holders of Senior or
Subordinated Notes, setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be given by
the Agent to the Company and to the holders of the respective Notes, in the same
manner as provided in Condition 16, not less than 21 nor more than 180 days
prior to the date fixed for the meeting. If at any time the Company or the
holders of at least 10 per cent. in principal amount of the outstanding Senior
or Subordinated Notes shall have requested the Agent to call a meeting of the
holders to take any action authorized in subclause (1), by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Agent shall not have given 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 Company, or the holders of
Senior or Subordinated Notes, as the case may be, in the amount above-specified,
as the case may be, may determine the time and the place in The City of New York
or London for such meeting and may call such meeting by giving notice thereof as
provided in this subclause (3).
(4) To be entitled to vote at any meeting of holders of Senior or
Subordinated Notes, a person shall be a holder of outstanding Senior or
Subordinated Notes, as the case may be, affected thereby at the time of such
meeting, or a person appointed by an instrument in writing as proxy for such
holder.
(5) The persons entitled to vote a majority in principal amount
of the outstanding Senior or Subordinated Notes affected thereby shall
constitute a quorum in respect of such Senior or Subordinated Notes. In the
absence of a quorum, within 30 minutes of the time appointed for any such
meeting, the meeting may 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
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further 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 subclause (3) except that such notice need be given not
less than five days prior to the date on which the meeting is scheduled to be
reconvened. Notice
<PAGE>
of the reconvening of an adjourned meeting shall state expressly that 25 per
cent. of the principal amount of the outstanding Senior or Subordinated Notes
affected thereby shall constitute a quorum.
Subject to the foregoing, at the reconvening of any meeting
adjourned for a lack of a quorum, the persons entitled to vote 25 per cent. in
principal amount of the outstanding Senior or Subordinated Notes affected
thereby, as the case may be, shall constitute a quorum for the taking of any
action set forth in the notice of the original meeting. Any meeting of holders
of Senior or Subordinated Notes at which a quorum is present may be adjourned
from time to time by vote of a majority in principal amount of the outstanding
Senior or Subordinated Notes affected thereby, as the case may be, represented
at the meeting, and the meeting may be held as so adjourned without further
notice. At a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid, any resolution and all matters shall be
effectively passed and decided if passed or decided by the persons entitled to
vote a majority in principal amount of the outstanding Senior or Subordinated
Notes represented and voting at such meeting, provided that such amount
approving such resolution shall be not less than 25 per cent. in principal
amount of the outstanding Senior or Subordinated Notes affected thereby, as the
case may be.
(6) The Agent may make such reasonable regulations as it may deem
advisable for any meeting of holders of Senior or Subordinated Notes in regard
to proof of the holding of such 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. The Agent shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or holders of Senior or Subordinated Notes as provided above, in which
case the Company or the holders of Senior or Subordinated Notes calling the
meeting, as the case may be, shall in like manner appoint a temporary chairman.
A permanent chairman and a permanent secretary of the meeting shall be elected
by vote of the persons entitled to vote a majority in principal amount of the
outstanding Senior or Subordinated Notes represented at the meeting. The
chairman of the meeting shall have no right to vote, except as a holder of
Senior or Subordinated Notes affected thereby or as a proxy. A record, at least
in triplicate, of the proceedings of each meeting of holders of Senior or
Subordinated Notes shall be prepared, and one such copy shall be delivered to
the Company and another to the Agent to be preserved by the Agent.
<PAGE>
29. Calculation Agency Agreement
A form of calculation agency agreement is annexed to this
Agreement as Appendix C. Where the Conditions require functions to be carried
out by a calculation agent (including in respect of Indexed Notes and Dual
Currency Notes), the Company may execute such an agreement or an agreement in
such form as the Company and the calculation agent may agree and any
calculations will be made in the manner specified in the applicable Pricing
Supplement.
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. Governing Law
This Agreement is governed by, and shall be construed in
accordance with, the laws of the State of California, United States of America,
applicable to agreements made and to be performed wholly within such
jurisdiction.
32. Counterparts
This Agreement may be executed in one or more counterparts all of
which shall constitute one and the same agreement.
[Signature Page Next]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
The Company
- -----------
BANKAMERICA CORPORATION
555 California Street
San Francisco, California 94104
Telephone: 1 415 953 8496
Telefax: 1 415 622 3611
Attention: Shaun M. Maguire, Senior Vice President
and Assistant Treasurer
By: /s/ S.M. Maguire
--------------------------------------
Name: Shaun M. Maguire
Title:Senior Vice President and Assistant Treasurer
The Agent
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION
100 Wall Street, Suite 1600
New York, New York 10005
Telephone: 1 212 361 2460
Telefax: 1 212 809 5459
Attention: John Bowman, Vice President
By: /s/ John Bowman
--------------------------------------
Name: John Bowman
Title: Vice President
The Agent's agent with respect to its obligations as issuing and principal
paying agent under this Agreement
UNION BANK OF SWITZERLAND,
LONDON BRANCH
Telephone: 44 171 901 6126
Telefax: 44 171 901 6118
Attention: Margaret Potter
By: /s/ Nicola Dale
--------------------------------------
Name: Nicola Dale
Title: Authorised Officer
<PAGE>
- --------------------------------------------------------------------------------
BankAmerica Corporation
NationsBank (DE) Corporation
- --------------------------------------------------------------------------------
AMENDMENT TO
SECOND AMENDED AND RESTATED AGENCY AGREEMENT
Dated as of September 30, 1998
Amending the Second Amended and Restated Agency Agreement dated
as of November 15, 1996, between
BankAmerica Corporation and
U.S. Bank Trust, National Association
(successor to First Trust of New York, National Association), as Agent
- --------------------------------------------------------------------------------
<PAGE>
AMENDMENT TO SECOND AMENDED AND RESTATED AGENCY AGREEMENT, dated as of
September 30, 1998 (the "Amendment"), among NationsBank (DE) Corporation, a
Delaware corporation ("NationsBank (DE)") and a direct wholly owned subsidiary
of NationsBank Corporation, a North Carolina corporation ("NationsBank"),
BankAmerica Corporation, a Delaware corporation ("BankAmerica"), and U.S. Bank
Trust National Association, as Agent (the "Agent") under the
Agency Agreement referred to herein;
WHEREAS, BankAmerica and the Agent heretofore executed and delivered a
Second Amended and Restated Agency Agreement, dated as of November 15, 1996 (the
"Agency Agreement"); and
WHEREAS, pursuant to the Agency Agreement BankAmerica issued and the
Agent authenticated and delivered one or more series of BankAmerica's Euro
Medium-Term Notes (the "Notes"); and
WHEREAS, NationsBank and BankAmerica have entered into the Agreement and
Plan of Reorganization, dated as of April 10, 1998, pursuant to which (i)
NationsBank will merge (the "Reincorporation Merger") with and into NationsBank
(DE), in accordance with the terms and conditions of the Plan of Reincorporation
Merger by and between NationsBank and NationsBank (DE), dated as of August 3,
1998, with NationsBank (DE) as the surviving corporation in the Reincorporation
Merger, and (ii) BankAmerica will thereafter merge (the "Merger," and together
with the Reincorporation Merger, the "Reorganization")with and into NationsBank
(DE), with NationsBank (DE) as the surviving corporation in the Merger; and
WHEREAS, the Reorganization is expected to be consummated on September
30, 1998, at which time, NationsBank (DE) will change its name to BankAmerica
Corporation; and
WHEREAS, Condition 11 of the Terms and Conditions of the Notes, which
are attached as Appendix A of the Agency Agreement (the "Terms and Conditions"),
provides that in the case of the Reorganization, NationsBank (DE) shall
expressly assume by amendment to the Agency Agreement all the obligations under
the Notes and the Agency Agreement on the part of BankAmerica to be performed or
observed; and
WHEREAS, Section 28(1) of the Agency Agreement provides that BankAmerica
and the Agent may amend the Agency Agreement and the Notes without notice to or
consent of any Holders of the Notes in order to comply with Condition 11 of the
Terms and Conditions; and
2
<PAGE>
WHEREAS, this Amendment has been duly authorized by all necessary
corporate action on the part of each of NationsBank (DE) and BankAmerica.
NOW, THEREFORE, NationsBank (DE), BankAmerica and the Agent agree as
follows for the equal and ratable benefit of the Holders of the Notes:
ARTICLE I
ASSUMPTION BY SUCCESSOR CORPORATION
SECTION 1.1. Assumption of the Notes. NationsBank (DE) hereby expressly
assumes the due and punctual payment of the principal of (and premium, if any)
and interest (including all Additional Amounts, if any, as provided in Condition
9 of the Terms and Conditions) on all the Notes, Receipts and Coupons, according
to their tenor, and the performance of every covenant and condition of the Notes
and the Agency Agreement to be performed by BankAmerica.
SECTION 1.2. Agent's Acceptance. The Agent hereby accepts this Amendment
and agrees to perform the same under the terms and conditions set forth in the
Agency Agreement.
ARTICLE II
MISCELLANEOUS
SECTION 2.1. Effect of Amendment. Upon the later to occur of (i) the
execution and delivery of this Amendment by NationsBank (DE), BankAmerica and
the Agent and (ii) the consummation of the Reorganization, the Agency Agreement
shall be amended in accordance herewith, and this Amendment shall form a part of
the Agency Agreement for all purposes, and every Holder of Notes heretofore or
hereafter authenticated and delivered under the Agency Agreement shall be bound
thereby.
SECTION 2.2. Agency Agreement Remains in Full Force and Effect. Except
as amended hereby, all provisions in the Agency Agreement shall remain in full
force and effect.
SECTION 2.3. Agency Agreement and Amendment. This Amendment amends the
Agency Agreement, and the Agency Agreement and this Amendment shall henceforth
be read and construed together.
3
<PAGE>
SECTION 2.4. Confirmation and Preservation of Agency Agreement. The
Agency Agreement, as amended by this Amendment is in all respects confirmed and
preserved.
SECTION 2.5 Severability. In case any provision in this Amendment shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 2.6 Terms Defined in the Agency Agreement. All capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in the
Agency Agreement, including its appendices.
SECTION 2.7. Headings. The Article and Section headings of this
Amendment have been inserted for convenience of reference only, are not to be
considered part of this Amendment and shall in no way modify or restrict any of
the terms or provisions hereof.
SECTION 2.8. Benefits of Amendment, etc. Nothing in this Amendment or
the Notes, express or implied, shall give to any Person, other than the parties
hereto and thereto and their successors hereunder and thereunder and the Holders
of the Notes, any benefit of any legal or equitable right, remedy or claim under
the Agency Agreement, this Amendment or the Notes.
SECTION 2.9. Successors. All agreements of NationsBank (DE) in this
Amendment shall bind its successors. All agreements of the Agent in this
Amendment shall bind its successors.
SECTION 2.10. Agent Not Responsible for Recitals. The recitals contained
herein shall be taken as the statements of BankAmerica and NationsBank (DE), and
the Agent assumes no responsibility for their correctness. The Agent makes no
representations as to, and shall not be responsible for, the validity or
sufficiency of this Amendment.
SECTION 2.11. Certain Duties and Responsibilities of the Agent. In
entering into this Amendment, the Agent shall be entitled to the benefit of
every provision of the Agency Agreement relating to the conduct or affecting the
liability or affording protection to the Agent, whether or not elsewhere herein
so provided.
SECTION 2.13. Governing Law. This Amendment to the Agency Agreement
shall be governed by, and construed in accordance with, the laws of the
jurisdiction which govern the Agency Agreement and its construction.
4
<PAGE>
SECTION 2.14. Counterpart originals. The parties may sign any number of
copies of this Amendment. Each signed copy shall be an original, but all of them
together represent the same agreement.
5
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed as of the date first written above.
NationsBank (DE) Corporation
By: /s/ John E. Mack
---------------------------------
Name: John E. Mack
Title: Senior Vice President
BankAmerica Corporation
By: /s/ S.M. Maguire
---------------------------------
Name: S.M. Maguire
Title: Senior Vice President and
Assistant Treasurer
U.S. Bank Trust, National
Association, as Agent
By: /s/ John D. Bowman
---------------------------------
Name: John D. Bowman
Title: Vice President
The Agent's agent with respect to
its obligations as issuing and
principal paying agent under the
Agency Agreement.
Midland Bank PLC, London office
By: /s/ Colin Groome
---------------------------------
Name: Colin Groome
Title: Head of Issuer Services
6
================================================================================
BANKAMERICA CORPORATION
to
BANKERS TRUST COMPANY
Trustee
----------
JUNIOR SUBORDINATED INDENTURE
Dated as of November 27, 1996
----------
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1. Definitions ................................................ 1
SECTION 1.2. Compliance Certificate and Opinions ........................ 10
SECTION 1.3. Forms of Documents Delivered to Trustee .................... 11
SECTION 1.4. Acts of Holders ............................................ 11
SECTION 1.5. Notices, Etc. to Trustee and Company ....................... 13
SECTION 1.6. Notice to Holders; Waiver .................................. 14
SECTION 1.7. Conflict with Trust Indenture Act .......................... 14
SECTION 1.8. Effect of Headings and Table of Contents ................... 14
SECTION 1.9. Successors and Assigns ..................................... 15
SECTION 1.10. Separability Clause ........................................ 15
SECTION 1.11. Benefits of Indenture ...................................... 15
SECTION 1.12. Governing Law .............................................. 15
SECTION 1.13. Non-Business Days .......................................... 15
ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally ............................................ 15
SECTION 2.2. Form of Face of Security. .................................. 16
SECTION 2.3. Form of Reverse of Security ................................ 20
SECTION 2.4. Additional Provisions Required in Global Security .......... 23
SECTION 2.5. Form of Trustee's Certificate of Authentication ............ 24
ARTICLE III
THE SECURITIES
SECTION 3.1. Title and Terms ............................................ 24
SECTION 3.2. Denominations .............................................. 27
SECTION 3.3. Execution, Authentication, Delivery and Dating ............. 27
SECTION 3.4. Temporary Securities ....................................... 28
SECTION 3.5. Global Securities .......................................... 29
SECTION 3.6. Registration, Transfer and Exchange Generally,
Certain Transfers and Exchanges; Securities Act Legends .... 30
SECTION 3.7. Mutilated, Destroyed, Lost and Stolen Securities ........... 33
SECTION 3.8. Payment of Interest; Interest Rights Preserved ............. 34
SECTION 3.9. Persons Deemed Owners ...................................... 35
SECTION 3.10. Cancellation ............................................... 35
SECTION 3.11. Computation of Interest .................................... 36
SECTION 3.12. Deferrals of Interest Payment Dates ........................ 36
SECTION 3.13. Right of Set-Off ........................................... 37
i
<PAGE>
SECTION 3.14. Agreed Tax Treatment ....................................... 37
SECTION 3.15. CUSIP Numbers .............................................. 37
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture ..................... 37
SECTION 4.2. Application of Trust Money .................................. 39
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default .......................................... 39
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment ......... 40
SECTION 5.3. Collection of Indebtedness and Suits for
Enforcement by Trustee ..................................... 41
SECTION 5.4. Trustee May File Proofs of Claim ........................... 42
SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities. 43
SECTION 5.6. Application of Money Collected ............................. 43
SECTION 5.7. Limitation on Suits ........................................ 43
SECTION 5.8. Unconditional Right of Holders to Receive
Principal, Premium and Interest; Direct Action
by Holders of Capital Securities ........................... 44
SECTION 5.9. Restoration of Rights and Remedies ......................... 44
SECTION 5.10. Rights and Remedies Cumulative ............................. 45
SECTION 5.11. Delay or Omission Not Waiver ............................... 45
SECTION 5.12. Control by Holders ......................................... 45
SECTION 5.13. Waiver of Past Defaults .................................... 45
SECTION 5.14. Undertaking for Costs ...................................... 46
SECTION 5.15. Waiver of Usury, Stay or Extension Laws .................... 46
ARTICLE VI
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities ........................ 47
SECTION 6.2. Notice of Defaults ......................................... 48
SECTION 6.3. Certain Rights of Trustee .................................. 48
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities ..... 49
SECTION 6.5. May Hold Securities ........................................ 49
SECTION 6.6. Money Held in Trust ........................................ 50
SECTION 6.7. Compensation and Reimbursement ............................. 50
SECTION 6.8. Disqualification; Conflicting Interests .................... 50
SECTION 6.9. Corporate Trustee Required; Eligibility .................... 51
SECTION 6.10. Resignation and Removal; Appointment of Successor .......... 51
SECTION 6.11. Acceptance of Appointment by Successor ..................... 53
SECTION 6.12. Merger, Conversion, Consolidation or
ii
<PAGE>
Succession to Business ..................................... 54
SECTION 6.13. Preferential Collection of Claims Against Company .......... 54
SECTION 6.14. Appointment of Authenticating Agent ........................ 54
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders .. 56
SECTION 7.2. Preservation of Information, Communications to Holders ..... 56
SECTION 7.3. Reports by Trustee ......................................... 56
SECTION 7.4. Reports by Company ......................................... 57
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms ........ 57
Section 8.2. Successor Corporation Substituted ........................... 58
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures without Consent of Holders ......... 59
SECTION 9.2. Supplemental indentures with Consent of Holders ............ 60
SECTION 9.3. Execution of Supplemental Indentures ....................... 61
SECTION 9.4. Effect of Supplemental Indentures .......................... 61
SECTION 9.5. Conformity with Trust Indenture Act ........................ 61
SECTION 9.6. Reference in Securities to Supplemental Indentures ......... 61
ARTICLE X
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest ................. 62
SECTION 10.2. Maintenance of Office or Agency ............................ 62
SECTION 10.3. Money for Security Payments to be Held in Trust ............ 62
SECTION 10.4. Statement as to Compliance ................................. 64
SECTION 10.5. Waiver of Certain Covenants ................................ 64
SECTION 10.6. Additional Sums ............................................ 64
SECTION 10.7. Additional Covenants ....................................... 65
SECTION 10.8. Original Issue Discount .................................... 65
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1. Applicability of This Article .............................. 66
SECTION 11.2. Election to Redeem; Notice to Trustee ...................... 66
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SECTION 11.3. Selection of Securities to be Redeemed ..................... 66
SECTION 11.4. Notice of Redemption ....................................... 67
SECTION 11.5. Deposit of Redemption Price ................................ 68
SECTION 11.6. Payment of Securities Called for Redemption ................ 68
SECTION 11.7. Right of Redemption of Securities Initially Issued
to a BankAmerica Trust ..................................... 69
ARTICLE XII
SINKING FUNDS
SECTION 12.1. Applicability of Article ................................... 69
SECTION 12.2. Satisfaction of Sinking Fund Payments with Securities ...... 69
SECTION 12.3. Redemption of Securities for Sinking Fund .................. 70
ARTICLE XIII
SUBORDINATION OF SECURITIES
SECTION 13.1. Securities Subordinate to Senior Indebtedness .............. 71
SECTION 13.2. No Payment When Senior Indebtedness in Default;
Payment Over of Proceeds Upon Dissolution, Etc ............. 71
SECTION 13.3. Payment Permitted If No Default ............................ 73
SECTION 13.4. Subrogation to Rights of Holders of Senior Indebtedness .... 73
SECTION 13.5. Provisions Solely to Define Relative Rights ................ 74
SECTION 13.6. Trustee to Effectuate Subordination ........................ 74
SECTION 13.7. No Waiver of Subordination Provisions ...................... 74
SECTION 13.8. Notice to Trustee .......................................... 75
SECTION 13.9. Reliance on Judicial Order or Certificate of
Liquidating Agent .......................................... 75
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior indebtedness ... 76
SECTION 13.11. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee`s Rights ........................... 76
SECTION 13.12. Article Applicable to Paying Agents ........................ 76
ANNEX A - Form of Trust Agreement
ANNEX B - Form of Amended and Restated Trust Agreement
ANNEX C - Form of Guarantee Agreement
ANNEX D - Form of Restricted Securities Certificate
ANNEX E - Form of Unrestricted Securities Certificate
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JUNIOR SUBORDINATED INDENTURE, dated as of November 27, 1996, between
BANKAMERICA CORPORATION, a Delaware corporation (hereinafter called the
"Company") having its principal office at 555 California Street, San Francisco,
California 94104, and BANKERS TRUST COMPANY, a New York banking corporation, as
Trustee (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured junior
subordinated debt securities in series (hereinafter called the "Securities") of
substantially the tenor hereinafter provided, including, without limitation,
Securities issued to evidence loans made to the Company of the proceeds from the
issuance from time to time by one or more business trusts (each a "BankAmerica
Trust," and, collectively, the "BankAmerica Trusts") of preferred trust
interests in such Trusts (the "Capital Securities") and common interests in such
Trusts (the "Common Securities" and, collectively with the Capital Securities,
the "Trust Securities"), and to provide the terms and conditions upon which the
Securities are to be authenticated, issued and delivered.
All things necessary to make the Securities, when executed by the Company
and authenticated and delivered hereunder and duly issued by the Company, the
valid obligations of the Company, and to make this Indenture a valid agreement
of the Company, in accordance with their and its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the
premises and the purchase of the Securities by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Securities or of any series thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) The terms defined in this Article have the meanings assigned to them in
this Article, and include the plural as well as the singular;
(2) All other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(3) All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and the term "generally accepted
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accounting principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles which are generally accepted at
the date or time of such computation; provided, that when two or more principles
are so generally accepted, it shall mean that set of principles consistent with
those in use by the Company; and
(4) The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
"Act" when used with respect to any Holder has the meaning specified in
Section 1.4.
"Additional Interest" means the interest, if any, that shall accrue on any
interest on the Securities of any series the payment of which has not been made
on the applicable Interest Payment Date and which shall accrue at the rate per
annum specified or determined as specified in such Security.
"Additional Sums" has the meaning specified in Section 10.6.
"Additional Taxes" means the sum of any additional taxes, duties and other
governmental charges to which a BankAmerica Trust has become subject from time
to time as a result of a Tax Event.
"Administrator" means, in respect of any BankAmerica Trust, each Person
identified as an "Administrator" in the related Trust Agreement, solely in such
Person's capacity as Administrator of such BankAmerica Trust under such Trust
Agreement and not in such Person's individual capacity, or any successor
administrator appointed as therein provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; provided, however, no BankAmerica Trust to
which Securities have been issued shall be deemed to be an Affiliate of the
Company. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and, the terms "controlling" and
"controlled", have meanings correlative to the foregoing.
"Agent Member" means any member of, or participant in, the Depository.
"Allocable Amounts," when used with respect to any Senior Subordinated
Debt, means the amount necessary to pay all principal (and premium, if any) and
interest, if any, on such Senior Subordinated Debt in full less, if applicable,
any portion of such amount which would have been paid to, and retained by, the
holders of such Senior Subordinated Debt (whether as a result of the receipt of
payments by the holders of such Senior Subordinated Debt from the Company or any
other obligor thereon or from any holders of, or trustee in respect of, other
indebtedness that is subordinate and junior in right of payment to such Senior
Subordinated Debt pursuant to any provision of such indebtedness for the payment
over of amounts received on account of such indebtedness to the holders of such
Senior Subordinated Debt) but for the fact that such Senior
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Subordinated Debt is subordinate or junior in right of payment to trade accounts
payable or accrued liabilities arising in the ordinary course of business.
"Applicable Procedures" means, with respect to any transfer or transaction
involving a Global Security or beneficial interest therein, the rules and
procedures of the Depository for such Security, in each case to the extent
applicable to such transaction and as in effect from time to time.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 6.14 to act on behalf of the Trustee to authenticate Securities of
one or more series.
"BankAmerica Guarantee" means the guarantee by the Company of distributions
on the Capital Securities of a BankAmerica Trust to the extent provided in the
Guarantee Agreement.
"BankAmerica Trust" has the meaning specified in the first recital of this
Indenture.
"Board of Directors" means either the board of directors of the Company or
any executive committee or other committee of that board duly authorized to act
hereunder.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors, or officers of the Company to which authority to act on behalf of
the Board of Directors has been delegated, and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Business Day" means any day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed or (iii) a day on which the
Corporate Trust Office of the Trustee, or, with respect to the Securities of a
series initially issued to a BankAmerica Trust, the principal office of the
Property Trustee under the related Trust Agreement, is closed for business.
"Capital Securities" has the meaning specified in the first recital of this
Indenture.
"Capital Treatment Event" means, with respect to an issue of Capital
Securities under the related Trust Agreement, the reasonable determination by
the Company (as evidenced by an Officers' Certificate delivered to the Trustee)
that, as a result of the occurrence of any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision thereof or therein, or as a
result of any official or administrative pronouncement or action or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or such pronouncement, action or decision is announced on or
after the Original Issue Date of such Capital Securities, there is more than an
insubstantial risk that the Company will not be entitled to treat an amount
equal to the Liquidation Amount of such Capital Securities as "Tier I Capital"
(or the then equivalent thereof) for purposes of the capital adequacy guidelines
of the Federal Reserve, as then in effect and applicable to the Company.
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"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties on such date.
"Common Securities" has the meaning specified in the first recital of this
Indenture.
"Common Stock" means the common stock, par value $1.5625 per share, of the
Company.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.
"Company Request" and "Company Order" mean, respectively, the written
request or order signed in the name of the Company by the Chairman of the Board
of Directors, the Chairman of the Executive Committee of the Board of Directors,
a Vice Chairman of the Board of Directors, the Chief Executive Officer, the
President, the Chief Operating Officer, a Vice Chairman or a Vice President, and
by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of the Company, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee at which
at any particular time its corporate trust business shall be administered, which
office as of the date of this Indenture is located at Four Albany Street, New
York, New York 10006, Attention: Corporate Trust and Agency Group--Corporate
Market Services.
"Corporation" includes a corporation, association, company, joint-stock
company or business trust.
"Defaulted Interest" has the meaning specified in Section 3.8.
"Depository" means, with respect to the Securities of any series issuable
or issued in whole or in part in the form of one or more Global Securities, the
Person designated as Depository by the Company pursuant to Section 3.1 with
respect to such series (or any successor thereto).
"Discount Security" means any security which provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2.
"Distributions," with respect to the Trust Securities issued by a
BankAmerica Trust, means amounts payable in respect of such Trust Securities as
provided in the related Trust Agreement and referred to therein as
"Distributions."
"Dollar" means the currency of the United States of America that, as at the
time of payment, is legal tender for the payment of public and private debts.
"DTC" means The Depository Trust Company.
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"Event of Default" unless otherwise specified in the supplemental indenture
creating a series of Securities has the meaning specified in Article V.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Extension Period" has the meaning specified in Section 3.12.
"Federal Reserve" means the Board of Governors of the Federal Reserve
System.
"Global Security" means a Security in the form prescribed in Section 2.4
evidencing all or part of a series of Securities, issued to the Depository or
its nominee for such series, and registered in the name of such Depository or
its nominee.
"Guarantee Agreement" means the Guarantee Agreement substantially in the
form attached hereto as Annex C, or substantially in such form as may be
specified as contemplated by Section 3.1 with respect to the Securities of any
series, in each case as amended from time to time.
"Holder" means a Person in whose name a Security is registered in the
Securities Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of each particular series of Securities established as
contemplated by Section 3.1.
"Institutional Accredited Investor" means an institutional accredited
investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act.
"Interest Payment Date" means as to each series of Securities the Stated
Maturity of an installment of interest on such Securities.
"Junior Subordinated Debt" means any obligation of the Company to its
creditors, whether now outstanding or subsequently incurred, where the
instrument creating or evidencing the obligation or pursuant to which the
obligation is outstanding provides that it is subordinated and junior in right
of payment to Senior Indebtedness pursuant to subordination provisions
substantially similar to those set forth in this Indenture. Junior Subordinated
Debt includes the Securities.
"Maturity" when used with respect to any Security means the date on which
the principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc.
"Notice of Default" means a written notice of the kind specified in Section
5.1(3).
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"Officers' Certificate" means a certificate signed by the Chairman of the
Board of Directors, a Vice Chairman of the Board of Directors, the President or
a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or
an Assistant Secretary of the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, and who shall be acceptable to the Trustee.
"Original Issue Date" means the date of issuance specified as such in each
Security.
"Other Securities" means Securities transferred, upon exchange or
otherwise, to holders of "Other Capital Securities" as defined in the related
Trust Agreement.
"Outstanding" means, when used in reference to any Securities, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities for whose payment money in the necessary amount has
been theretofore deposited with the Trustee or any Paying Agent in trust
for the Holders of such Securities; and
(iii) Securities in substitution for or in lieu of which other
Securities have been authenticated and delivered or which have been paid
pursuant to Section 3.7, unless proof satisfactory to the Trustee is
presented that any such Securities are held by Holders in whose hands such
Securities are valid, binding and legal obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which a Responsible Officer of the Trustee
knows to be so owned shall be so disregarded. Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or such other
obligor. Upon the written request of the Trustee, the Company shall furnish to
the Trustee promptly an Officers' Certificate listing and identifying all
Securities, if any, known by the Company to be owned or held by or for the
account of the Company, or any other obligor on the Securities or any Affiliate
of the Company or such obligor, and, subject to the provisions of Section 6.1,
the Trustee shall be entitled to accept such Officers' Certificate as conclusive
evidence of the facts therein set forth and of the fact that all Securities not
listed therein are Outstanding for the purpose of any such determination.
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"Paying Agent" means the Trustee or any Person authorized by the Company to
pay the principal of (and premium, if any) or interest on any Securities on
behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment" means, with respect to the Securities of any series, the
place or places where the principal of (and premium, if any) and interest on the
Securities of such series are payable pursuant to Sections 3.1.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any security
authenticated and delivered under Section 3.7 in lieu of a lost, destroyed or
stolen Security shall be deemed to evidence the same debt as the lost, destroyed
or stolen Security.
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means, in respect of any BankAmerica Trust, the
commercial bank or trust company identified as the "Property Trustee" in the
related Trust Agreement, solely in its capacity as Property Trustee of such
BankAmerica Trust under such Trust Agreement and not in its individual capacity,
or its successor in interest in such capacity, or any successor property trustee
appointed as therein provided.
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
with respect to the Securities of a series means, unless otherwise provided
pursuant to Section 3.1 with respect to Securities of a series, the date which
is fifteen days next preceding such Interest Payment Date (whether or not a
Business Day).
"Regulation D" means Regulation D under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Responsible Officer" means when used with respect to the Trustee, any
officer assigned to the Corporate Trust Office, including any managing director,
vice president, assistant vice president, assistant treasurer, assistant
secretary or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers, and also,
with respect to a particular matter, any other officer, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
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"Restricted Security" means each Security required pursuant to Section
3.6(c) to bear a Restricted Securities Legend.
"Restricted Securities Certificate" means a certificate substantially in
the form set forth in Annex D.
"Restricted Securities Legend" means a legend substantially in the form of
the legend required in the form of Security set forth in Section 2.2 to be
placed upon a Restricted Security.
"Rights Plan" means a plan of the Company providing for the issuance by the
Company to all holders of its Common Stock of rights entitling the holders
thereof to subscribe for or purchase shares of Common Stock or any class or
series of preferred stock, which rights (i) are deemed to be transferred with
such shares of Common Stock, (ii) are not exercisable and (iii) are also issued
in respect of future issuances of Common Stock, in each case until the
occurrence of a specified event or events.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Ratings Services.
"Securities" or "Security" means any debt securities or debt security, as
the case may be, authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933 (or any successor
statute), as it may be amended from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.6.
"Senior Debt" means any obligation of the Company to its creditors, whether
now outstanding or subsequently incurred, other than any obligation as to which,
in the instrument creating or evidencing the obligation or pursuant to which the
obligation is outstanding, it is provided that such obligation is not Senior
Debt. Senior Debt does not include Senior Subordinated Debt or Junior
Subordinated Debt.
"Senior Indebtedness" means (i) Senior Debt (but excluding trade accounts
payable and accrued liabilities arising in the ordinary course of business) and
(ii) the Allocable Amounts of Senior Subordinated Debt.
"Senior Subordinated Debt" means any obligation of the Company to its
creditors, whether now outstanding or subsequently incurred, where the
instrument creating or evidencing the obligation or pursuant to which the
obligation is outstanding, provides that it is subordinate and junior in right
of payment to Senior Debt pursuant to subordinated provisions substantially
similar to those applicable to the Company's outstanding Senior Subordinated
Debt. Senior Subordinated Debt includes the indebtedness of the Company issued
under the Subordinated Indenture between the Company and Chemical Trust Company
of California, as successor
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trustee, dated as of June 15, 1984, as amended by the First Supplemental
Indenture, dated as of May 15, 1987, and as further amended by the Second
Supplemental Indenture, dated as of September 30, 1987; the Subordinated
Indenture between the Company and Bankers Trust Company, as trustee, dated as of
July 15, 1988; the Subordinated Indenture between the Company and Chemical Trust
Company of California, as successor trustee, dated as of September 1, 1990; the
Subordinated Indenture between the Company and Chemical Trust Company of
California, as successor trustee, dated as of November 1, 1991, as amended by
the First Supplemental Indenture, dated as of September 8, 1992; the
Subordinated Indenture between the Company's predecessor and The Chase Manhattan
Bank, as successor trustee, dated as of March 15, 1987, as amended by the First
Supplemental Indenture, dated as of April 22, 1992; the Subordinated Indenture
between the Company's predecessor and The First National Bank of Chicago, as
trustee, dated as of December 10, 1990, as amended by the First Supplemental
Indenture, dated as of April 22, 1992.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.8.
"Stated Maturity" when used with respect to any Security or any installment
of principal thereof or interest thereon means the date specified pursuant to
the terms of such Security as the date on which the principal of such Security
or such installment of interest is due and payable, in the case of such
principal, as such date may be shortened or extended as provided pursuant to the
terms of such Security and this Indenture.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For purposes of this definition, "voting stock" means stock which ordinarily has
voting power for the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of any contingency.
"Successor Security" of any particular Security means every Security issued
after, and evidencing all or a portion of the same debt as that evidenced by,
such particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Tax Event" means the receipt by a BankAmerica Trust of an Opinion of
Counsel (as defined in the relevant Trust Agreement) experienced in such matters
to the effect that, as a result of any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, or as a result of any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or which pronouncement or decision is announced on or after
the date of issuance of the Capital Securities of such BankAmerica Trust, there
is more than an insubstantial risk that (i) such BankAmerica Trust is, or will
be within 90 days of the date of such Opinion of Counsel, subject to United
States Federal income tax with respect to income received or accrued on the
corresponding series of Securities issued by the Company to such BankAmerica
Trust, (ii)
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interest payable by the Company on such corresponding series of Securities is
not, or within 90 days of the date of such Opinion of Counsel, will not be,
deductible by the Company, in whole or in part, for United States Federal income
tax purposes or (iii) such BankAmerica Trust is, or will be within 90 days of
the date of such Opinion of Counsel, subject to more than a de minimis amount of
other taxes, duties or other governmental charges.
"Trust Agreement" means the Trust Agreement substantially in the form
attached hereto as Annex A, as amended by the form of Amended and Restated Trust
Agreement substantially in the form attached hereto as Annex B, or substantially
in such form as may be specified as contemplated by Section 3.1 with respect to
the Securities of any series, in each case as amended from time to time.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder and, if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.
ss.ss. 77aaa-77bbb), as amended and as in effect on the date as of this
Indenture, except as provided in Section 9.5.
"Trust Securities" has the meaning specified in the first recital of this
Indenture.
"Unrestricted Securities Certificate" means a certificate substantially in
the form set forth in Annex E.
"Vice President" when used with respect to the Company, means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
SECTION 1.2. Compliance Certificate and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent
(including covenants, compliance with which constitutes a condition precedent),
if any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent (including covenants compliance with which
constitute a condition precedent), if any, have been complied with, except that
in the case of any such application or request as to which the furnishing of
such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than the certificates provided
pursuant to Section 10.4) shall include:
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(1) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.
SECTION 1.3. Forms of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions, or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given to or taken by Holders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments is or are delivered to the
Trustee, and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of
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execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a Person acting in other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority.
(c) The fact and date of the execution by any Person of any such instrument
or writing, or the authority of the Person executing the same, may also be
proved in any other manner which the Trustee deems sufficient and in accordance
with such reasonable rules as the Trustee may determine.
(d) The ownership of Securities shall be proved by the Securities Register.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Security shall bind every future Holder of
the same Security and the Holder of every Security issued upon the transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
or suffered to be done by the Trustee or the Company in reliance thereon,
whether or not notation of such action is made upon such Security.
(f) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders of Securities of such series, provided that the
Company may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving or making of any notice,
declaration, request or direction referred to in the next paragraph. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date, provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
(as hereinafter in this Section 1.4(f) provided) by Holders of the requisite
principal amount of Outstanding Securities of such series on such record date.
Nothing in this paragraph shall be construed to prevent the Company from setting
a new record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be cancelled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding
Securities of the relevant series on the date such action is taken. Promptly
after any record date is set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Trustee in writing and to
each Holder of Securities of the relevant series in the manner set forth in
Section 1.6.
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The Trustee may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities of any series entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 5.2, (iii) any request to institute
proceedings referred to in Section 5.7(2) or (iv) any direction referred to in
Section 5.12, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date, provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 1.6.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day, provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities of the relevant series in the manner set forth in
Section 10.6, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
(g) Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard to
all or any part of the principal amount of such Security or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
SECTION 1.5. Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
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(1) the Trustee by any Holder, any holder of Capital Securities or the
Company shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its Corporate Trust
office, or
(2) the Company by the Trustee, any Holder or any holder of Capital
Securities shall be sufficient for every purpose (except as otherwise provided
in Section 5.1) hereunder if in writing and mailed, first class, postage
prepaid, to the Company addressed to it at the address of its principal office
specified in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by the Company.
SECTION 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. In case, by reason of
the suspension of or irregularities in regular mail service or for any other
reason, it shall be impossible or impracticable to mail notice of any event to
Holders when said notice is required to be given pursuant to any provision of
this Indenture or of the relevant Securities, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
SECTION 1.7. Conflict with Trust Indenture Act.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by any of Sections 310 to 317, inclusive, of the Trust Indenture
Act through operation of Section 318(c) thereof, such imposed duties shall
control. This Indenture, the Company and the Trustee shall be deemed for all
purposes hereof to be subject to and governed by the Trust Indenture Act to the
same extent as would be the case if this Indenture were so qualified on the date
hereof.
SECTION 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
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SECTION 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 1.10. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors and
assigns, the holders of Senior Indebtedness, the Holders of the Securities and,
to the extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.1 and
9.2, the holders of Capital Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 1.12. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of California, except that the rights,
duties and obligations of the Trustee shall be governed by and construed in
accordance with the laws of the State of New York.
SECTION 1.13. Non-Business Days.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or the Securities) payment of interest or
principal (and premium, if any) need not be made on such date, but may be made
on the next succeeding Business Day (and no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date or Stated Maturity,
as the case may be, until such next succeeding Business Day except that, if
such Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day (in each case with the same force
and effect as if made on the Interest Payment Date or Redemption Date or at the
Stated Maturity).
ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally.
The Securities of each series and the Trustee's certificate of
authentication shall be in substantially the forms set forth in this Article, or
in such other form or forms as shall be
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established by or pursuant to a Board Resolution or in one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with applicable tax laws or the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such securities,
as evidenced by their execution of the Securities. If the form of Securities of
any series is established by action taken pursuant to a Board Resolution, a copy
of an appropriate record of such action shall be certified by the Secretary or
an Assistant Secretary of the Company and delivered to the Trustee at or prior
to the delivery of the Company Order contemplated by Section 3.3 with respect to
the authentication and delivery of such Securities.
The Trustee's certificate of authentication shall be substantially in the
form set forth in this Article.
The definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these methods, if required by any securities
exchange on which the Securities may be listed, on a steel engraved border or
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution of such securities.
Securities distributed to holders of Book-Entry Capital Securities upon the
dissolution of a BankAmerica Trust shall be distributed in the form of one or
more Global Securities registered in the name of a Depository or its nominee,
and deposited with the Security Registrar, as custodian for such Depository, or
held by such Depository, for credit by the Depository to the respective accounts
of the beneficial owners of the Securities represented thereby (or such other
accounts as they may direct). Securities distributed to holders of Capital
Securities other than Book-Entry Capital Securities upon the dissolution of a
BankAmerica Trust shall not be issued in the form of a Global Security or any
other form intended to facilitate book-entry trading in beneficial interests in
such Securities.
SECTION 2.2. Form of Face of Security.
[If the Security is a Restricted Security, then insert -- THIS SECURITY HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF. 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)
BY [THE INITIAL PURCHASER] [AN INVESTOR WHO WAS PRIOR TO THE DISTRIBUTION OF
THIS SECURITY HOLDING RELATED CAPITAL SECURITIES AS AN INITIAL PURCHASER
THEREOF] (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE
TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE 903
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OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND (B) BY SUBSEQUENT INVESTORS HOLDING THIS SECURITY
IN BOOK-ENTRY FORM AS SET FORTH IN (A) ABOVE AND, IN ADDITION, TO AN
INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER JURISDICTIONS OF THE UNITED
STATES. THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.]
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), NO
ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S
INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE")
96-23, 95-60, 91-38, 90-1 OR 84-14 WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY
PURCHASER OR HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE DEEMED TO
HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT EITHER (A) IS NOT A
PLAN OR A PLAN ASSET ENTITY AND IS NOT PURCHASING THIS SECURITY ON BEHALF OF OR
WITH "PLAN ASSETS" OF ANY PLAN OR (B) IS ELIGIBLE FOR THE EXEMPTIVE RELIEF
AVAILABLE UNDER PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH RESPECT TO SUCH
PURCHASE OR HOLDING.
BANKAMERICA CORPORATION
(Title of Security)
No. $
BANKAMERICA CORPORATION, a corporation organized and existing under the
laws of Delaware (hereinafter called the "Company", which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to _____________________________, or registered
assigns, the principal sum of _______________ Dollars [if the Security is a
Global Security, then insert, if applicable --, or such other principal amount
as may be set forth in the records of the Securities Registrar hereinafter
referred to in accordance with the Indenture,] on _____________, ___. The
Company further promises to pay interest on said principal sum from
______________, ___________ or from the most recent interest payment date (each
such date, an "Interest Payment Date") on which interest has been paid or duly
provided for, [monthly] [quarterly] (semi-annually] [if applicable,
insert--(subject to deferral as set forth herein)] in
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arrears on [insert applicable Interest Payment Dates] of each year, commencing
________, ________ at the rate of ___% per annum, until the principal hereof
shall have become due and payable, [if applicable, insert--plus Additional
Interest, if any,] until the principal hereof is paid or duly provided for or
made available for payment [if applicable, insert--and on any overdue principal
and (without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at the
rate of ___% per annum, compounded [monthly] [quarterly] [semi-annually]]. The
amount of interest payable for any period less than a full interest period shall
be computed on the basis of twelve 30-day months and a 360-day year and the
actual number of days elapsed in a partial month in a period. The amount of
interest payable for any full interest period shall be computed by dividing the
rate per annum by [twelve] [four] [two]. In the event that any date on which
interest is payable on this Security is not a Business Day, then a payment of
the interest payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on the date the
payment was originally payable. A "Business Day" shall mean any day other than
(i) a Saturday or Sunday, (ii) a day on which banking institutions in The City
of New York are authorized or required by law or executive order to remain
closed or (iii) a day on which the Corporate Trust Office of the Trustee [if
applicable, insert--, or the principal office of the Property Trustee under the
Trust Agreement hereinafter referred to for [BankAmerica Capital ________,]] is
closed for business. The interest installment so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities is registered at the close of business on the Regular
Record Date for such interest installment, which shall be the [insert definition
of Regular Record Dates]. Any such interest installment not so punctually paid
or duly provided for shall forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of this series
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture.
[If applicable, insert--So long as no Event of Default has occurred and is
continuing, the Company shall have the right at any time during the term of this
Security to defer payment of interest on this Security, at any time or from time
to time, for up to consecutive [monthly] [quarterly] [semi-annual] interest
payment periods with respect to each deferral period (each an "Extension
Period"), during which Extension Periods the Company shall have the right to
make partial payments of interest on any Interest Payment Date, and at the end
of which the Company shall pay all interest then accrued and unpaid (together
with Additional Interest thereon to the extent permitted by applicable law);
provided, however, that no Extension Period shall extend beyond the Stated
Maturity of the principal of this Security; provided, further, that during any
such Extension Period, the Company shall not, and shall not permit any
Subsidiary of the Company to, (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire
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or make a liquidation payment with respect to, any of the Company's capital
stock or (ii) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company that rank pari
passu in all respects with or junior in interest to this Security or make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any Subsidiaries of the Company if such guarantee ranks pari passu
with or junior in interest to this Security (other than (a) dividends or
distributions in Common Stock, (b) any declaration of a dividend in connection
with the implementation of a Rights Plan, the issuance of any Common Stock or
any class or series of preferred stock of the Company under any Rights Plan in
the future or the redemption or repurchase of any rights distributed pursuant to
a Rights Plan, (c) payments under any BankAmerica Guarantee, and (d) purchases
of Common Stock related to the issuance of Common Stock or rights under any of
the Company's benefit plans for its directors, officers or employees). Prior to
the termination of any such Extension Period, the Company may further extend the
interest payment period, provided that no Extension Period shall exceed
consecutive [months] [quarters] [semi-annual periods] or extend beyond the
Stated Maturity of the principal of this Security. Upon the termination of any
such Extension Period and upon the payment of all amounts then due on any
Interest Payment Date, the Company may elect to begin a new Extension Period,
subject to the above requirements. No interest shall be due and payable during
an Extension Period except at the end thereof. The Company shall give the
Property Trustee and the Trustee notice of its election to begin any Extension
Period at least one Business Day prior to the earlier of (i) the date on which
Distributions on the Capital Securities would be payable but for such deferral
or (ii) the date the Property Trustee is required to give notice to any
applicable self-regulatory organization or to holders of such Capital Securities
of the record date or the date such Distributions are payable, but in any event
not less than one Business Day prior to such record date. For purposes hereof,
neither the Company's Senior Debt nor its Senior Subordinated Debt shall be
deemed to be pari passu with this Security.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the United States, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts [if applicable, insert--; provided, however, that at the option of
the Company payment of interest may be made (i) by check mailed to the address
of the Person entitled thereto as such address shall appear in the Securities
Register or (ii) by wire transfer in immediately available funds at such place
and to such account as may be designated by the Person entitled thereto as
specified in the Securities Register].
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and junior in right of payments to the prior payment
in full of all Senior Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such actions as may be
necessary or appropriate to effectuate the subordination so provided and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes. Each
Holder hereof, by his acceptance
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hereof, waives all notice of the acceptance of the subordination provisions
contained herein and in the Indenture by each holder of Senior Indebtedness,
whether now outstanding or hereafter incurred, and waives reliance by each such
holder upon said provisions.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
BANKAMERICA CORPORATION
By: _______________________________
[President, Vice President, Treasurer or
Assistant Treasurer]
Attest:
_______________________________________
[Secretary or Assistant Secretary]
SECTION 2.3. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities") issued and to be issued in one or more
series under a Junior Subordinated Indenture, dated as of November 27, 1996
(herein called the "Indenture"), between the Company and Bankers Trust Company,
as Trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Trustee, the
Company and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is one
of the series designated on the face hereof [, limited in aggregate principal
amount to $___________].
All terms used in this Security that are defined in the Indenture [if
applicable, insert--or in the Amended and Restated Trust Agreement, dated as of
____________, ____, as amended (the "Trust Agreement"), for [BankAmerica Capital
________,] among BANKAMERICA CORPORATION, as Depositor, and the Trustees named
therein, shall have the meanings assigned to them in the Indenture [if
applicable, insert--or the Trust Agreement, as the case may be].
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[If applicable, insert--The Company may at any time, at its option, on or
after __________ ____ and subject to the terms and conditions of Article XI of
the Indenture, redeem this Security in whole at any time or in part from time to
time, without premium or penalty, at a redemption price equal to 100% of the
principal amount thereof plus accrued and unpaid interest [if applicable,
insert--including Additional Interest, if any] to the Redemption Date.]
[If applicable, insert--The Company may, at its option, on or after
__________, ____, and subject to the terms and conditions of Article XI of the
Indenture, redeem this Security in whole at any time or in part from time to
time, at the following Redemption Prices (expressed as percentages of the
principal amount): If redeemed during the 12-month period beginning __________.
Redemption
Year Price
---- -----
and at 100% on or after _________, ____, together in the case of any such
redemption with accrued interest to but excluding the date fixed for
redemption.]
[If applicable, insert--Upon the occurrence and during the continuation of
a Tax Event or Capital Treatment Event in respect of a BankAmerica Trust, the
Company may, at its option, [at any time] [before _________, ____ and] within 90
days of the occurrence of such Tax Event or Capital Treatment Event redeem this
Security, in whole but not in part, subject to the provisions of Section 11.7
and the other provisions of Article XI of the Indenture, at a redemption price
equal to [describe formulation].]
In the event of redemption of this Security in part only, a new Security or
Securities of this series for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Company with certain
conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and obligations
of the Company and of the Holders of the Securities, with the consent of the
Holders of not less than a majority in principal amount of the Outstanding
Securities of each series to be affected by such supplemental indenture. The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent
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or waiver by the Holder of this Security shall be conclusive and binding upon
such Holder and upon all future Holders of this Security and of any Security
issued upon the registration of transfer hereof or in exchange herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon this
Security.
[If the Security is not a Discount Security ,--As provided in and subject
to the provisions of the Indenture, if an Event of Default with respect to the
Securities of this series at the time Outstanding occurs and is continuing, then
and in every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities of this series may declare the
principal amount of all the Securities of this series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), provided that, in the case of the Securities of this series issued
to a BankAmerica Trust, if upon an Event of Default, the Trustee or the Holders
of not less than 25% in principal amount of the Outstanding Securities of this
series fails to declare the principal of all the Securities of this series to be
immediately due and payable, the holders of at least 25% in aggregate
Liquidation Amount of the Capital Securities of such BankAmerica Trust then
outstanding shall have such right by a notice in writing to the Company and the
Trustee; and upon any such declaration the principal amount of and the accrued
interest (including any Additional Interest) on all the Securities of this
series shall become immediately due and payable, provided that the payment of
principal and interest (including any Additional Interest) on such Securities
shall remain subordinated to the extent provided in Article XXIII of the
Indenture.]
[If the Security is a Discount Security ,--As provided in and subject to
the provisions of the Indenture, if an Event of Default with respect to the
Securities of this series at the time Outstanding occurs and is continuing, then
and in every such case the Trustee or the Holders of not less than such portion
of the principal amount as may be specified in the terms of this series may
declare an amount of principal of the Securities of this series to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), provided that, in the case of the Securities of this
series issued to a BankAmerica Trust, if upon an Event of Default, the Trustee
or the Holders of not less than 25% in principal amount of the Outstanding
Securities of this series fails to declare the principal of all the Securities
of this series to be immediately due and payable, the holders of at least 25%
in aggregate Liquidation Amount of the Capital Securities of such BankAmerica
Trust then outstanding shall have such right by a notice in writing to the
Company and the Trustee. Such amount shall be calculated by the Company and
shall be equal to--insert formula for determining the amount. Upon any such
declaration, such amount of the principal of and the accrued interest (including
any Additional Interest) on all the Securities of this series shall become
immediately due and payable, provided that the payment of principal and interest
(including any Additional Interest) on such Securities shall remain subordinated
to the extent provided in Article XIII of the Indenture. Upon payment (i) of the
amount of principal so declared due and payable and (ii) of interest on any
overdue principal and overdue interest (in each case to the extent that the
payment of such interest shall be legally enforceable), all of the Company's
obligations in respect of the payment of the principal of and interest, if any,
on this Security shall terminate.]
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay
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the principal of (and premium, if any) and interest on this Security at the
times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer" of this Security is registrable in the Securities
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained under Section 10.2 of the Indenture
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees. No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee shall treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Securities of this series are issuable only in registered form without
coupons in minimum denominations of $100,000 and any integral multiples of
$1,000 in excess thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of such series of a different
authorized denomination, as requested by the Holder surrendering the same.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agree that for United States Federal, state and local
tax purposes it is intended that this Security constitute indebtedness.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, EXCEPT THAT THE RIGHTS,
DUTIES AND) OBLIGATIONS OF THE TRUSTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 2.4. Additional Provisions Required in Global Security.
Any Global Security issued hereunder shall, in addition to the provisions
contained in Sections 2.2 and 2.3, bear a legend in substantially the following
form:
"THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF
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A DEPOSITORY OR A NOMINEE OF A DEPOSITORY. THIS SECURITY IS EXCHANGEABLE FOR
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT
BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY."
SECTION 2.5. Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within mentioned
Indenture.
Dated:
Bankers Trust Company
as Trustee
By:
-----------------------------------
Authorized Signatory
ARTICLE III
THE SECURITIES
SECTION 3.1. Title and Terms.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of Securities of a series:
(a) the title of the securities of such series, which shall distinguish the
Securities of the series from all other Securities;
(b) the limit, if any, upon the aggregate principal amount of the
Securities of such series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 3.4, 3.5, 3.6, 3.7, 9.6 or 11.6 and except for any
Securities which, pursuant to Section 3.3, are deemed never to have been
authenticated and delivered hereunder); provided, however, that the authorized
aggregate principal amount of such series may be increased above such amount by
a Board Resolution to such effect;
(c) the Stated Maturity or Maturities on which the principal of the
Securities of such series is payable or the method of determination thereof;
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(d) the rate or rates, if any, at which the Securities of such series shall
bear interest, if any, the rate or rates and extent to which Additional
Interest, if any, shall be payable in respect of any Securities of such series,
the Interest Payment Dates on which such interest shall be payable, the right,
pursuant to Section 3.12 or as otherwise set forth therein, of the Company to
defer or extend an Interest Payment Date, and the Regular Record Date for the
interest payable on any Interest Payment Date or the method by which any of the
foregoing shall be determined;
(e) the place or places where the principal of (and premium, if any) and
interest on the Securities of such series shall be payable, the place or places
where the Securities of such series may be presented for registration of
transfer or exchange, and the place or places where notices and demands to or
upon the Company in respect of the Securities of such series may be made;
(f) the period or periods within or the date or dates on which, if any, the
price or prices at which and the terms and conditions upon which the Securities
of such series may be redeemed, in whole or in part, at the option of the
Company;
(g) the obligation or the right, if any, of the Company to redeem, repay or
purchase the Securities of such series pursuant to any sinking fund,
amortization or analogous provisions, or at the option of a Holder thereof, and
the period or periods within which, the price or prices at which, the currency
or currencies (including currency unit or units) in which and the other terms
and conditions upon which Securities of the series shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation;
(h) the denominations in which any Securities of such series shall be
issuable, if other than denominations of $100,000 and any integral multiple of
$1,000 in excess thereof;
(i) if other than Dollars, the currency or currencies (including currency
unit or units) in which the principal of (and premium, if any) and interest, if
any, on the Securities of the series shall be payable, or in which the
Securities of the series shall be denominated and the manner of determining the
equivalent thereof in Dollars for purposes of the definition of Outstanding;
(j) the additions, modifications or deletions, if any, in the Events of
Default or covenants of the Company set forth herein with respect to the
Securities of such series;
(k) if other than the principal amount thereof, the portion of the
principal amount of Securities of such series that shall be payable upon
declaration of acceleration of the Maturity thereof;
(1) the additions or changes, if any, to this Indenture with respect to the
Securities of such series as shall be necessary to permit or facilitate the
issuance of the Securities of such series in bearer form, registrable or not
registrable as to principal, and with or without interest coupons;
(m) any index or indices used to determine the amount of payments of
principal of and premium, if any, on the Securities of such series or the manner
in which such amounts will be determined;
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(n) whether the Securities of the series, or any portion thereof, shall
initially be issuable in the form of a temporary Global Security representing
all or such portion of the Securities of such series and provisions for the
exchange of such temporary Global Security for definitive Securities of such
series;
(o) if applicable, that any Securities of the series shall be issuable in
whole or in part in the form of one or more Global Securities and, in such case,
the respective Depositories for such Global Securities, the form of any legend
or legends which shall be borne by any such Global Security in addition to or in
lieu of that set forth in Section 2.4 and any circumstances in addition to or in
lieu of those set forth in Section 3.5 in which any such Global Security may be
exchanged in whole or in part for Securities registered, and any transfer of
such Global Security in whole or in part may be registered, in the name or names
of Persons other than the Depository for such Global Security or a nominee
thereof;
(p) the appointment of any Paying Agent or Agents for the Securities of
such series;
(q) the terms of any right to convert or exchange Securities of such series
into any other securities or property of the Company, and the additions or
changes, if any, to this Indenture with respect to the Securities of such series
to permit or facilitate such conversion or exchange;
(r) the form or forms of the Trust Agreement, Amended and Restated Trust
Agreement and Guarantee Agreement, if different from the forms attached hereto
as Annexes A, B and C, respectively;
(s) the relative degree, if any, to which the Securities of the series
shall be senior to or be subordinated to other series of Securities in right of
payment, whether such other series of Securities are Outstanding or not; and
(t) any other terms of the Securities of such series (which terms shall not
be inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided herein or in or
pursuant to such Board Resolution and set forth in such Officers' Certificate or
in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article XIII.
Unless otherwise provided with respect to the Securities of any series, at
the option of the Company, interest on the Securities of any series that bears
interest may be paid (i) by mailing a check to the address of the person
entitled thereto as such address shall appear in the Security
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Register or (ii) by wire transfer in immediately available funds at such place
and to such account as may be designated by the person entitled thereto as
specified in the Security Register.
SECTION 3.2. Denominations.
The Securities of each series shall be in registered form without coupons
and shall be issuable in denominations of $100,000 and any integral multiple of
$1,000 in excess thereof, unless otherwise specified as contemplated by Section
3.1.
SECTION 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
President, one of its Vice Presidents, its Treasurer or an Assistant Treasurer
under its corporate seal reproduced or impressed thereon and attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities. At any time and from time to
time after the execution and delivery of this Indenture, the Company may deliver
Securities of any series executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities. If the form or terms of
the Securities of the series have been established by or pursuant to one or more
Board Resolutions as permitted by Sections 2.1 and 3.1, in authenticating such
Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities, the Trustee shall be entitled to receive, and
(subject to Section 6.1) shall be fully protected in relying upon, an Opinion of
Counsel stating,
(1) if the form of such Securities has been established by or pursuant
to Board Resolution as permitted by Section 2.1, that such form has been
established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 3.1, that such terms
have been established in conformity with the provisions of this Indenture;
and
(3) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
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If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 3.1 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder. Notwithstanding the foregoing, if any Security shall have
been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 3.10, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
SECTION 3.4. Temporary Securities.
Pending the preparation of definitive Securities of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any denomination, substantially of the tenor of the
definitive Securities of such series in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as-
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of such series to be prepared without unreasonable delay.
After the preparation of definitive Securities, the temporary Securities shall
be exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for that purpose
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more definitive Securities
of the same series, of any authorized denominations having the same Original
Issue Date and Stated Maturity and having the same terms as such temporary
Securities. Until so exchanged, the temporary Securities of any series shall in
all respects be entitled to the same benefits under this Indenture as definitive
Securities of such series.
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SECTION 3.5. Global Securities.
(a) Each Global Security issued under this Agreement shall be registered in
the name of the Depository designated by the Company for such Global Security or
a nominee thereof and delivered to such Depository or a nominee thereof or
custodian therefor, and each such Global Security shall constitute a single
Security for all purposes of this Agreement.
(b) Notwithstanding any other provision in this Agreement, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than the Depository for such Global Security or a nominee
thereof unless (a) such Depository advises the Trustee in writing that such
Depository is no longer willing or able to properly discharge its
responsibilities as Depository with respect to such Global Security, and the
Company is unable to locate a qualified successor, (b) the Company executes and
delivers to the Trustee a Company Order stating that the Company elects to
terminate the book-entry system through the Depository, (c) there shall have
occurred and be continuing an Event of Default or (d) pursuant to the following
sentence. All or any portion of a Global Security may be exchanged for a
Security that has a like aggregate principal amount and is not a Global Security
upon 20 days' prior request made by the Depository or its Agent Member to the
Securities Registrar.
(c) If any Global Security is to be exchanged for other Securities or
cancelled in whole, it shall be surrendered by or on behalf of the Depository or
its nominee to the Security Registrar for exchange or cancellation as provided
in this Article III. If any Global Security is to be exchanged for other
Securities or cancelled in part, or if another Security is to be exchanged in
whole or in part for a beneficial interest in any Global Security, then either
(i) such Global Security shall be so surrendered for exchange or cancellation as
provided in this Article III or (ii) the principal amount thereof shall be
reduced, subject to Section 3.6(b)(v), or increased by an amount equal to the
portion thereof to be so exchanged or cancelled, or equal to the principal
amount of such other Security to be so exchanged for a beneficial interest
therein, as the case may be, by means of an appropriate adjustment made on the
records of the Security Registrar, whereupon the Trustee, in accordance with the
Applicable Procedures, shall instruct the Depository or its authorized
representative to make a corresponding adjustment to its records. Upon any such
surrender or adjustment of a Global Security by the Depository, accompanied by
registration instructions, the Trustee shall, subject to Section 3.5(b) and as
otherwise provided in this Article III, authenticate and deliver any Securities
issuable in exchange for such Global Security (or any portion thereof) in
accordance with the instructions of the Depository. The Trustee shall not be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be fully protected in relying on, such instructions.
(d) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Article III, Section 9.6 or 11.6 or otherwise,
shall be authenticated and delivered in the form of, and shall be, a Global
Security, unless such Security is registered in the name of a Person other than
the Depository for such Global Security or a nominee thereof.
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(e) The Depository or its nominee, as registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under
this Indenture and the Securities, and owners of beneficial interests in a
Global Security shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner's beneficial interest in a Global Security shall be
shown only on, and the transfer of such interest shall be effected only through,
records maintained by the Depository or its nominee or its Agent Members.
Neither the Trustee nor the Securities Registrar shall have any liability in
respect of any transfers effected by the Depository.
(f) The rights of owners of beneficial interests in a Global Security shall
be exercised only through the Depository and shall be limited to those
established by law and agreements between such owners and the Depository and/or
its Agent Members.
SECTION 3.6. Registration, Transfer and Exchange Generally, Certain
Transfers and Exchanges; Securities Act Legends.
(a) The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities and of
transfers of Securities. Such register is herein sometimes referred to as the
"Securities Register. The Trustee is hereby appointed "Securities Registrar" for
the purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security at the office
or agency of the Company designated for that purpose the Company shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Securities of the same series of any
authorized denominations, of a like aggregate principal amount, of the same
Original Issue Date and Stated Maturity and having the same terms and bearing
such restrictive legends as may be required by this Indenture.
At the option of the Holder, Securities may be exchanged for other
Securities of the same series of any authorized denominations, of a like
aggregate principal amount, of the same Original Issue Date and Stated Maturity
and having the same terms and bearing such restrictive legends as may be
required by this Indenture, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any transfer or exchange of Securities shall be
the valid obligations of the Company, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
Every Security presented or surrendered for transfer or exchange shall (if
so required by the Company or the Securities Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing.
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No service charge shall be made to a Holder for any transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Securities.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (a) to issue, transfer or exchange any Security of
any series during a period beginning at the opening of business 15 days before
the day of selection for redemption of Securities pursuant to Article XI and
ending at the close of business on the day of mailing of notice of redemption or
(b) to transfer or exchange any Security so selected for redemption in whole or
in part, except, in the case of any Security to be redeemed in part, any portion
thereof not to be redeemed.
(b) Certain Transfers and Exchanges. Notwithstanding any other provision of
this Indenture, transfers and exchanges of Securities and beneficial interests
in a Global Security of the kinds specified in this Section 3.6(b) shall be made
only in accordance with this Section 3.6(b).
(i) Restricted Non-Global Security to Global Security. If the Holder of a
Restricted Security (other than a Global Security) wishes at any time to
transfer all or any portion of such Security to a Person who wishes to take
delivery thereof in the form of a beneficial interest in a Global Security, such
transfer may be effected only in accordance with the provisions of this Clause
(b)(i) and subject to the Applicable Procedures. Upon receipt by the Security
Registrar of (A) such Security as provided in Section 3.6(a) and instructions
satisfactory to the Security Registrar directing that a beneficial interest in
the Global Security in a specified principal amount not greater than the
principal amount of such Security be credited to a specified Agent Member's
account and (B) a Restricted Securities Certificate duly executed by such Holder
or his attorney duly authorized in writing, then the Security Registrar shall
cancel such Security (and issue a new Security in respect of any untransferred
portion thereof) as provided in Section 3.6(a) and increase the aggregate
principal amount of the Global Security by the specified principal amount as
provided as provided in Section 3.5(c).
(ii) Non-Global Security to Non-Global Security. A Security that is not a
Global Security may be transferred, in whole or in part, to a Person who takes
delivery in the form of another Security that is not a Global Security as
provided in Section 3.6(a), provided that if the Security to be transferred in
whole or in part is a Restricted Security, then the Security Registrar shall
have received a Restricted Securities Certificate duly executed by the
transferor Holder or his attorney duly authorized in writing.
(iii) Exchanges between Global Security and Non-Global Security. A
beneficial interest in a Global Security may be exchanged for a Security that is
not a Global Security as provided in Section 3.5.
(iv) Certain Initial Transfers of Non-Global Securities. In the case of
Securities initially issued other than in global form, an initial transfer or
exchange of such Securities that does not involve any change in beneficial
ownership may be made to an Institutional Accredited Investor or Investors as if
such transfer or exchange were not an initial transfer or exchange; provided
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that written certification shall be provided by a Holder of such Securities to
the Securities Registrar that such transfer or exchange does not involve a
change in beneficial ownership.
(v) Limitations relating to Principal Amount. Notwithstanding any other
provision of this Indenture and unless otherwise specified as permitted by
Section 3.1, Securities or portions thereof may be transferred or exchanged only
in principal amounts of not less than $100,000. Any transfer, exchange or other
disposition of Securities in contravention of this Section 3.6(b)(v) shall be
deemed to be void and of no legal effect whatsoever, any such transferee shall
be deemed not to be the Holder or owner of any beneficial interest in such
Securities for any purpose, including but not limited to the receipt of interest
payable on such Securities, and such transferee shall be deemed to have no
interest whatsoever in such Securities.
(c) Restricted Securities Legend. Except as set forth below, all Securities
shall bear a Restricted Securities Legend:
(i) subject to the following Clauses of this Section 3.6(c), a
Security or any portion thereof which is exchanged, upon transfer or
otherwise, for a Global Security or any portion thereof shall bear the
Restricted Securities Legend;
(ii) subject to the following Clauses of this Section 3.6(c), a new
Security which is not a Global Security and is issued in exchange for
another Security (including a Global Security) or any portion thereof, upon
transfer or otherwise, shall bear a Restricted Securities Legend;
(iii) after the date which is three years following the Original Issue
Date of a Security, a new Security (other than a Global Security) which
does not bear a Restricted Securities Legend shall, unless the Securities
Registrar is otherwise instructed by the Company in writing, be issued in
exchange for or in lieu of a Restricted Security or any portion thereof
which bears such a legend if the Trustee has received an Unrestricted
Securities Certificate, in the form of Exhibit B hereto, duly executed by
the Holder of such legended Restricted Security or his attorney duly
authorized in writing, and after such date and receipt of such certificate,
the Trustee shall authenticate and deliver such a new Security in exchange
for or in lieu of such other Security as provided in this Article III;
(iv) a new Security (other than a Global Security) which does not bear
a Restricted Securities Legend may be issued in exchange for or in lieu of
a Restricted Security or any portion thereof which bears such a legend if,
in the Company's judgment, placing such a legend upon such new Security is
not necessary to ensure compliance with the registration requirements of
the Securities Act, and the Trustee, at the written direction of the
Company in the form of an Officers' Certificate, shall authenticate and
deliver such a new Security as provided in this Article III;
(v) notwithstanding the foregoing provisions of this Section 3.6(c), a
Successor Security of a Security that does not bear a Restricted Securities
Legend shall not bear such form of legend unless the Company has reasonable
cause to believe that such Successor Security is a "restricted security"
within the meaning of Rule 144, in which case the Trustee, at the written
direction of the Company in the form of an Officers' Certificate, shall
authenticate and deliver a new
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Security bearing a Restricted Securities Legend in exchange for such
Successor Security as provided in this Article III; and
(v) Securities distributed to a holder of Capital Securities upon
dissolution of a BankAmerica Trust shall bear a Restricted Securities
Legend if the Capital Securities so held bear a similar legend.
SECTION 3.7. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee together with such
security or indemnity as may be required by the Company or the Trustee to save
each of them harmless, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of the same issue
and series of like tenor and principal amount, having the same Original Issue
Date and Stated Maturity, and bearing a number not contemporaneously
outstanding.
If there shall be delivered to the Company and to the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security, and
(ii) such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and upon its request the Trustee shall authenticate and deliver, in lieu of any
such destroyed, lost or stolen Security, a new Security of the same issue and
series of like tenor and principal amount, having the same Original Issue Date
and Stated Maturity as such destroyed, lost or stolen Security, and bearing a
number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company 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 Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
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SECTION 3.8. Payment of Interest; Interest Rights Preserved.
Interest on any Security of any series which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date, shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
in respect of Securities of such series, except that, unless otherwise provided
in the Securities of such series, interest payable on the Stated Maturity of the
principal of a Security shall be paid to the Person to whom principal is paid.
The initial payment of interest on any Security of any series which is issued
between a Regular Record Date and the related Interest Payment Date shall be
payable as provided in such Security or in the Board Resolution pursuant to
Section 3.1 with respect to the related series of Securities.
Any interest on any Security which is payable, but is not timely paid or
duly provided for, on any Interest Payment Date for Securities of such series
(herein called "Defaulted Interest"), shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Securities of such series in respect of which
interest is in default (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be held
in trust for the benefit of the Persons entitled to such Defaulted Interest as
in this Clause provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special Record
Date and, in the name and at the expense of the Company, shall cause notice of
the proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first class, postage prepaid, to each Holder of a
Security of such series at the address of such Holder as it appears in the
Securities Register not less than 10 days prior to such Special Record Date. The
Trustee may, in its discretion, in the name and at the expense of the Company,
cause a similar notice to be published at least once in a newspaper, customarily
published in the English language on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, but such
publication shall not be a condition precedent to the establishment of such
Special Record Date. Notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names the Securities of
such series (or their respective Predecessor Securities) are registered on such
Special Record Date and shall no longer be payable pursuant to the following
Clause (2).
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(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of the series in respect of which interest is in default
may be listed and, upon such notice as may be required by such exchange (or by
the Trustee if the Securities are not listed), if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause, such
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
SECTION 3.9. Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name any Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and (subject to
Section 3.8) any interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
No holder of any beneficial interest in any Global Security held on its
behalf by a Depository shall have any rights under this Indenture with respect
to such Global Security, and such Depository may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by a Depository or impair, as between a Depository and
such holders of beneficial interests, the operation of customary practices
governing the exercise of the rights of the Depository (or its nominee) as
Holder of any Security.
SECTION 3.10. Cancellation.
All Securities surrendered for payment, redemption, transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee, and any such Securities and Securities surrendered directly to the
Trustee for any such purpose shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly canceled by
the Trustee. No Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Securities shall be destroyed by the
Trustee and the Trustee shall deliver to the Company a certificate of such
destruction.
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SECTION 3.11. Computation of Interest.
Except as otherwise specified as contemplated by Section 3.1 for Securities
of any series, interest on the Securities of each series for any partial period
shall be computed on the basis of a 360-day year of twelve 30-day months and the
actual days elapsed in a partial month in such period, and interest on the
Securities of each series for a full period shall be computed by dividing the
rate per annum by the number of interest periods that together constitute a full
twelve months.
SECTION 3.12. Deferrals of Interest Payment Dates.
If specified as contemplated by Section 2.1 or Section 3.1 with respect to
the Securities of a particular series, so long as no Event of Default has
occurred and is continuing, the Company shall have the right, at any time during
the term of such series, from time to time to defer the payment of interest on
such Securities for such period or periods as may be specified as contemplated
by Section 3.1 (each, an "Extension Period") during which Extension Periods the
Company shall have the right to make partial payments of interest on any
Interest Payment Date. No Extension Period shall end on a date other than an
Interest Payment Date. At the end of any such Extension Period the Company shall
pay all interest then accrued and unpaid on the Securities (together with
Additional Interest thereon, if any, at the rate specified for the Securities of
such series to the extent permitted by applicable law); provided, however, that
no Extension Period shall extend beyond the Stated Maturity of the principal of
the Securities of such series; provided, further, that during any such Extension
Period, the Company shall not, and shall not permit any Subsidiary to, (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of the Company's capital
stock, or (ii) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company that rank pari
passu in all respects with or junior in interest to the Securities of such
series or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any Subsidiary of the Company if such
guarantee ranks pari passu with or junior in interest to the securities of such
series (other than (a) dividends or distributions in Common Stock, (b) any
declaration of a dividend in connection with the implementation of a Rights
Plan, or the issuance of any Common Stock of any class or series of preferred
stock of the Company under any Rights Plan in the future or the redemption or
repurchase of any rights pursuant thereto, (c) payments under any BankAmerica
Guarantee, and (d) purchases of Common Stock related to the issuance of Common
Stock or rights under any of the Company's benefit plans for its directors,
officers or employees). Prior to the termination of any such Extension Period,
the Company may further extend the interest payment period, provided that no
Extension Period shall exceed the period or periods specified in such Securities
or extend beyond the Stated Maturity of the principal of such Securities. Upon
the termination of any Extension Period and upon the payment of all amounts then
due on any Interest Payment Date, the Company may elect to begin a new Extension
Period, subject to the above requirements. No interest shall be due and payable
during an Extension Period, except at the end thereof. The Company shall give
the Property Trustee and the Trustee notice of its election to begin any such
Extension Period at least one Business Day prior to the earlier of (i) the date
the Distributions on the Capital Securities of such BankAmerica Trust would have
been payable except for the election to begin such Extension
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Period or (ii) the date the Property Trustee of such BankAmerica Trust is
required to give notice to any applicable self-regulatory organization or to
holders of such Capital Securities of the record date or the date such
Distributions are payable, but in any event not less than one Business Day prior
to such record date. For purposes hereof, neither the Company's Senior Debt nor
its Senior Subordinated Debt shall be deemed to be pari passu with the
Securities.
The Trustee, at the expense of the Company, shall promptly give notice of
the Company's election to begin any such Extension Period to the Holders of the
Outstanding Securities of such series.
SECTION 3.13. Right of Set-Off.
With respect to the Securities of a series issued to a BankAmerica Trust,
notwithstanding anything to the contrary herein, the Company shall have the
right to set-off any payment it is otherwise required to make thereunder in
respect of any such Security to the extent the Company has theretofore made, or
is concurrently on the date of such payment making, a payment under the
BankAmerica Guarantee relating to such Security or under Section 5.8 hereof.
SECTION 3.14. Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Company and, by its
acceptance of a Security or a beneficial interest therein, the Holder of, and
any Person that acquires a beneficial interest in, such Security agree that for
United States Federal, state and local tax purposes it is intended that such
Security constitutes indebtedness.
SECTION 3.15. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption or other related material as a convenience to Holders; provided
that any such notice or other related material may state that no representation
is made as to the correctness of such numbers either as printed on the
Securities or as contained in any notice of redemption or other related material
and that reliance may be placed only on the other identification numbers printed
on the Securities, and any such redemption shall not be affected by any defect
in or omission of such numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for and as otherwise provided in this
Section 4.1) and the Trustee, on demand of and at the
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expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other than
(i) Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 3.7 and (ii) Securities for
whose payment money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 10.3) have been
delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one
year of the date of deposit, or
(iii) are to be called for redemption within one year by the Trustee
in the name, and at the expense, of the Company,
and the Company, in the case of Clause (B)(i), (ii) or (iii) above,
has deposited or caused to be deposited with the Trustee as trust
funds in trust for such purpose an amount in the currency or
currencies in which the Securities of such series are payable
sufficient to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for cancellation,
for principal (and premium, if any) and interest (including any
Additional Interest) to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this Indenture have been
complied with.
Notwithstanding the satisfaction and discharge of this Indenture, or the earlier
resignation or removal of the Trustee or any Authenticating Agent, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Company to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
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SECTION 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all money
deposited with the Trustee pursuant to Section 4.1 shall be held in trust and
applied by the Trustee, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for the payment of which such money or obligations have been
deposited with or received by the Trustee.
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default.
"Event of Default," wherever used herein with respect to the Securities of
any series, means any one of the following events that has occurred and is
continuing (whatever the reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series, including any Additional Interest in respect thereof, when it
becomes due and payable, and continuance of such default for a period of 30
days (subject to the deferral of any due date in the case of an Extension
Period); or
(2) default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity; or
(3) default in the performance or breach, in any material respect, of
any covenant of the Company in this Indenture (other than a covenant a
default in the performance of which or the breach of which is elsewhere in
this Section specifically dealt with), and continuance of such default or
breach for a period of 90 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series a written notice specifying such
default or breach and requiring it to be remedied; or
(4) the entry of a decree or order for relief in respect of the
Company by a court having jurisdiction in the premises in an involuntary
case under Federal or State bankruptcy laws, as now or hereafter
constituted, and the continuance of any such decree or order unstayed and
in effect for a period of 60 consecutive days; or
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(5) the commencement by the Company of a voluntary case under Federal
or State bankruptcy laws, as now or hereafter constituted, or the consent
by the Company to the entry of a decree or order for relief in an
involuntary case under any such laws; or
(6) any other Event of Default provided with respect to Securities of
that series.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in Section
5.1(4) or 5.1(5)) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if the
Securities of that series are Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) of all the Securities of
that series to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), provided that, in the case of
the Securities of a series issued to a BankAmerica Trust, if, upon an Event of
Default, the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series fail to declare the principal of all
the Securities of that series to be immediately due and payable, the holders of
at least 25% in aggregate Liquidation Amount (as defined in the related Trust
Agreement) of the corresponding series of Capital Securities then outstanding
shall have such right by a notice in writing to the Company and the Trustee; and
upon any such declaration such principal amount (or specified portion thereof)
of and the accrued interest (including any Additional Interest) on all the
Securities of such series shall become immediately due and payable. Payment of
principal and interest (including any Additional Interest) on such Securities
shall remain subordinated to the extent provided in Article XIII notwithstanding
that such amount shall become immediately due and payable as herein provided. If
an Event of Default specified in Section 5.1(4) or 5.1(5) with respect to
Securities of any series at the time Outstanding occurs, the principal amount of
all the Securities of that series (or, if the Securities of that series are
Discount Securities, such portion of the principal amount of such Securities as
may be specified by the terms of that series) shall automatically, and without
any declaration or other action on the part of the Trustee or any Holder, become
immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum sufficient to
pay:
(A) all overdue installments of interest (including any Additional
Interest) on all Securities of that series,
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(B) the principal of (and premium, if any, on) any Securities of that
series which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Securities, and
(C) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities of that series, other
than the non-payment of the principal of Securities of that series which has
become due solely by such acceleration, have been cured or waived as provided in
Section 5.13.
In the case of Securities of a series issued to a BankAmerica Trust, the
holders of a majority in aggregate Liquidation Amount (as defined in the related
Trust Agreement) of the related series of Capital Securities issued by such
BankAmerica Trust shall also have the right to rescind and annul such
declaration and its consequences by written notice to the Company and the
Trustee, subject to the satisfaction of the conditions set forth in Clauses (1)
and (2) above of this Section 5.2.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if:
(1) default is made in the payment of any installment of interest
(including any Additional Interest) on any Security when such interest
becomes due and payable and such default continues for a period of 30 days,
or
(2) default is made in the payment of the principal of (and premium,
if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal, including any sinking fund payment or
analogous obligations (and premium, if any) and interest (including any
Additional Interest); and, in addition thereto, all amounts owing the Trustee
under Section 6.7.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
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If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
SECTION 5.4. Trustee May File Proof of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors,
(a) the Trustee (irrespective of whether the principal of the Securities of
any series shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
on the Company for the payment of overdue principal (and premium, if any) or
interest (including any Additional Interest)) shall be entitled and empowered,
by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest (including any Additional Interest) owing and
unpaid in respect to the Securities and to file such other papers or
documents as may be necessary or advisable and to take any and all actions
as are authorized under the Trust Indenture Act in order to have the claims
of the Holders and any predecessor to the Trustee under Section 6.7 allowed
in any such judicial proceedings; and
(ii) in particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such
claims and to distribute the same in accordance with Section 5.6; and
(b) any custodian, receiver, assignee, trustee, liquidator, sequestrator
(or other similar official) in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee for distribution in
accordance with Section 5.6, and in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due to it and any predecessor Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
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SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of all the amounts owing the Trustee and any predecessor Trustee
under Section 6.7, its agents and counsel, be for the ratable benefit of the
Holders of the Securities in respect of which such judgment has been recovered.
SECTION 5.6. Application of Money Collected.
Any money or property collected or to be applied by the Trustee with
respect to a series of Securities pursuant to this Article shall be applied in
the following order, at the date or dates fixed by the Trustee and, in case of
the distribution of such money or property on account of principal (or premium,
if any) or interest (including any Additional Interest), upon presentation of
the Securities and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any predecessor
Trustee;
SECOND: Subject to Article XIII, to the payment of the amounts then due and
unpaid upon such series of Securities for principal (and premium, if any) and
interest (including any Additional Interest), in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such series of
Securities for principal (and premium, if any) and interest (including any
Additional Interest), respectively; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
SECTION 5.7. Limitation on Suits.
No Holder of any Securities of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture or for the
appointment of a receiver, assignee, trustee, liquidator, sequestrator (or other
similar official) or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
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(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing itself of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Securities, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium
and Interest; Direct Action by Holders of Capital Securities.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right which is absolute and unconditional to receive
payment of the principal of (and premium, if any) and (subject to Section 3.8)
interest (including any Additional Interest) on such Security on the respective
Stated Maturities expressed in such Security (or, in the case of redemption, on
the Redemption Date) and to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder. In the case of Securities of a series issued to a BankAmerica Trust, any
holder of the corresponding series of Capital Securities issued by such
BankAmerica Trust shall have the right, upon the occurrence of an Event of
Default described in Section 5.1(1) or 5.1(2), to institute a suit directly
against the Company for enforcement of payment to such holder of principal of
(premium, if any) and (subject to Section 3.8) interest (including any
Additional Interest) on the Securities having a principal amount equal to the
aggregate Liquidation Amount (as defined in the Trust Agreement under which such
BankAmerica Trust is formed) of such Capital Securities of the corresponding
series held by such holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Capital Securities has
instituted any proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee, such Holder or such holder of Capital
Securities, then and in every such case the Company, the Trustee, the Holders
and such holder of Capital Securities shall, subject to any determination in
such proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Trustee, the
Holders and the holders of Capital Securities shall continue as though no such
proceeding had been instituted.
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SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section 3.7, no right
or remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver
No delay or omission of the Trustee, any Holder of any Security or any
holder of any Capital Security to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or constitute a waiver of
any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to
the Holders and the right and remedy given to the holders of Capital Securities
by Section 5.8 may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee, the Holders or the holders of Capital Securities, as
the case may be.
SECTION 5.12. Control by Holders.
The Holders of a majority in principal amount of the Outstanding Securities
of any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, with respect to the Securities of
such series, provided that:
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) subject to the provisions of Section 6.1, the Trustee shall have
the right to decline to follow such direction if a Responsible Officer or
Officers of the Trustee shall, in good faith, determine that the proceeding
so directed would be unjustly prejudicial to the Holders not joining in any
such direction or would involve the Trustee in personal liability.
SECTION 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series affected thereby and, in the case of any
Securities of a series issued to a BankAmerica Trust, the holders of a majority
in aggregate Liquidation Amount (as defined in the related Trust Agreement)
Capital Securities issued by such BankAmerica Trust, may waive any past default
hereunder and its consequences with respect to such series except a default:
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(1) in the payment of the principal of (or premium, if any) or
interest (including any Additional Interest) on any Security of such
series, or
(2) in respect of a covenant or provision hereof which under Article
IX cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
Any such waiver shall be deemed to be on behalf of the Holders of all the
Securities of such series or, in the case of a waiver by holders of Capital
Securities issued by such BankAmerica Trust, by all holders of Capital
Securities issued by such BankAmerica Trust.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities
of any series, or to any suit instituted by any Holder for the enforcement of
the payment of the principal of (or premium, if any) or interest (including any
Additional Interest) on any Security on or after the respective Stated
Maturities expressed in such Security.
SECTION 5.15. Waiver of Usury; Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE VI
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provisions
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of Holders pursuant to Section 5.12 relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to the Securities of such series.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
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(e) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 6.2. Notice of Defaults.
Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities of any series, the Trustee shall transmit by mail to all Holders of
Securities of such series, as their names and addresses appear in the Securities
Register, notice of such default, unless such default shall have been cured or
waived; provided, however, that, except in the case of a default in the payment
of the principal of (or premium, if any) or interest (including any Additional
Interest) on any Security of such series, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of Securities of such series; and provided, further,
that, in the case of any default of the character specified in Section 5.1(3),
no such notice to Holders of Securities of such series shall be given until at
least 30 days after the occurrence thereof. For the purpose of this Section, the
term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to Securities of such
series.
SECTION 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, Security or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officers' Certificate;
(d) the Trustee may consult with counsel and the advice of such counsel or
any Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity
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against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, indenture,
Security or other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may see fit, and,
if the Trustee shall determine to make such inquiry or investigation, it shall
be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(h) the Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Indenture;
(i) the Trustee shall not be charged with knowledge of any Event of Default
unless either (i) a Responsible Officer of the Trustee shall have actual
knowledge thereof or (2) the Trustee shall have received notice thereof in
accordance with Section 1.5(1) hereof from the Company or a Holder; and
(j) no permissive power or authority available to the Trustee shall be
construed as a duty.
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or application by the
Company of the Securities or the proceeds thereof.
SECTION 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Securities
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
6.8 and 6.13, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Securities
Registrar or such other agent.
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SECTION 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
SECTION 6.7. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation for all
services rendered by it hereunder in such amounts as the Company and the Trustee
shall agree from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(2) to reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense (including the reasonable compensation and the
expenses and disbursements of its agents and counsel) incurred without
negligence or bad faith, arising out of or in connection with the acceptance or
administration of this trust or the performance of its duties hereunder,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder.
The obligations of the Company under this Section 6.7 shall survive the
termination of the Indenture or the earlier resignation or removal of the
Trustee.
To secure the Company's payment obligations in this Section, the Company
and the Holders agree that the Trustee shall have a lien prior to the Securities
on all money or property held or collected by the Trustee. Such lien shall
survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(4) or (5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under the Bankruptcy Reform Act of 1978 or any successor statute.
SECTION 6.8. Disqualification; Conflicting Interests.
The Trustee for the Securities of any series issued hereunder shall be
subject to the provisions of Section 310(b) of the Trust Indenture Act. Nothing
herein shall prevent the Trustee from filing with the Commission the application
referred to in the second to last paragraph of said Section 310(b).
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SECTION 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
(a) a corporation organized and doing business under the laws of the United
States of America or of any State or Territory or the District of Columbia,
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by Federal, State, Territorial or District of
Columbia authority, or
(b) a corporation or other Person organized and doing business under the
laws of a foreign government that is permitted to act as Trustee pursuant to a
rule, regulation or order of the Commission, authorized under such laws to
exercise corporate trust powers, and subject to supervision or examination by
authority of such foreign government or a political subdivision thereof
substantially equivalent to supervision or examination applicable to United
States institutional trustees,
in either case having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then,
for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published, if at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section,
it shall resign immediately in the manner and with the effect hereinafter
specified in this Article. Neither the Company nor any Person directly or
indirectly controlling, controlled by or under common control with the Company
shall serve as Trustee for the Securities of any series issued hereunder.
SECTION 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If an
instrument of acceptance by a successor Trustee shall not have been delivered to
the Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(c) The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.
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(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after written request
therefor by the Company or by any Holder who has been a bona fide Holder of a
Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9 and shall fail
to resign after written request therefor by the Company or by any such Holder,
or
(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Company, acting pursuant to the authority of a
Board Resolution, may remove the Trustee with respect to all Securities, or (ii)
subject to Section 5.14, any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee with respect to all Securities and the appointment of a successor
Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause with respect
to the Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee with respect to the Securities of
that or those series. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee with respect to the Securities of such series and supersede
the successor Trustee appointed by the Company. If no successor Trustee with
respect to the Securities of any series shall have been so appointed by the
Company or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Security for at least
six months may, subject to Section 5.14, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Securities of such series as their names and addresses appear in the
Securities Register. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its Corporate
Trust Office.
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SECTION 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more series, the Company, the retiring
Trustee and each successor Trustee with respect to the Securities of one or more
series shall execute and deliver an instrument in writing or an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (2) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such instrument in writing or supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such instrument in writing or supplemental
indenture the resignation or removal of the retiring Trust shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts, and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all rights, powers and trusts referred to in paragraph
(a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be eligible under this Article.
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SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated, and in case any
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor Trustee or
the name of such successor Trustee, and in all cases the certificate of
authentication shall have the full force which it is provided anywhere in the
Securities or in this Indenture that the certificate of the Trustee shall have.
SECTION 6.13. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 6.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original issue
and upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 3.7, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, or of any State or Territory or
the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
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Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of an Authenticating Agent shall be the successor
Authenticating Agent hereunder, provided such corporation shall be otherwise
eligible under this Section, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.6 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provision of this Section.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities referred to in the within mentioned
Indenture.
Dated:
Bankers Trust Company
As Trustee
By: _________________________________
As Authenticating Agent
By: _________________________________
Authorized Officer
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ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after each Regular Record Date in
each year, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished, excluding from any such list names and addresses received by the
Trustee in its capacity as Securities Registrar.
SECTION 7.2. Preservation of Information, Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided in the Trust
Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
SECTION 7.3. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act, at the times and in the manner provided pursuant thereto.
(b) Reports so required to be transmitted at stated intervals of not more
than 12 months shall be transmitted no later than 60 days after December 31 in
each calendar year, commencing 60 days after the first December 31 after the
first issuance of Securities under this Indenture.
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(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each securities exchange upon which any
Securities are listed and also with the Commission. The Company will notify the
Trustee when any Securities are listed on any securities exchange.
SECTION 7.4. Reports by Company.
The Company shall file with the Trustee and with the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided in the Trust Indenture Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act shall be filed with
the Trustee within 15 days after the same is required to be filed with the
Commission. Notwithstanding that the Company may not be required to remain
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall continue to file with the Commission and provide the
Trustee with the annual reports and the information, documents and other reports
which are specified in Sections 13 and 15(d) of the Exchange Act. The Company
also shall comply with the other provisions of Trust Indenture Act Section
314(a).
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and no Person shall consolidate with or merge into the Company or
convey, transfer or lease its properties and assets substantially as an entirety
to the Company, unless:
(1) in case the Company shall consolidate with or merge into another Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the corporation formed by such consolidation or into
which the Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation, partnership or trust
organized and existing under the laws of the United States of America or any
State or the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form satisfactory
to the Trustee, the due and punctual payment of the principal of (and premium,
if any) and interest (including any Additional Interest) on all the Securities
and the performance of every covenant of this Indenture on the part of the
Company to be performed or observed;
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(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing;
(3) in the case of the Securities of a series issued to a BankAmerica
Trust, such consolidation, merger, conveyance, transfer or lease is permitted
under the related Trust Agreement and BankAmerica Guarantee and does not give
rise to any breach or violation of the related Trust Agreement or BankAmerica
Guarantee; and
(4) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and any such supplemental indenture comply with this Article
and that all conditions precedent herein provided for relating to such
transaction have been complied with; and the Trustee, subject to Section 6.1,
may rely upon such Officers' Certificate and Opinion of Counsel as conclusive
evidence that such transaction complies with this Section 8.1.
SECTION 8.2. Successor Corporation Substituted.
Upon any consolidation or merger by the Company with or into any other
Person, or any conveyance, transfer or lease by the Company of its properties
and assets substantially as an entirety to any Person in accordance with Section
8.1, the successor corporation formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein; and in the event of any such
conveyance, transfer or lease the Company shall be discharged from all
obligations and covenants under the Indenture and the Securities and may be
dissolved and liquidated.
Such successor Person may cause to be signed, and may issue either in its
own name or in the name of the Company, any or all of the Securities issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such successor Person instead
of the Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities which previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication pursuant to such provisions and
any Securities which such successor Person thereafter shall cause to be signed
and delivered to the Trustee on its behalf for the purpose pursuant to such
provisions. All the Securities so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Securities theretofore or
thereafter issued in accordance with the terms of this Indenture as though all
of such Securities had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form may be made in the Securities thereafter to be
issued as may be appropriate.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to evidence the succession of another Person to the Company, and the
assumption by any such successor of the covenants of the Company herein and in
the Securities contained; or
(2) to convey, transfer, assign, mortgage or pledge any property to or with
the Trustee or to surrender any right or power herein conferred upon the
Company; or
(3) to establish the form or terms of Securities of any series as permitted
by Sections 2.1. or 3.1; or
(4) to add to the covenants of the Company for the benefit of the Holders
of all or any series of Securities (and if such covenants are to be for the
benefit of less than all series of Securities, stating that such covenants are
expressly being included solely for the benefit of such series) or to surrender
any right or power herein conferred upon the Company; or
(5) to add any additional Events of Default for the benefit of the Holders
of all or any series of Securities (and if such additional Events of Default are
to be for the benefit of less than all series of Securities, stating that such
additional Events of Default are expressly being included solely for the benefit
of such series); or
(6) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination (a) shall become effective only
when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit of
such provision or (b) shall not apply to any Outstanding Securities; or
(7) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Indenture, provided that such action pursuant to this clause (7) shall not
adversely affect the interest of the Holders of Securities of any series in any
material respect or, in the case of the Securities of a series issued to a
BankAmerica Trust and for so long as any of the corresponding series of Capital
Securities issued by such BankAmerica Trust shall remain outstanding, the
holders of such Capital Securities; or
(8) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee with respect to the Securities of one or more series and to
add to or change any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration
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of the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 6.11(b); or
(9) to comply with the requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the Trust Indenture Act.
SECTION 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) except to the extent permitted by Section 3.12 or as otherwise
specified as contemplated by Section 2.1 or Section 3.1 with respect to the
deferral of the payment of interest on the Securities of any series, change the
Stated Maturity of the principal of, or any installment of interest (including
any Additional Interest) on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or reduce any premium payable upon the
redemption thereof, or reduce the amount of principal of a Discount Security
that would be due and payable upon a declaration of acceleration of the Maturity
thereof pursuant to Section 5.2, or change the place of payment where, or the
coin or currency in which, any Security or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of redemption, on or after
the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding Securities
of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 5.13 or Section
10.5, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Security affected thereby;
provided, further, that, in the case of the Securities of a series issued to a
BankAmerica Trust, so long as any of the corresponding series of Capital
Securities issued by such BankAmerica Trust remains outstanding, (i) no such
amendment shall be made that adversely affects the holders of such Capital
Securities in any material respect, and no termination of this Indenture shall
occur, and no waiver of any Event of Default or compliance with any covenant
under this Indenture shall be effective, without the prior consent of the
holders of at least a majority of the aggregate Liquidation Amount of such
Capital Securities then outstanding unless and until the principal (and premium,
if any) of the Securities of such series and all accrued and, subject to
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Section 3.8, unpaid interest (including any Additional Interest) thereon have
been paid in full and (ii) no amendment shall be made to Section 5.8 of this
Indenture that would impair the rights of the holders of Capital Securities
provided therein without the prior consent of the holders of each Capital
Security then outstanding unless and until the principal (and premium, if any)
of the Securities of such series and all accrued and (subject to Section 3.8)
unpaid interest (including any Additional Interest) thereon have been paid in
full.
A supplemental indenture that changes or eliminates any covenant or other
provision of this Indenture that has expressly been included solely for the
benefit of one or more particular series of Securities or Capital Securities, or
which modifies the rights of the Holders of Securities or holders of Capital
Securities of such series with respect to such covenant or other provision,
shall be deemed not to affect the rights under this Indenture of the Holders of
Securities or holders of Capital Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 9.3. Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 6.1) shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture, and that
all conditions precedent have been complied with. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise or
that may subject it to any liability.
SECTION 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 9.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Company, bear a notation in form approved by the Company as to any matter
provided for in such supplemental indenture. If the
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Company shall so determine, new Securities of any series so modified as to
conform, in the opinion of the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE X
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of that series in accordance with the
terms of such Securities and this Indenture.
SECTION 10.2. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities, an office or agency where Securities of that series may be presented
or surrendered for payment and an office or agency where Securities of that
series may be surrendered for transfer or exchange and where notices and demands
to or upon the Company in respect of the Securities of that series and this
Indenture may be served. The Company initially appoints the Trustee, acting
through its Corporate Trust Office, as its agent for said purposes. The Company
will give prompt written notice to the Trustee of any change in the location of
any such office or agency. If at any time the Company shall fail to maintain
such office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
of such purposes, and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in each Place of
Payment for Securities of any series for such purposes. The Company will give
prompt written notice to the Trustee of any such designation and any change in
the location of any such office or agency.
SECTION 10.3. Money for Security Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of such
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided, and will promptly notify the Trustee of its
failure so to act.
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Whenever the Company shall have one or more Paying Agents, it will, prior
to 10:00 a.m. New York City time on each due date of the principal of or
interest on any Securities, deposit with a Paying Agent a sum sufficient to pay
the principal (and premium, if any) or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal and
premium (if any) or interest, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of its failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities) in the making of any payment of principal (and
premium, if any) or interest;
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent; and
(4) comply with the provisions of the Trust Indenture Act applicable to it
as a Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Security and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall be
paid on Company Request to the Company, or (if then held by the Company) shall
(unless otherwise required by mandatory provision of applicable escheat or
abandoned or unclaimed property law) be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in the Borough of Manhattan, The City of New York,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
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SECTION 10.4. Statement as to Compliance.
The Company shall deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate executed by the principal executive officer, principal financial
officer or principal accounting officer of the Company covering the preceding
calendar year, stating whether or not to the best knowledge of the signers
thereof the Company is in default in the performance, observance or fulfillment
of or compliance with any of the terms, provisions, covenants and conditions of
this Indenture, and if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge. For
the purpose of this Section 10.4, compliance shall be determined without regard
to any grace period (other than an Extension Period) or requirement of notice
provided pursuant to the terms of this Indenture.
SECTION 10.5. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any covenant
or condition provided pursuant to Section 3.1, 9.1(3) or 9.1(4) with respect to
the Securities of any series, if before or after the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company in respect of any such covenant
or condition shall remain in full force and effect.
SECTION 10.6. Additional Sums.
In the case of the Securities of a series issued to a BankAmerica Trust, so
long as no Event of Default has occurred and is continuing and except as
otherwise specified as contemplated by Section 2.1 or Section 3.1, in the event
that (i) a BankAmerica Trust is the Holder of all of the Outstanding Securities
of such series and (ii) a Tax Event in respect of such BankAmerica Trust shall
have occurred and be continuing, the Company shall pay to such BankAmerica Trust
(and its permitted successors or assigns under the related Trust Agreement) as
Holder of the Securities of such series for so long as such BankAmerica Trust
(or its permitted successor or assignee) is the registered holder of any
Securities of such series, such additional sums as may be necessary in order
that the amount of Distributions (including any Additional Amounts (as defined
in such Trust Agreement)) paid by such BankAmerica Trust on the related Capital
Securities and Common Securities that at any time remain outstanding in
accordance with the terms thereof shall not be reduced as a result of any
Additional Taxes (the "Additional Sums"). Whenever in this Indenture or the
Securities there is a reference in any context to the payment of principal of or
interest on the Securities, such mention shall be deemed to include mention of
the payments of the Additional Sums provided for in this paragraph to the extent
that, in such context, Additional Sums are, were or would be payable in respect
thereof pursuant to the provisions of this paragraph and express mention of the
payment of Additional Sums (if applicable) in any provisions hereof shall not be
construed as excluding Additional Sums in those provisions hereof where such
express mention is not made.
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SECTION 10.7. Additional Covenants.
The Company covenants and agrees with each Holder of Securities of each
series that it shall not, and it shall not permit any Subsidiary of the Company
to, (a) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Company's
capital stock, or (b) make any payment of principal of or interest or premium,
if any, on or repay, repurchase or redeem any debt securities of the Company
that rank pari passu in all respects with or junior in interest to the
Securities of such series or make any guarantee payments with respect to any
guarantee by the Company of debt securities of any subsidiary of the Company if
such guarantee ranks pari passu with or junior in interest to the Securities
(other than (a) dividends or distributions in Common Stock, (b) any declaration
of a dividend in connection with the implementation of a Rights Plan, the
issuance of any Common Stock of any class or series of preferred stock of the
Company under any Rights Plan in the future or the redemption or repurchase of
any such rights pursuant thereto, (c) payments under any BankAmerica Guarantee,
and (d) purchases of Common Stock related to the issuance of Common Stock or
rights under any of the Company's benefit plans for its directors, officers or
employees) if at such time (i) there shall have occurred any event of which the
Company has actual knowledge that (A) with the giving of notice or the lapse of
time, or both, would constitute an Event of Default with respect to the
Securities of such series and (B) in respect of which the Company shall not have
taken reasonable steps to cure, (ii) if the Securities of such series are held
by a BankAmerica Trust, the Company shall be in default with respect to its
payment of any obligations under the BankAmerica Guarantee relating to the
Capital Securities issued by such BankAmerica Trust or (iii) the Company shall
have given notice of its election to begin an Extension Period with respect to
the Securities of such series as provided herein and shall not have rescinded
such notice, or such Extension Period, or any extension thereof, shall be
continuing. For purposes hereof, neither the Company's Senior Debt nor its
Senior Subordinated Debt shall be deemed to be pari passu with the Securities.
The Company also covenants with each Holder of Securities of a series
issued to a BankAmerica Trust (i) to maintain directly or indirectly 100%
ownership of the Common Securities of such BankAmerica Trust; provided, however,
that any permitted successor of the Company hereunder may succeed to the
Company's ownership of such Common Securities, (ii) as holder of the Common
Securities not to voluntarily terminate, wind-up or liquidate such BankAmerica
Trust, except upon prior approval of the Federal Reserve, if then required under
applicable capital guidelines or policies of the Federal Reserve, and (a) in
connection with a distribution of the Securities of such series to the holders
of Capital Securities in liquidation of such BankAmerica Trust or (b) in
connection with certain mergers, consolidations or amalgamations permitted by
the related Trust Agreement and (iii) to use its reasonable efforts, consistent
with the terms and provisions of such Trust Agreement, to cause such BankAmerica
Trust to remain classified as a grantor trust and not an association taxable as
a corporation for United States federal income tax purposes.
SECTION 10.8. Original Issue Discount.
On or before December 15 of each year during which any Securities are
outstanding, the Company shall furnish to each Paying Agent such information as
may be reasonably requested
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by each Paying Agent in order that each Paying Agent may prepare the information
which it is required to report for such year on Internal Revenue Service Forms
1096 and 1099 pursuant to Section 6049 of the Internal Revenue Code of 1986, as
amended. Such information shall include the amount of original issue discount
includible in income for each $1,000 of principal amount at Stated Maturity of
outstanding Securities during such year.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1. Applicability of This Article.
Redemption of Securities of any series (whether by operation of a sinking
fund or otherwise) as permitted or required by any form of Security issued
pursuant to this Indenture shall be made in accordance with such form of
Security and this Article; provided, however, that if any provision of any such
form of Security shall conflict with any provision of this Article, the
provision of such form of Security shall govern. Except as otherwise set forth
in the form of Security for such series, each Security of such series shall be
subject to partial redemption only in the amount of $1,000 or integral multiples
thereof and the principal amount of the unredeemed portion of such Security is
not less than $100,000.
SECTION 11.2. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by
or pursuant to a Board Resolution. In case of any redemption at the election of
the Company of any of the Securities of any particular series and having the
same terms, the Company shall, not less than 30 nor more than 60 days prior to
the Redemption Date (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee and, in the case of Securities of a series held by
a BankAmerica Trust, the related Property Trustee of such date and of the
principal amount of Securities of that series to be redeemed and provide the
additional information required to be included in the notice or notices
contemplated by Section 11.4. In the case of any redemption of Securities prior
to the expiration any restriction on such redemption provided in the terms of
such Securities, the Company shall furnish the Trustee with an Officers'
Certificate and an Opinion of Counsel evidencing compliance with such
restriction. The Company shall have received the prior approval of the Federal
Reserve if then required under applicable capital guidelines or policies of the
Federal Reserve prior to redeeming any Securities pursuant hereto.
SECTION 11.3. Selection of Securities to be Redeemed.
If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of a portion of the principal amount of any Security of such series.
If less than all the Securities of such series and of a specified tenor are to
be redeemed (unless such redemption affects only a single Security), the
particular Securities to be redeemed shall be
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selected not more than 60 days prior to the Redemption Date by the Trustee, from
the Outstanding Securities of such series and specified tenor not previously
called for redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the Securities
selected for partial redemption and the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed. If the
Company shall so direct, Securities registered in the name of the Company, any
Affiliate or any Subsidiary thereof shall not be included in the Securities
selected for redemption.
SECTION 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not later than the thirtieth day, and not earlier than the sixtieth day,
prior to the Redemption Date, to each Holder of Securities to be redeemed, at
the address of such Holder as it appears in the Securities Register.
With respect to Securities of each series to be redeemed, each notice of
redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price or if the Redemption Price cannot be calculated
prior to the time the notice is required to be sent, the estimate of the
Redemption Price provided pursuant to the Indenture together with a statement
that it is an estimate and that the actual Redemption Price will be calculated
on the third Business Day prior to the Redemption Date (if such an estimate of
the Redemption Price is given, a subsequent notice shall be given as set forth
above setting forth the Redemption Price promptly following the calculation
thereof);
(c) if less than all Outstanding Securities of such particular series and
having the same terms are to be redeemed, the identification (and, in the case
of partial redemption, the respective principal amounts) of the particular
Securities to be redeemed;
(d) that on the Redemption Date, the Redemption Price will become due and
payable upon each such Security or portion thereof, and that interest thereon,
if any, shall cease to accrue on and after said date;
(e) the place or places where such Securities are to be surrendered for
payment of the Redemption Price;
(f) that the redemption is for a sinking fund, if such is the case; and
(g) such other provisions as may be required in respect of the terms of a
particular series of Securities.
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Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall not be
irrevocable. The notice if mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice. In any case, a failure to give such notice by mail or any
defect in the notice to the Holder of any Security designated for redemption as
a whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security.
SECTION 11.5. Deposit of Redemption Price.
Prior to 10:00 a.m. New York City time on the Redemption Date specified in
the notice of redemption given as provided in Section 11.4, the Company will
deposit with the Trustee or with one or more Paying Agents (or if the Company is
acting as its own Paying Agent, the Company will segregate and hold in trust as
provided in Section 10.3) an amount of money sufficient to pay the Redemption
Price of, and any accrued interest (including Additional Interest) on, all the
Securities which are to be redeemed on that date.
SECTION 11.6. Payment of Securities Called for Redemption.
If any notice of redemption has been given as provided in Section 11.4, the
Securities or portion of Securities with respect to which such notice has been
given shall become due and payable on the date and at the place or places stated
in such notice at the applicable Redemption Price, together with accrued
interest (including any Additional Interest) to the Redemption Date. On
presentation and surrender of such Securities at a Place of Payment in said
notice specified, the said securities or the specified portions thereof shall be
paid and redeemed by the Company at the applicable Redemption Price, together
with accrued interest (including any Additional Interest) to the Redemption
Date; provided, however, that, unless otherwise specified as contemplated by
Section 3.1, installments of interest whose Stated Maturity is on or prior to
the Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on the
relevant record dates according to their terms and the provisions of Section
3.8.
Upon presentation of any Security redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder thereof, at
the expense of the Company, a new Security or Securities of the same series, of
authorized denominations, in aggregate principal amount equal to the unredeemed
portion of the Security so presented and having the same Original Issue Date,
Stated Maturity and terms. If a Global Security is so surrendered, such new
Security (subject to Section 3.5) will also be a new Global Security.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal of and premium, if any, on such Security
shall, until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
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SECTION 11.7. Right of Redemption of Securities Initially Issued to a
BankAmerica Trust.
In the case of the Securities of a series initially issued to a BankAmerica
Trust, if specified as contemplated by Section 3.1, the Company, at its option,
may redeem such Securities (i) on or after the date ten years after the Original
Issue Date of such Securities, in whole at any time or in part from time to
time, or (ii) upon the occurrence and during the continuation of a Tax Event or
Capital Treatment Event, prior to the date ten years after the Original Issue
Date of such Securities and within 90 days following the occurrence of such Tax
Event or Capital Treatment Event in respect of such BankAmerica Trust, in whole
(but not in part), in each case at a Redemption Price specified as contemplated
by Section 3.1.
ARTICLE XII
SINKING FUNDS
SECTION 12.1. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of any series except as otherwise specified as
contemplated by Section 3.1 for such Securities.
The minimum amount of any sinking fund payment provided for by the terms of
any Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any sinking fund payment in excess of such minimum amount which is
permitted to be made by the terms of such Securities of any series is herein
referred to as an "optional sinking fund payment." If provided for by the terms
of any Securities of any series, the cash amount of any sinking fund payment may
be subject to reduction as provided in Section 12.2. Each sinking fund payment
shall be applied to the redemption (or purchase by tender or otherwise) of
Securities of any series as provided for by the terms of such Securities.
SECTION 12.2. Satisfaction of Sinking Fund Payments with Securities.
In lieu of making all or any part of a mandatory sinking fund payment with
respect to any Securities of a series in cash, the Company may at its option, at
any time no more than 16 months and no less than 45 days prior to the date on
which such sinking fund payment is due, deliver to the Trustee Securities of
such series (together with the unmatured coupons, if any, appertaining thereto)
theretofore purchased or otherwise acquired by the Company, except Securities of
such series that have been redeemed through the application of mandatory or
optional sinking fund payments pursuant to the terms of the Securities of such
series, accompanied by a Company Order instructing the Trustee to credit such
obligations and stating that the Securities of such series were originally
issued by the Company by way of bona fide sale or other negotiation for value;
provided that the Securities to be so credited have not been previously so
credited. The Securities to be so credited shall be received and credited for
such purpose by the Trustee at the redemption price for such Securities, as
specified in the Securities
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so to be redeemed, for redemption through operation of the sinking fund and the
amount of such sinking fund payment shall be reduced accordingly.
SECTION 12.3. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
such Securities pursuant to the terms of such Securities, the portion thereof,
if any, which is to be satisfied by payment of cash in the currency in which the
Securities of such series are payable (except as provided pursuant to Section
3.1) and the portion thereof, if any, which is to be satisfied by delivering and
crediting Securities pursuant to Section 12.2 and will also deliver to the
Trustee any Securities to be so delivered. Such Officers' Certificate shall be
irrevocable and upon its delivery the Company shall be obligated to make the
cash payment or payments therein referred to, if any, on or before the
succeeding sinking fund payment date. In the case of the failure of the Company
to deliver such Officers' Certificate (or, as required by this Indenture, the
Securities and coupons, if any, specified in such Officers' Certificate) by the
due date therefor, the sinking fund payment due on the succeeding sinking fund
payment date for such series shall be paid entirely in cash and shall be
sufficient to redeem the principal amount of the Securities of such series
subject to a mandatory sinking fund payment without the right to deliver or
credit securities as provided in Section 12.2 and without the right to make the
optional sinking fund payment with respect to such series at such time.
Any sinking fund payment or payments (mandatory or optional) made in cash
plus any unused balance of any preceding sinking fund payments made with respect
to the Securities of any particular series shall be applied by the Trustee (or
by the Company if the Company is acting as its own Paying Agent) on the sinking
fund payment date on which such payment is made (or, if such payment is made
before a sinking fund payment date, on the sinking fund payment date immediately
following the date of such payment) to the redemption of Securities of such
series at the Redemption Price specified in such Securities with respect to the
sinking fund. Any sinking fund moneys not so applied or allocated by the Trustee
(or, if the Company is acting as its own Paying Agent, segregated and held in
trust by the Company as provided in Section 10.3) for such series and together
with such payment (or such amount so segregated) shall be applied in accordance
with the provisions of this Section 12.3. Any and all sinking fund moneys with
respect to the Securities of any particular series held by the Trustee (or if
the Company is acting as its own Paying Agent, segregated and held in trust as
provided in Section 10.3) on the last sinking fund payment date with respect to
Securities of such series and not held for the payment or redemption of
particular Securities of such series shall be applied by the Trustee (or by the
Company if the Company is acting as its own Paying Agent), together with other
moneys, if necessary, to be deposited (or segregated) sufficient for the
purpose, to the payment of the principal of the Securities of such series at
Maturity. The Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 11.3 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Company in the manner provided in Section 11.4. Such notice having been
duly given, the redemption of such Securities shall be made upon the terms and
in the manner stated in Section 11.6. On or before each sinking fund payment
date, the Company shall pay to the
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Trustee (or, if the Company is acting as its own Paying Agent, the Company shall
segregate and hold in trust as provided in Section 10.3) in cash a sum in the
currency in which Securities of such series are payable (except as provided
pursuant to Section 3.1) equal to the principal, premium, if any, and any
interest accrued to the Redemption Date for Securities or portions thereof to be
redeemed on such sinking fund payment date pursuant to this Section 12.3.
Neither the Trustee nor the Company shall redeem any Securities of a series
with sinking fund moneys or mail any notice of redemption of Securities of such
series by operation of the sinking fund for such series during the continuance
of a default in payment of interest, if any, on any Securities of such series or
of any Event of Default (other than an Event of Default occurring as a
consequence of this paragraph) with respect to the Securities of such series,
except that if the notice of redemption shall have been provided in accordance
with the provisions hereof, the Trustee (or the Company, if the Company is then
acting as its own Paying Agent) shall redeem such Securities if cash sufficient
for that purpose shall be deposited with the Trustee (or segregated by the
Company) for that purpose in accordance with the terms of this Article XII.
Except as aforesaid, any moneys in the sinking fund for such series at the time
when any such default or Event of Default shall occur and any moneys thereafter
paid into such sinking fund shall, during the continuance of such default or
Event of Default, be held as security for the payment of the Securities and
coupons, if any, of such series; provided, however, that in case such default or
Event of Default shall have been cured or waived herein, such moneys shall
thereafter be applied on the next sinking fund payment date for the Securities
of such series on which such moneys may be applied pursuant to the provisions of
this Section 12.3.
ARTICLE XIII
SUBORDINATION OF SECURITIES
SECTION 13.1. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article, the payment of the principal
of (and premium, if any) and interest (including any Additional Interest) on
each and all of the Securities are hereby expressly made subordinate and subject
in right of payment to the prior payment in full of all Senior Indebtedness.
SECTION 13.2. No Payment When Senior Indebtedness in Default; Payment Over
of Proceeds Upon Dissolution, Etc.
In the event that the Company shall default in the payment of any principal
of (or premium, if any) or interest on any Senior Indebtedness when the same
becomes due and payable, whether at maturity or at a date fixed for prepayment
or by declaration of acceleration or otherwise, then, upon written notice of
such default to the Company by the holders of Senior Indebtedness or any trustee
therefor, unless and until such default shall have been cured or waived or shall
have ceased to exist, no direct or indirect payment (in cash, property,
securities, by set-off or
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otherwise) shall be made or agreed to be made on account of the principal of (or
premium, if any) or interest on any of the Securities, or in respect of any
redemption, repayment, retirement, purchase or other acquisition of any of the
Securities.
In the event of (a) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceedings relating
to the Company, its creditors or its property, (b) any proceeding for the
liquidation, dissolution or other winding up of the Company, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings, (c)
any assignment by the Company for the benefit of creditors or (d) any other
marshalling of the assets of the Company (each such event, if any, herein
sometimes referred to as a "Proceeding"), all Senior Indebtedness (including any
interest thereon accruing after the commencement of any such proceedings) shall
first be paid in full before any payment or distribution, whether in cash,
securities or other property, shall be made to any Holder of any of the
Securities on account thereof. Any payment or distribution, whether in cash,
securities or other property (other than securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment the payment
of which is subordinate, at least to the extent provided in these subordination
provisions with respect to the indebtedness evidenced by the Securities, to the
payment of all Senior Indebtedness at the time outstanding and to any securities
issued in respect thereof under any such plan of reorganization or
readjustment), which would otherwise (but for these subordination provisions) be
payable or deliverable in respect of the Securities of any series shall be paid
or delivered directly to the holders of Senior Indebtedness in accordance with
the priorities then existing among such holders until all Senior Indebtedness
(including any interest thereon accruing after the commencement of any
Proceeding) shall have been paid in full.
In the event of any Proceeding, after payment in full of all sums owing
with respect to Senior Indebtedness, the Holders of the Securities, together
with the holders of any obligations of the Company ranking on a parity with the
Securities (which for this purpose only shall include the Allocable Amounts of
Senior Subordinated Debt), shall be entitled to be paid from the remaining
assets of the Company the amounts at the time due and owing on account of unpaid
principal of (and premium, if any) and interest on the Securities and such other
obligations before any payment or other distribution, whether in cash, property
or otherwise, shall be made on account of any capital stock or any obligations
of the Company ranking junior to the Securities and such other obligations. In
the event that, notwithstanding the foregoing, any payment or distribution of
any character or any security, whether in cash, securities or other property
(other than securities of the Company or any other corporation provided for by a
plan of reorganization or readjustment the payment of which is subordinate, at
least to the extent provided in these subordination provisions with respect to
the indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment), shall be
received by the Trustee or any Holder in contravention of any of the terms
hereof and before all Senior Indebtedness shall have been paid in full, such
payment or distribution or security shall be received in trust for the benefit
of, and shall be paid over or delivered and transferred to, the holders of the
Senior Indebtedness at the time outstanding in accordance with the priorities
then existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in
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full. In the event of the failure of the Trustee or any Holder to endorse or
assign any such payment, distribution or security, each holder of Senior
Indebtedness is hereby irrevocably authorized to endorse or assign the same.
The Trustee and Holders will take such action (including, without
limitation, the delivery of this Indenture to an agent for the holders of Senior
Indebtedness or consent to the filing of a financing statement with respect
hereto) as may, in the opinion of counsel designated by the holders of a
majority in principal amount of the Senior Indebtedness at the time outstanding,
be necessary or appropriate to assure the effectiveness of the subordination
effected by these provisions.
The provisions of this Section 13.2 shall not impair any rights, interests,
remedies or powers of any secured creditor of the Company in respect of any
security interest the creation of which is not prohibited by the provisions of
this Indenture.
The securing of any obligations of the Company, otherwise raking on a
parity with the Securities or ranking junior to the Securities, shall not be
deemed to prevent such obligations from constituting, respectively, obligations
ranking on a parity with the Securities or ranking junior to the Securities.
SECTION 13.3. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture, or in any
of the Securities, shall prevent (a) the Company at any time, except during the
conditions described in the first paragraph of Section 13.2 or the pendency of
any Proceeding referred to in Section 13.2, from making payments at any time of
principal of (and premium, if any) or interest (including Additional Interest)
on the Securities, or (b) the application by the Trustee of any moneys deposited
with it hereunder to the payment of or on account of the principal of (and
premium, if any) or interest (including any Additional Interest) on the
Securities or the retention of such payment by the Holders, if, at the time of
such application by the Trustee, it did not have knowledge that such payment
would have been prohibited by the provisions of this Article.
SECTION 13.4. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all amounts due or to become due on all
Senior Indebtedness, or the provision for such payment in cash of cash
equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness, the Holders of the Securities shall be subrogated to the extent of
the payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article (equally and ratably with the holders
of all indebtedness of the Company which by its express terms is subordinated to
Senior Indebtedness of the Company to substantially the same extent as the
Securities are subordinated to the Senior Indebtedness and is entitled to like
rights of subrogation by reason of any payments or distributions made to holders
of such Senior Indebtedness) to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of (and
premium, if any) and interest on the Securities shall be paid in full. For
purposes of such subrogation, no payments or
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distributions to the holders of the Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article, and no payments over
pursuant to the provisions of this Article to the holders of Senior Indebtedness
by Holders of the Securities or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment or distribution by the Company to or on
account of the Senior Indebtedness.
SECTION 13.5. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the purpose
of defining the relative rights of the Holders of the Securities on the one hand
and the holders of Senior Indebtedness on the other hand. Nothing contained in
this Article or elsewhere in this Indenture or in the Securities is intended to
or shall (a) impair, as between the Company and the Holders of the Securities,
the obligations of the Company, which are absolute and unconditional, to pay to
the Holders of the Securities the principal of (and premium, if any) and
interest (including any Additional Interest) on the Securities as and when the
same shall become due and payable in accordance with their terms; or (b) affect
the relative rights against the Company of the Holders of the Securities and
creditors of the Company other than their rights in relation to the holders of
Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture including, without limitation, filing and voting claims in
any Proceeding, subject to the rights, if any, under this Article of the holders
of Senior Indebtedness to receive cash, property and securities otherwise
payable or deliverable to the Trustee or such Holder.
SECTION 13.6. Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof authorizes and
directs the Trustee on his or her behalf to take such action as may be necessary
or appropriate to acknowledge or effectuate the subordination provided in this
Article and appoints the Trustee his or her attorney-in-fact for any and all
such purposes.
SECTION 13.7. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the immediately preceding
paragraph, the holders of Senior Indebtedness may, at any time and from to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Senior
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Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii)
release any Person liable in any manner for the collection of Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Company and any other Person.
SECTION 13.8. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee, agent or
representative therefor; provided, however, that if the Trustee shall not have
received the notice provided for in this Section at least two Business Days
prior to the date upon which by the terms hereof any monies may become payable
for any purpose (including, without limitation, the payment of the principal of
(and premium, if any) or interest (including any Additional Interest) on any
Security), then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such monies and to apply
the same to the purpose for which they were received and shall not be affected
by any notice to the contrary which may be received by it within two Business
Days prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
to be a holder of Senior Indebtedness (or a trustee or attorney-in-fact
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee or attorney-in-fact therefor). In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any Person as a holder of Senior Indebtedness to participate in
any payment or distribution pursuant to this Article, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Article, and if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 13.9. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 6.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
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trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article.
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee, in its capacity as trustee under this Indenture, shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall
not be liable to any such holders if it shall in good faith mistakenly pay over
or distribute to Holders of Securities or to the Company or to any other Person
cash, property or securities to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article or otherwise.
SECTION 13.11. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article with respect to any Senior Indebtedness which may at
any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
SECTION 13.12. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall in such case (unless the context otherwise requires)
be construed as extending to and including such Paying Agent within its meaning
as fully for all intents and purposes as if such Paying Agent were named in this
Article in addition to or in place of the Trustee.
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This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
BANKAMERICA CORPORATION
By: /s/ [ILLEGIBLE]
------------------------------------
Attest:
BANKERS TRUST COMPANY
as Trustee
By:
------------------------------------
<PAGE>
* * * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
BANKAMERICA CORPORATION
By:
------------------------------------
Attest: /s/ [ILLEGIBLE]
BANKERS TRUST COMPANY
as Trustee
By: /s/ [ILLEGIBLE]
------------------------------------
<PAGE>
Annex A
See Tab A.3.
<PAGE>
Annex B
See Tab 3.
<PAGE>
Annex C
See Tab 2.
<PAGE>
ANNEX D -- Form of Restricted
Securities Certificate
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to ss. 3.6(b) of the Indenture)
[____________________________]
as Security Registrar
(address]
Re: _____________ of [BankAmerica Institutional Capital ___] (the "Trust")
(the "Securities")
Reference is made to the Indenture, dated as of November 27, 1996 (the
"Indenture"), entered into between BankAmerica Corporation, and Bankers Trust
Company, as Trustee. Terms used herein and defined in the Indenture or in
Regulation S, Rule 144A or Rule 144 under the U.S. Securities Act of 1933 (the
"Securities Act") are used herein as so defined.
This certificate relates to $_____________ aggregate principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ______________________
CERTIFICATE No(s). ________________
CURRENTLY IN BOOK-ENTRY FORM: Yes___ No___ (check one)
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through a Depository or an Agent Member in the name of the Undersigned, as or on
behalf of the Owner. If the Specified Securities are not represented by a Global
Security, they are registered in the name of the Undersigned, as or on behalf of
the Owner.
The Owner has requested that the Specified Securities be transferred to a
person (the "Transferee") who will take delivery in the form of a Restricted
Security. In connection with such transfer, the Owner hereby certifies that,
unless such transfer is being effected pursuant to an effective registration
statement under the Securities Act, it is being effected in
<PAGE>
accordance with Rule 144A, Rule 904 of Regulation S or Rule 144 under the
Securities Act and all applicable securities laws of the states of the United
States and other jurisdictions. Accordingly, the Owner hereby further certifies
as:
(1) Rule 144A Transfers. If the transfer is being effected in
accordance with Rule 144A:
(A) the Specified Securities are being transferred to a person
that the Owner and any person acting on its behalf reasonably believe
is a "qualified institutional buyer" within the meaning of Rule 144A,
acquiring for its own account or for the account of a qualified
institutional buyer; and
(B) the Owner and any person acting on its behalf have taken
reasonable steps to ensure that the Transferee is aware that the Owner
may be relying on Rule 144A in connection with the transfer; and
(2) Rule 904 Transfers. If the transfer is being effected in
accordance with Rule 904:
(A) the Owner is not a distributor of the Securities, an
affiliate of the Company or any such distributor or a person acting in
behalf of any of the foregoing;
(B) the offer of the Specified Securities was not made to a
person in the United States;
(C) either;
(i) at the time the buy order was originated, the Transferee
was outside the United States or the Owner and any person acting
on its behalf reasonably believed that the Transferee was outside
the United States, or
(ii) the transaction is being executed in, on or through the
facilities of the Eurobond market, as regulated by the
Association of International Bond Dealers, or another designated
offshore securities market and neither the Owner nor any person
acting on its behalf knows that the transaction has been
prearranged with a buyer in the United States;
(D) no directed selling efforts have been made in the United
States by or on behalf of the Owner or any affiliate thereof; and
(E) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities act.
2
<PAGE>
(3) Rule 144 Transfers. If the transfer is being effected pursuant to
Rule 144:
(A) the transfer is occurring after a holding period of at least
two years (computed in accordance with paragraph (d) of Rule 144) has
elapsed since the date the Specified Securities were acquired from the
Company or from an affiliate (as such term is defined in Rule 144) of
the Company, whichever is later, and is being effected in accordance
with the applicable amount, manner of sale and notice requirements of
paragraphs (e); (f) and (h) of Rule 144; or
(B) the transfer is occurring after a holding period of at least
three years has elapsed since the date the Specified Securities were
acquired from the Company or from an affiliate (as such term is
defined in Rule 144) of the Company, whichever is later, and the Owner
is not, and during the preceding three months has not been, an
affiliate of the Company.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchasers (as defined in
the related Trust Agreement).
Dated: ________________________________________
(Print the name of the Undersigned, as
such term is defined in the second
paragraph of this certificate.)
By:_____________________________________
Name:
Title:
(If the Undersigned is a corporation,
partnership or fiduciary, the title of
the person signing on behalf of the
Undersigned must be stated.)
3
<PAGE>
ANNEX E -- Form of Unrestricted
Securities Certificate
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Restricted Capital Securities Legends pursuant to
ss. 3.6(c) of the Indenture)
[____________________________]
as Security Registrar
(address]
Re: ________________________ of [BankAmerica Institutional Capital __]
(the "Trust") (the "Securities")
Reference is made to the Indenture, dated as of November 27, 1996 (the
"Indenture"), between BankAmerica Corporation and Bankers Trust Company, as
Trustee. Terms used herein and defined in the Indenture or in Rule 144 under the
U.S. Securities Act of 1933 (the "Securities Act") are used herein as so
defined.
This certificate relates to $_____________ aggregate principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ______________________
CERTIFICATE No(s). ________________
CURRENTLY IN BOOK-ENTRY FORM: Yes___ No____ (check one)
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depository or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.
The Owner has requested that the Specified Securities be exchanged for
Securities bearing no Restricted Securities Legend pursuant to Section 3.6(c) of
the Indenture. In connection with such exchange, the Owner hereby certifies that
the exchange is occurring after a period of at least three years has elapsed
since the date the Specified Securities were acquired from the Company or from
an affiliate (as such term is defined in Rule 144) of the Company,
<PAGE>
whichever is later, and the Owner is not, and during the preceding three months
has not been, an affiliate of the Company. The Owner also acknowledges that any
future transfers of the Specified Securities must comply with all applicable
securities laws of the states of the United States and other jurisdictions.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchasers (as defined in
the related Trust Agreement).
Dated: ________________________________________
(Print the name of the Undersigned, as
such term is defined in the second
paragraph of this certificate.)
By:_____________________________________
Name:
Title:
(If the Undersigned is a corporation,
partnership or fiduciary, the title of
the person signing on behalf of the
Undersigned must be stated.)
2
<PAGE>
- --------------------------------------------------------------------------------
BankAmerica Corporation
NationsBank (DE) Corporation
- --------------------------------------------------------------------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of September 15, 1998
Supplementing the Junior Subordinated Indenture, dated
as of November 27, 1996, between
BankAmerica Corporation and
Bankers Trust Company, as Trustee
- --------------------------------------------------------------------------------
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of September 15, 1998 (the "First
Supplemental Indenture"), among NationsBank (DE) Corporation, a Delaware
corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of
NationsBank Corporation, a North Carolina corporation ("NationsBank"),
BankAmerica Corporation, a Delaware corporation ("BankAmerica"), and Bankers
Trust Company, as Trustee (the "Trustee") under the Indenture referred to
herein;
WHEREAS, BankAmerica and the Trustee heretofore executed and delivered a
Junior Subordinated Indenture, dated as of November 27, 1996 (the "Indenture");
and
WHEREAS, pursuant to the Indenture BankAmerica issued and the Trustee
authenticated and delivered one or more series of BankAmerica's Notes (the
"Securities"); and
WHEREAS, NationsBank and BankAmerica have entered into the Agreement and
Plan of Reorganization, dated as of April 10, 1998, pursuant to which (i)
NationsBank will merge (the "Reincorporation Merger") with and into NationsBank
(DE), in accordance with the terms and conditions of the Plan of Reincorporation
Merger by and between NationsBank and NationsBank (DE), dated as of August 3,
1998, with NationsBank (DE) as the surviving corporation in the Reincorporation
Merger, and (ii) BankAmerica will thereafter merge (the "Merger," and together
with the Reincorporation Merger, the "Reorganization")with and into NationsBank
(DE), with NationsBank (DE) as the surviving corporation in the Merger; and
WHEREAS, the Reorganization is expected to be consummated on September
30, 1998; and
WHEREAS, Section 8.1 of the Indenture provides that in the case of the
Reorganization, NationsBank (DE) shall expressly assume by supplemental
indenture all the obligations under the Securities and the Indenture on the part
of BankAmerica to be performed or observed; and
WHEREAS, Section 9.1 of the Indenture provides that BankAmerica and the
Trustee may amend the Indenture and the Securities without notice to or consent
of any Holders of the Securities in order to comply with Article VIII of the
Indenture; and
WHEREAS, this First Supplemental Indenture has been duly authorized by
all necessary corporate action on the part of each of NationsBank (DE) and
BankAmerica.
NOW, THEREFORE, NationsBank (DE), BankAmerica and the Trustee agree as
follows for the equal and ratable benefit of the Holders of the Securities:
2
<PAGE>
ARTICLE I
ASSUMPTION BY SUCCESSOR CORPORATION
SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby
expressly assumes the due and punctual payment of the principal of (and premium,
if any) and interest (including any Additional Interest) on all the Securities
and the performance of every covenant of the Indenture on the part of
BankAmerica to be performed or observed.
SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this First
Supplemental Indenture and agrees to perform the same under the terms and
conditions set forth in the Indenture.
ARTICLE II
MISCELLANEOUS
SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur
of (i) the execution and delivery of this First Supplemental Indenture by
NationsBank (DE), BankAmerica and the Trustee and (ii) the consummation of the
Reorganization, the Indenture shall be supplemented in accordance herewith, and
this First Supplemental Indenture shall form a part of the Indenture for all
purposes, and every Holder of Securities heretofore or hereafter authenticated
and delivered under the Indenture shall be bound thereby.
SECTION 2.2. Indenture Remains in Full Force and Effect. Except as
supplemented hereby, all provisions in the Indenture shall remain in full force
and effect.
SECTION 2.3. Indenture and Supplemental Indenture Construed Together.
This First Supplemental Indenture is an indenture supplemental to and in
implementation of the Indenture, and the Indenture and this First Supplemental
Indenture shall henceforth be read and construed together.
SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture
as supplemented by this First Supplemental Indenture is in all respects
confirmed and preserved.
SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this
First Supplemental Indenture limits, qualifies or conflicts with any provision
of the Trust Indenture Act ("TIA") that is required under the TIA to be part of
and govern any provision of this First Supplemental Indenture, the provision of
the TIA shall control. If any provision of this First Supplemental Indenture
modifies or excludes any provision of the TIA that may be so modified or
excluded, the provision of the TIA shall be deemed to apply to the Indenture as
so modified or to be excluded by this First Supplemental Indenture, as the case
may be.
3
<PAGE>
SECTION 2.6. Severability. In case any provision in this First
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Indenture.
SECTION 2.8. Headings. The Article and Section headings of this First
Supplemental Indenture have been inserted for convenience of reference only, are
not to be considered part of this Supplemental Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 2.9. Benefits of First Supplemental Indenture, etc. Nothing in
this First Supplemental Indenture or the Securities, express or implied, shall
give to any Person, other than the parties hereto and thereto and their
successors hereunder and thereunder and the Holders of the Securities, any
benefit of any legal or equitable right, remedy or claim under the Indenture,
this First Supplemental Indenture or the Securities.
SECTION 2.10. Successors. All agreements of NationsBank (DE) in this
First Supplemental Indenture shall bind its successors. All agreements of the
Trustee in this First Supplemental Indenture shall bind its successors.
SECTION 2.11. Trustee Not Responsible for Recitals. The recitals
contained herein shall be taken as the statements of BankAmerica and NationsBank
(DE), and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to, and shall not be responsible for, the
validity or sufficiency of this First Supplemental Indenture.
SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In
entering into this First Supplemental Indenture, the Trustee shall be entitled
to the benefit of every provision of the Indenture relating to the conduct or
affecting the liability or affording protection to the Trustee, whether or not
elsewhere herein so provided.
SECTION 2.13. Governing Law. This First Supplemental Indenture shall be
governed by, and construed in accordance with, the laws of the jurisdiction
which govern the Indenture and its construction.
SECTION 2.14. Counterpart originals. The parties may sign any number of
copies of this First Supplemental Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement.
4
<PAGE>
IN WITNESS WHEREOF, the parties have caused this First Supplemental
Indenture to be duly executed as of the date first written above.
NationsBank (DE) Corporation
By: /s/ John E. Mack
------------------------------------
Name: John E. Mack
Title: Senior Vice President
Attest:
/s/ James W. Kiser
- --------------------------------
Secretary
BankAmerica Corporation
By: /s/ S.M. Maguire
------------------------------------
Name: S.M. Maguire
Title: Senior Vice President and
Assistant Treasurer
Attest:
/s/ Cheryl Sorokin
- --------------------------------
Secretary
Bankers Trust Company, as Trustee
By: /s/ Ednora G. Linares
------------------------------------
Name: Ednora G. Linares
Title: Assistant Vice President
Attest:
/s/ Marc Parilla
- --------------------------------
Marc Parilla
Assistant Treasurer
5
- --------------------------------------------------------------------------------
BANKAMERICA CORPORATION
to
BANKERS TRUST COMPANY
Trustee
----------
JUNIOR SUBORDINATED INDENTURE
Dated as or December 20, 1996
----------
- --------------------------------------------------------------------------------
<PAGE>
BANKAMERICA CORPORATION
Reconciliation and tie between the Trust Indenture Act of 1939 (including
cross-references to provisions of Sections 310 to and including 317 which,
pursuant to Section 318(c) of the Trust Indenture Act of 1939, as amended by the
Trust Reform Act of 1990, are a part of and govern the Indenture whether or not
physically contained therein) and the Junior Subordinated Indenture, dated as of
December 20, 1996.
Trust Indenture Indenture
Act Section Section
----------- -------
ss. 310 (a) (1), (2) and (5) ................................ 6.9
(a) (3) ............................................. Not Applicable
(a) (4) ............................................. Not Applicable
(b) ................................................. 6.8
..................................................... 6.10.
(c) ................................................. Not Applicable
ss. 311 (a) ................................................. 6.13(a)
(b) ................................................. 6.13(b)
(b) (2) ............................................. 7.3(a) (2)
..................................................... 7.3(a) (2)
ss. 312 (a) ................................................. 7.1
..................................................... 7.2(a)
(b) ................................................. 7.2(b)
(c) ................................................. 7.2(c)
ss. 313 (a) ................................................. 7.3(a)
(b) ................................................. 7.3(b)
(c) ................................................. 7.3(a), 7.3(b)
(d) ................................................. 7.3(c)
ss. 314 (a) (1), (2) and (3) ................................ 7.4
(a) (4) ............................................. 10.5
(b) ................................................. Not Applicable
(c) (1) ............................................. 1.2
(c) (2) ............................................. 1.2
(c) (3) ............................................. Not Applicable
(d) ................................................. Not Applicable
(e) ................................................. 1.2
(f) ................................................. Not Applicable
ss. 315 (a) ................................................. 6.1(a)
(b) ................................................. 6.2
..................................................... 7.3(a) (6)
(c) ................................................. 6.1(b)
<PAGE>
(d). ................................................ 6.1(c)
(d) (1).............................................. 6.1(a) (1)
(d) (2).............................................. 6.1(c) (2)
(d) (3) ............................................. 6.1(c) (3)
(e) ................................................. 5.14
ss. 316 (a) ................................................. 1.1
(a) (1) (A) ......................................... 5.12
(a) (1) (B) ......................................... 5.13
(a) (2) ............................................. Not Applicable
(b) ................................................. 5.8
(c) ................................................. 1.4(f)
ss. 317 (a) (1) ............................................. 5.3
(a) (2) ............................................. 5.4
(b) ................................................. 10.3
ss. 318 (a) ................................................. 1.7
----------
- ----------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Junior Subordinated Indenture.
ii
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1. Definitions ........................................... 1
SECTION 1.2. Compliance Certificate and Opinions ................... 9
SECTION 1.3. Forms of Documents Delivered to Trustee ............... 10
SECTION 1.4. Acts of Holders ....................................... 11
SECTION 1.5. Notices, Etc. to Trustee and Company .................. 13
SECTION 1.6. Notice to Holders; Waiver ............................. 13
SECTION 1.7. Conflict with Trust Indenture Act ..................... 13
SECTION 1.8. Effect of Headings and Table of Contents .............. 14
SECTION 1.9. Successors and Assigns ................................ 14
SECTION 1.10. Separability Clause ................................... 14
SECTION 1.11. Benefits of Indenture ................................. 14
SECTION 1.12. Governing Law ......................................... 14
SECTION 1.13. Non-Business Days ..................................... 14
ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally ....................................... 15
SECTION 2.2. Form of Face of Security .............................. 15
SECTION 2.3. Form of Reverse of Security ........................... 19
SECTION 2.4. Additional Provisions Required in Global Security ..... 22
SECTION 2.5. Form of Trustee's Certificate of Authentication ....... 23
ARTICLE III
THE SECURITIES
SECTION 3.1. Title and Terms ....................................... 23
SECTION 3.2. Denominations ......................................... 26
SECTION 3.3. Execution, Authentication, Delivery and Dating ........ 26
SECTION 3.4. Temporary Securities .................................. 27
SECTION 3.5. Registration, Transfer and Exchange ................... 28
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities ...... 29
SECTION 3.7. Payment of Interest; Interest Rights Preserved ........ 30
SECTION 3.8. Persons Deemed Owners ................................. 31
SECTION 3.9. Cancellation .......................................... 32
SECTION 3.10. Computation of Interest ............................... 32
SECTION 3.11. Deferrals of Interest Payment Dates ................... 32
SECTION 3.12. Right of Set-Off ...................................... 33
SECTION 3.13. Agreed Tax Treatment .................................. 33
SECTION 3.14. Shortening or Extension of Stated Maturity ............ 34
iii
<PAGE>
Page
SECTION 3.15. CUSIP Numbers ......................................... 34
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture ............... 34
SECTION 4.2. Application of Trust Money ............................ 35
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default ..................................... 36
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment .... 37
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement
by Trustee .......................................... 38
SECTION 5.4. Trustee May File Proofs of Claim ...................... 39
SECTION 5.5. Trustee May Enforce Claim Without Possession
of Securities ....................................... 39
SECTION 5.6. Application of Money Collected ........................ 40
SECTION 5.7. Limitation on Suits ................................... 40
SECTION 5.8. Unconditional Right of Holders to Receive
Principal Premium and Interest; Direct Action
by Holders of Preferred Securities .................. 41
SECTION 5.9. Restoration of Rights and Remedies .................... 41
SECTION 5.10. Rights and Remedies Cumulative ........................ 41
SECTION 5.11. Delay or Omission Not Waiver .......................... 42
SECTION 5.12. Control by Holders .................................... 42
SECTION 5.13. Waiver of Past Defaults ............................... 42
SECTION 5.14. Undertaking for Costs ................................. 43
SECTION 5.15. Waiver of Usury, Stay or Extension Laws ............... 43
ARTICLE VI
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities ................... 43
SECTION 6.2. Notice of Defaults .................................... 45
SECTION 6.3. Certain Rights of Trustee ............................. 45
SECTION 6.4. Not Responsible for Recitals or Issuance of
Securities .......................................... 46
SECTION 6.5. May Hold Securities ................................... 46
SECTION 6.6. Money Held in Trust ................................... 46
SECTION 6.7. Compensation and Reimbursement ........................ 47
SECTION 6.8. Disqualification; Conflicting Interests ............... 47
SECTION 6.9. Corporate Trustee Required; Eligibility ............... 47
SECTION 6.10. Resignation and Removal; Appointment of Successor ..... 48
SECTION 6.11. Acceptance of Appointment by Successor ................ 49
SECTION 6.12. Merger, Conversion, Consolidation or Succession
to Business ......................................... 50
SECTION 6.13. Preferential Collection of Claims Against Company ..... 51
iv
<PAGE>
Page
SECTION 6.14. Appointment of Authenticating Agent ................... 51
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1. Company to Furnish Trustee Names and Addresses
of Holders .......................................... 53
SECTION 7.2. Preservation of Information, Communications
to Holders .......................................... 53
SECTION 7.3. Reports by Trustee .................................... 53
SECTION 7.4. Reports by Company .................................... 54
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms .. 54
SECTION 8.2. Successor Corporation Substituted ..................... 55
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures without Consent of Holders .... 56
SECTION 9.2. Supplemental Indentures with Consent of Holders ....... 57
SECTION 9.3. Execution of Supplemental Indentures .................. 58
SECTION 9.4. Effect of Supplemental Indentures ..................... 58
SECTION 9.5. Conformity with Trust Indenture Act ................... 58
SECTION 9.6. Reference in Securities to Supplemental Indentures .... 58
ARTICLE X
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest ............ 59
SECTION 10.2. Maintenance of Office or Agency ....................... 59
SECTION 10.3. Money for Security Payments to be Held in Trust ..... 59
SECTION 10.4. Statement as to Compliance ........................... 61
SECTION 10.5. Waiver of Certain Covenants ........................... 61
SECTION 10.6. Additional Sums ....................................... 61
SECTION 10.7. Additional Covenants .................................. 62
SECTION 10.8. Original Issue Discount ............................... 62
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1. Applicability of This Article ......................... 63
SECTION 11.2. Election to Redeem; Notice to Trustee ................. 63
SECTION 11.3. Selection of Securities to be Redeemed ................ 63
v
<PAGE>
Page
SECTION 11.4. Notice of Redemption .................................. 64
SECTION 11.5. Deposit of Redemption Price ........................... 65
SECTION 11.6. Payment of Securities Called for Redemption ........... 65
SECTION 11.7. Right of Redemption of Securities Initially
Issued to a BankAmerica Trust ....................... 66
ARTICLE XII
SINKING FUNDS
SECTION 12.1. Applicability of Article .............................. 66
SECTION 12.2. Satisfaction of Sinking Fund Payments with Securities.. 66
SECTION 12.3. Redemption of Securities for Sinking Fund ............. 67
ARTICLE XIII
SUBORDINATION OF SECURITIES
SECTION 13.1. Securities Subordinate to Senior Indebtedness ......... 68
SECTION 13.2. No Payment When Senior Indebtedness in Default;
Payment Over of Proceeds Upon Dissolution, Etc ...... 68
SECTION 13.3. Payment Permitted If No Default ....................... 70
SECTION 13.4. Subrogation to Rights of Holders of Senior
Indebtedness ........................................ 70
SECTION 13.5. Provisions Solely to Define Relative Rights ........... 71
SECTION 13.6. Trustee to Effectuate Subordination ................... 71
SECTION 13.7. No Waiver of Subordination Provisions ................. 71
SECTION 13.8. Notice to Trustee ..................................... 72
SECTION 13.9. Reliance on Judicial Order or Certificate of
Liquidating Agent ................................... 72
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior
Indebtedness ........................................ 73
SECTION 13.11. Rights of Trustee as Holder of Senior
Indebtedness; Preservation of Trustee's Rights ...... 73
SECTION 13.12. Article Applicable to Paying Agents ................... 73
ANNEX A - Form of Trust Agreement
ANNEX B - Form of Amended and Restated Trust Agreement
ANNEX C - Form of Guarantee Agreement
vi
<PAGE>
JUNIOR SUBORDINATED INDENTURE, dated as of December 20, 1996, 1996, between
BANKAMERICA CORPORATION, a Delaware corporation (hereinafter called the
"Company") having its principal office at 555 California Street, San Francisco,
California 94104, and Bankers Trust Company, a New York banking corporation, as
Trustee (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured junior
subordinated debt securities in series (hereinafter called the "Securities") of
substantially the tenor hereinafter provided, including, without limitation,
Securities issued to evidence loans made to the Company of the proceeds from the
issuance from time to time by one or more business trusts (each a "BankAmerica
Trust," and, collectively, the "BankAmerica Trusts") of preferred trust
interests in such Trusts (the "Preferred Securities") and common interests in
such Trusts (the "Common Securities" and, collectively with the Preferred
Securities, the "Trust Securities"), and to provide the terms and conditions
upon which the Securities are to be authenticated, issued and delivered.
All things necessary to make the Securities, when executed by the Company
and authenticated and delivered hereunder and duly issued by the Company, the
valid obligations of the Company, and to make this Indenture a valid agreement
of the Company, in accordance with their and its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the
premises and the purchase of the Securities by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Securities or of any series thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) The terms defined in this Article have the meanings assigned to them in
this Article, and include the plural as well as the singular;
(2) All other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(3) All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and the term "generally accepted
<PAGE>
accounting principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles which are generally accepted at
the date or time of such computation; provided, that when two or more principles
are so generally accepted, it shall mean that set of principles consistent with
those in use by the Company: and
(4) The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
"Act" when used with respect to any Holder has the meaning specified in
Section 1.4.
"Additional Interest" means the interest, if any, that shall accrue on any
interest on the Securities of any series the payment of which has not been made
on the applicable Interest Payment Date and which shall accrue at the rate per
annum specified or determined as specified in such Security.
"Additional Sums" has the meaning specified in Section 10.6.
"Additional Taxes" means the sum of any additional taxes, duties and other
governmental charges to which a BankAmerica Trust has become subject from time
to time as a result of a Tax Event.
"Administrative Trustee" means, in respect of any BankAmerica Trust, each
Person identified as an "Administrative Trustee" in the related Trust Agreement,
solely in such Person's capacity as Administrative Trustee of such BankAmerica
Trust under such Trust Agreement and not in such Person's individual capacity,
or any successor administrative trustee appointed as therein provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; provided, however, no BankAmerica Trust to
which Securities have been issued shall be deemed to be an Affiliate of the
Company. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Allocable Amounts," when used with respect to any Senior Subordinated
Debt, means the amount necessary to pay all principal (and premium, if any) and
interest, if any, on such Senior Subordinated Debt in full less, if applicable,
any portion of such amount which would have been paid to, and retained by, the
holders of such Senior Subordinated Debt (whether as a result of the receipt of
payments by the holders of such Senior Subordinated Debt from the Company or any
other obligor thereon or from any holders of, or trustee in respect of, other
indebtedness that is subordinate and junior in right of payment to such Senior
Subordinated Debt pursuant to any provision of such indebtedness for the payment
over of amounts received on account of such indebtedness to the holders of such
Senior Subordinated Debt) but for the fact that such Senior
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Subordinated Debt is subordinate or junior in right of payment to trade accounts
payable or accrued liabilities arising in the ordinary course of business.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 6.14 to act on behalf of the Trustee to authenticate Securities of
one or more series.
"BankAmerica Guarantee" means the guarantee by the Company of distributions
on the Preferred Securities (which includes any similar preferred securities) of
a BankAmerica Trust (which includes any similar trust) to the extent provided in
the Guarantee Agreement (which includes any similar guarantee agreement).
"BankAmerica Trust" has the meaning specified in the first recital of this
Indenture.
"Board of Directors" means either the board of directors of the Company or
any executive committee or other committee of that board duly authorized to act
hereunder.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors, or officers of the Company to which authority to act on behalf of
the Board of Directors has been delegated, and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Business Day" means any day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed or (iii) a day on which the
Corporate Trust Office of the Trustee, or, with respect to the Securities of a
series initially issued to a BankAmerica Trust, the principal office of the
Property Trustee under the related Trust Agreement, is closed for business.
"Capital Treatment Event" means, with respect to an issue of Preferred
Securities under the related Trust Agreement, the reasonable determination by
the Company (as evidenced by an Officers' Certificate delivered to the Trustee)
that, as a result of the occurrence of any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision thereof or therein, or as a
result of any official or administrative pronouncement or action or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or such pronouncement, action or decision is announced on or
after the Original Issue Date of such Preferred Securities, there is more than
an insubstantial risk that the Company will not be entitled to treat an amount
equal to the Liquidation Amount of such Preferred Securities as "Tier I Capital"
(or the then equivalent thereof) for purposes of the capital adequacy guidelines
of the Federal Reserve, as then in effect and applicable to the Company.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties on such date.
"Common Securities" has the meaning specified in the first recital of this
Indenture.
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"Common Stock" means the common stock, par value $ 1.5625 per share, of the
Company.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.
"Company Request" and "Company Order" mean, respectively, the written
request or order signed in the name of the Company by the Chairman of the Board
of Directors, the Chairman of the Executive Committee of the Board of Directors,
a Vice Chairman of the Board of Directors, the Chief Executive Officer, the
President, the Chief Operating Officer, a Vice Chairman or a Vice President, and
by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of the Company, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee at which
at any particular time its corporate trust business shall be administered, which
office as of the date of this Indenture is located at Four Albany Street, New
York, New York 10006, Attention: Corporate Trust and Agency Group--Corporate
Market Services.
"Corporation" includes a corporation, association, company, joint-stock
company or business trust.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Depository" means, with respect to the Securities of any series issuable
or issued in whole or in part in the form of one or more Global Securities, the
Person designated as Depository by the Company pursuant to Section 3.1 with
respect to such series (or any successor thereto).
"Discount Security" means any security which provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2.
"Distributions," with respect to the Trust Securities issued by a
BankAmerica Trust, means amounts payable in respect of such Trust Securities as
provided in the related Trust Agreement and referred to therein as
"Distributions."
"Dollar" means the currency of the United States of America that, as at the
time of payment, is legal tender for the payment of public and private debts.
"Event of Default" unless otherwise specified in the supplemental indenture
creating a series of Securities has the meaning specified in Article V.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Extension Period' has the meaning specified in Section 3.11.
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"Federal Reserve" means the Board of Governors of the Federal Reserve
System.
"Global Security" means a Security in the form prescribed in Section 2.4
evidencing all or part of a series of Securities, issued to the Depository or
its nominee for such series, and registered in the name of such Depository or
its nominee.
"Guarantee Agreement" means the Guarantee Agreement substantially in the
form attached hereto as Annex C, or substantially in such form as may be
specified as contemplated by Section 3.1 with respect to the Securities of any
series, in each case as amended from time to time.
"Holder" means a Person in whose name a Security is registered in the
Securities Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of each particular series of Securities established as
contemplated by Section 3.1.
"Interest Payment Date" means as to each series of Securities the Stated
Maturity of an installment of interest on such Securities.
"Junior Subordinated Debt" means any obligation of the Company to its
creditors, whether now outstanding or subsequently incurred, where the
instrument creating or evidencing the obligation or pursuant to which the
obligation is outstanding provides that it is subordinated and junior in right
of payment to Senior Indebtedness pursuant to subordination provisions
substantially similar to those set forth in this Indenture. Junior Subordinated
Debt includes the Securities and $463,918,000 aggregate principal amount of the
Company's Junior Subordinated Deferrable Interest Debentures, Series A and
$309,279,000 aggregate principal amount of the Company's Junior Subordinated
Deferrable Interest Debentures, Series B.
"Maturity" when used with respect to any Security means the date on which
the principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc.
"Notice of Default" means a written notice of the kind specified in Section
5.1(3).
"Officers' Certificate" means a certificate signed by the Chairman of the
Board of Directors, a Vice Chairman of the Board of Directors, the President or
a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or
an Assistant Secretary of the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, and who shall be acceptable to the Trustee.
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"Original Issue Date" means the date of issuance specified as such in each
Security.
"Outstanding" means, when used in reference to any Securities, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities for whose payment money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent in trust for the
Holders of such Securities; and
(iii) Securities in substitution for or in lieu of which other Securities
have been authenticated and delivered or which have been paid pursuant to
Section 3.6, unless proof satisfactory to the Trustee is presented that any such
Securities are held by Holders in whose hands such Securities are valid, binding
and legal obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which a Responsible Officer of the Trustee
knows to be so owned shall be so disregarded. Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or such other
obligor. Upon the written request of the Trustee, the Company shall furnish to
the Trustee promptly an Officers' Certificate listing and identifying all
Securities, if any, known by the Company to be owned or held by or for the
account of the Company, or any other obligor on the Securities or any Affiliate
of the Company or such obligor, and, subject to the provisions of Section 6.1,
the Trustee shall be entitled to accept such Officers' Certificate as conclusive
evidence of the facts therein set forth and of the fact that all Securities not
listed therein are Outstanding for the purpose of any such determination.
"Paying Agent" means the Trustee or any Person authorized by the Company to
pay the principal of (and premium, if any) or interest on any Securities on
behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment" means, with respect to the Securities of any series, the
place or places where the principal of (and premium, if any) and interest on the
Securities of such series are payable pursuant to Sections 3.1 and 3.11.
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"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any security
authenticated and delivered under Section 3.6 in lieu of a lost, destroyed or
stolen Security shall be deemed to evidence the same debt as the lost, destroyed
or stolen Security.
"Preferred Securities" has the meaning specified in the first recital of
this Indenture.
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means, in respect of any BankAmerica Trust, the
commercial bank or trust company identified as the "Property Trustee" in the
related Trust Agreement, solely in its capacity as Property Trustee of such
BankAmerica Trust under such Trust Agreement and not in its individual capacity,
or its successor in interest in such capacity, or any successor property trustee
appointed as therein provided.
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
with respect to the Securities of a series means, unless otherwise provided
pursuant to Section 3.1 with respect to Securities of a series, the date which
is fifteen days next preceding such Interest Payment Date (whether or not a
Business Day).
"Responsible Officer" means when used with respect to the Trustee, any
officer assigned to the Corporate Trust Office, including any managing director,
vice president, assistant vice president, assistant treasurer, assistant
secretary or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers, and also,
with respect to a particular matter, any other officer, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Rights Plan" means a plan of the Company providing for the issuance by the
Company to all holders of its Common Stock of rights entitling the holders
thereof to subscribe for or purchase shares of Common Stock or any class or
series of preferred stock, which rights (i) are deemed to be transferred with
such shares of Common Stock, (ii) are not exercisable and (iii) are also issued
in respect of future issuances of Common Stock, in each case until the
occurrence of a specified event or events.
"S&P" means Standard & Poor's Ratings Services.
"Securities" or "Security" means any debt securities or debt security, as
the case may be, authenticated and delivered under this Indenture.
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"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.5.
"Senior Debt" means any obligation of the Company to its creditors, whether
now outstanding or subsequently incurred, other than any obligation as to which,
in the instrument creating or evidencing the obligation or pursuant to which the
obligation is outstanding, it is provided that such obligation is not Senior
Debt. Senior Debt does not include Senior Subordinated Debt or Junior
Subordinated Debt.
"Senior Indebtedness" means (i) Senior Debt (but excluding trade accounts
payable and accrued liabilities arising in the ordinary course of business) and
(ii) the Allocable Amounts of Senior Subordinated Debt.
"Senior Subordinated Debt" means any obligation of the Company to its
creditors, whether now outstanding or subsequently incurred, where the
instrument creating or evidencing the obligation or pursuant to which the
obligation is outstanding, provides that it is subordinate and junior in right
of payment to Senior Debt pursuant to subordinated provisions substantially
similar to those applicable to the Company's outstanding Senior Subordinated
Debt. Senior Subordinated Debt includes the indebtedness of the Company issued
under the Subordinated Indenture between the Company and Chemical Trust Company
of California, as successor trustee, dated as of June 15, 1984, as amended by
the First Supplemental Indenture, dated as of May 15, 1987, and as further
amended by the Second Supplemental Indenture, dated as of September 30, 1987;
the Subordinated Indenture between the Company and Bankers Trust Company, as
trustee, dated as of July 15, 1988; the Subordinated Indenture between the
Company and Chemical Trust Company of California, as successor trustee, dated as
of September 1, 1990; the Subordinated Indenture between the Company and
Chemical Trust Company of California, as successor trustee, dated as of November
1, 1991, as amended by the First Supplemental Indenture, dated as of September
8, 1992; the Subordinated Indenture between the Company's predecessor and The
Chase Manhattan Bank, as successor trustee, dated as of March 15, 1987, as
amended by the First Supplemental Indenture, dated as of April 22, 1992; the
Subordinated Indenture between the Company's predecessor and The First National
Bank of Chicago, as trustee, dated as of December 10, 1990, as amended by the
First Supplemental Indenture, dated as of April 22, 1992.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity" when used with respect to any Security or any installment
of principal thereof or interest thereon means the date specified pursuant to
the terms of such Security as the date on which the principal of such Security
or such installment of interest is due and payable, in the case of such
principal, as such date may be shortened or extended as provided pursuant to the
terms of such Security and this Indenture.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For purposes of this definition, "voting stock"
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means stock which ordinarily has voting power for the election of directors,
whether at all times or only so long as no senior class of stock has such voting
power by reason of any contingency.
"Tax Event" means the receipt by a BankAmerica Trust of an Opinion of
Counsel (as defined in the relevant Trust Agreement) experienced in such matters
to the effect that as a result of any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, or as a result of any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or which pronouncement or decision is announced on or after
the date of issuance of the Preferred Securities of such BankAmerica Trust,
there is more than an insubstantial risk that (i) such BankAmerica Trust is, or
will be within 90 days of the date of such Opinion of Counsel, subject to United
States Federal income tax with respect to income received or accrued on the
corresponding series of Securities issued by the Company to such BankAmerica
Trust, (ii) interest payable by the Company on such corresponding series of
Securities is not, or within 90 days of the date of such Opinion of Counsel,
will not be, deductible by the Company, in whole or in part, for United States
Federal income tax purposes or (iii) such BankAmerica Trust is, or will be
within 90 days of the date of such Opinion of Counsel, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
"Trust Agreement" means the Trust Agreement substantially in the form
attached hereto as Annex A, as amended by the form of Amended and Restated
Trust Agreement substantially in the form attached hereto as Annex B, or
substantially in such form as may be specified as contemplated by Section 3.1
with respect to the Securities of any series, in each case as amended from time
to time.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder and, if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.
ss.ss.77aaa-77bbb), as amended and as in effect on the date as of this
Indenture, except as provided in Section 9.5.
"Trust Securities" has the meaning specified in the first recital of this
Indenture.
"Vice President" when used with respect to the Company, means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
SECTION 1.2. Compliance Certificate and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent
(including covenants, compliance with which constitutes a condition precedent),
if any, provided for in this Indenture relating to the proposed action have
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been complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent (including covenants compliance with which
constitute a condition precedent), if any, have been complied with, except that
in the case of any such application or request as to which the furnishing of
such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than the certificates provided
pursuant to Section 10.4) shall include:
(1) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.
SECTION 1.3. Forms of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions, or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
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SECTION 1.4. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given to or taken by Holders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments is or are delivered to the
Trustee, and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.1) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a Person acting in other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority.
(c) The fact and date of the execution by any Person of any such instrument
or writing, or the authority of the Person executing the same, may also be
proved in any other manner which the Trustee deems sufficient and in accordance
with such reasonable rules as the Trustee may determine.
(d) The ownership of Securities shall be proved by the Securities Register.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Security shall bind every future Holder of
the same Security and the Holder of every Security issued upon the transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
or suffered to be done by the Trustee or the Company in reliance thereon,
whether or not notation of such action is made upon such Security.
(f) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders of Securities of such series, provided that the
Company may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving or making of any notice,
declaration, request or direction referred to in the next paragraph. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date, provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
(as hereinafter in this Section 1.4(f) provided) by Holders of the requisite
principal amount of Outstanding Securities of such series on such record date.
Nothing
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in this paragraph shall be construed to prevent the Company from setting a new
record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be cancelled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding
Securities of the relevant series on the date such action is taken. Promptly
after any record date is set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Trustee in writing and to
each Holder of Securities of the relevant series in the manner set forth in
Section 1.6.
The Trustee may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities of any series entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 5.2, (iii) any request to institute
proceedings referred to in Section 5.7(2) or (iv) any direction referred to in
Section 5.12, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date, provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 1.6.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day, provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities of the relevant series in the manner set forth in
Section 10.6, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
(g) Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard to
all or any part of the principal amount of such Security or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
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SECTION 1.5. Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder, any holder of Preferred Securities or the
Company shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its Corporate Trust
office, or
(2) the Company by the Trustee, any Holder or any holder of Preferred
Securities shall be sufficient for every purpose (except as otherwise provided
in Section 5.1) hereunder if in writing and mailed, first class, postage
prepaid, to the Company addressed to it at the address of its principal office
specified in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by the Company.
SECTION 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. In case, by reason of
the suspension of or irregularities in regular mail service or for any other
reason, it shall be impossible or impracticable to mail notice of any event to
Holders when said notice is required to be given pursuant to any provision of
this Indenture or of the relevant Securities, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
SECTION 1.7. Conflict with Trust Indenture Act.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by any of Sections 310 to 317, inclusive, of the Trust Indenture
Act through operation of Section 318(c) thereof, such imposed duties shall
control.
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SECTION 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 1.10. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors and
assigns, the holders of Senior Indebtedness, the Holders of the Securities and,
to the extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.1 and
9.2, the holders of Preferred Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 1.12. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of California, except that the rights,
duties and obligations of the Trustee shall be governed by and construed in
accordance with the laws of the State of New York.
SECTION 1.13. Non-Business Days.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or the Securities) payment of interest or
principal (and premium, if any) need not be made on such date, but may be made
on the next succeeding Business Day (and no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date or Stated Maturity,
as the case may be, until such next succeeding Business Day except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day (in each case with the same force and
effect as if made on the Interest Payment Date or Redemption Date or at the
Stated Maturity).
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ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally.
The Securities of each series and the Trustee's certificate of
authentication shall be in substantially the forms set forth in this Article, or
in such other form or forms as shall be established by or pursuant to a Board
Resolution or in one or more indentures supplemental hereto, in each case with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required to comply with applicable tax laws or the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 3.3 with respect to the authentication and
delivery of such Securities.
The Trustee's certificate of authentication shall be substantially in the
form set forth in this Article.
The definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these methods, if required by any securities
exchange on which the Securities may be listed, on a steel engraved border or
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution of such securities.
SECTION 2.2. Form of Face of Security.
THE SECURITIES EVIDENCED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK OR ANY NONBANK SUBSIDIARY OF THE COMPANY AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR
ANY OTHER GOVERNMENTAL AGENCY.
BANKAMERICA CORPORATION
(Title of Security)
No. $
BANKAMERICA CORPORATION, a corporation organized and existing under the
laws of Delaware (hereinafter called the "Company", which term includes any
successor corporation
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under the Indenture hereinafter referred to), for value received, hereby
promises to pay to ____________________, or registered assigns, the principal
sum of ________________ Dollars on ___________________, ______ [; provided that
the Company may(i) shorten the Stated Maturity of the principal of this Security
to a date not earlier than ___________, and (ii) extend the Stated Maturity of
the principal of this Security at any time on one or more occasions, subject to
certain conditions specified in Section 3.14 of the Indenture, but in no event
to a date later than_____________]. The Company further promises to pay interest
on said principal sum from ____________, or from the most recent interest
payment date (each such date, an "Interest Payment Date") on which interest has
been paid or duly provided for, [monthly] [quarterly] [semi-annually] [if
applicable, insert--(subject to deferral as set forth herein)] in arrears on
[insert applicable Interest Payment Dates] of each year, commencing __________,
at the rate of ___% per annum, until the principal hereof shall have become due
and payable, [if applicable, insert--plus Additional Interest, if any,] until
the principal hereof is paid or duly provided for or made available for payment
[if applicable, insert--and on any overdue principal and (without duplication
and to the extent that payment of such interest is enforceable under applicable
law) on any overdue installment of interest at the rate of ___% per annum,
compounded [monthly] [quarterly] [semi-annually]]. The amount of interest
payable for any period less than a full interest period shall be computed on the
basis of twelve 30-day months and a 360-day year and the actual number of days
elapsed in a partial month in a period. The amount of interest payable for any
full interest period shall be computed by dividing the rate per annum by
[twelve][four] [two]. [If applicable, insert-The interest payable on [first
Interest Payment Date] shall be [$___.] In the event that any date on which
interest is payable on this Security is not a Business Day, then a payment of
the interest payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on the date the
payment was originally payable. A "Business Day" shall mean any day other than
(i) a Saturday or Sunday, (ii) a day on which banking institutions in The City
of New York are authorized or required by law or executive order to remain
closed or (iii) a day on which the Corporate Trust Office of the Trustee [if
applicable, insert--, or the principal office of the Property Trustee under the
Trust Agreement hereinafter referred to for [BankAmerica Capital ,]] is closed
for business. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities is registered at the close of business on the Regular Record Date for
such interest installment, which shall be the [insert definition of Regular
Record Dates], except that interest payable on the Stated Maturity of the
principal of this Security shall be paid to the Person to whom principal is
paid. Any such interest installment not so punctually paid or duly provided for
shall forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture.
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[If applicable, insert--So long as no Event of Default has occurred and is
continuing, the Company shall have the right at any time during the term of this
Security to defer payment of interest on this Security, at any time or from time
to time, for up to consecutive [monthly] [quarterly] [semi-annual] interest
payment periods with respect to each deferral period (each an "Extension
Period"), during which Extension Periods the Company shall have the right to
make partial payments of interest on any Interest Payment Date, and at the end
of which the Company shall pay all interest then accrued and unpaid (together
with Additional Interest thereon to the extent permitted by applicable law);
provided, however, that no Extension Period shall extend beyond the Stated
Maturity of the principal of this Security; provided, further, that during any
such Extension Period, the Company shall not, and shall not permit any
Subsidiary of the Company to, (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of the Company's capital stock or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu in all respects with or junior in
interest to this Security or make any guarantee payments with respect to any
guarantee by the Company of the debt securities of any Subsidiaries of the
Company if such guarantee ranks pari passu with or junior in interest to this
Security (other than (a) dividends or distributions in Common Stock, (b) any
declaration of a dividend in connection with the implementation of a Rights
Plan, the issuance of any Common Stock or any class or series of preferred stock
of the Company under any Rights Plan in the future or the redemption or
repurchase of any rights distributed pursuant to a Rights Plan, (c) payments
under any BankAmerica Guarantee, and (d) purchases of Common Stock related to
the issuance of Common Stock or rights under any of the Company's (or its
subsidiaries') benefit plans for their directors, officers or employees). Prior
to the termination of any such Extension Period, the Company may further extend
the interest payment period, provided that no Extension Period shall exceed
_____ consecutive [months] [quarters] [semiannual periods] or extend beyond the
Stated Maturity of the principal of this Security. Upon the termination of any
such Extension Period and upon the payment of all amounts then due on any
Interest Payment Date, the Company may elect to begin a new Extension Period,
subject to the above requirements. No interest shall be due and payable during
an Extension Period except at the end thereof. The Company shall give the Holder
of this Security and the Trustee notice of its election to begin any Extension
Period at least one Business Day prior to the next succeeding Interest Payment
Date on which interest on this Security would be payable but for such deferral
[if applicable, -insert: or, with respect to the Securities issued to a
BankAmerica Trust, so long as such Securities are held by such BankAmerica
Trust, prior to the earlier of (i) the next succeeding date on which
Distributions on the Preferred Securities would be payable but for such deferral
or (ii) the date the Administrative Trustees are required to give notice to any
securities exchange or other applicable self-regulatory organization or to
holders of such Preferred Securities of the record date or the date such
Distributions are payable, but in any event not less than one Business Day prior
to such record date]. For purposes hereof, neither the Company's Senior Debt nor
its Senior Subordinated Debt shall be deemed to be pari passu with this
Security.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the United States, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts [if applicable, insert--; provided, however, that at the option of
the Company payment of interest may be made (i) by check mailed to the address
of the
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Person entitled thereto as such address shall appear in the Securities Register
or (ii) by wire transfer in immediately available funds at such place and to
such account as may be designated by the Person entitled thereto as specified in
the Securities Register].
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture. subordinate and junior in right of payments to the prior payment
in full of all Senior Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions. (b)
authorizes and directs the Trustee on his behalf to take such actions as may be
necessary or appropriate to effectuate the subordination so provided and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes. Each
Holder hereof, by his acceptance hereof, waives all notice of the acceptance of
the subordination provisions contained herein and in the Indenture by each
holder of Senior Indebtedness, whether now outstanding or hereafter incurred,
and waives reliance by each such holder upon said provisions.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
BANKAMERICA CORPORATION
By: ___________________________
[President, Vice President, Treasurer or
Assistant Treasurer]
Attest:
___________________________
[Secretary or Assistant Secretary]
SECTION 2.3. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under a Junior Subordinated Indenture, dated as of ____________, 1996
(herein called the "Indenture"), between the Company and Bankers Trust Company,
as Trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Trustee, the
Company and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is one
of the series designated on the face hereof [, limited in aggregate principal
amount to $__________].
All terms used in this Security that are defined in the Indenture [if
applicable, insert--or in the Amended and Restated Trust Agreement, dated as of
__________________, as amended (the "Trust Agreement"), for [BankAmerica Capital
____________,] among BANKAMERICA CORPORATION, as Depositor, and the Trustees
named therein, shall have the meanings assigned to them in the Indenture [if
applicable, insert--or the Trust Agreement, as the case may be].
[If applicable, insert--The Company may at any time, at its option, on or
after _________, _____, and subject to the terms and conditions of Article XI of
the Indenture, redeem this Security in whole at any time or in part from time to
time, without premium or penalty, at a redemption price equal to 100% of the
principal amount thereof plus accrued and unpaid interest [if applicable,
insert--including Additional Interest, if any] to the Redemption Date.]
[If applicable, insert-The Company may, at its option, on or after
_________, ____, and subject to the terms and conditions of Article XI of the
Indenture, redeem this Security in whole at any time or in part from time to
time, at the following Redemption Prices (expressed as percentages of the
principal amount): If redeemed during the I 2-month period beginning_________,
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Redemption
Year Price
---- -----
and at 100% on or after _________, ____, together in the case of any such
redemption with accrued interest to but excluding the date fixed for
redemption.]
[If applicable, insert--Upon the occurrence and during the continuation of
a Tax Event or Capital Treatment Event in respect of a BankAmerica Trust, the
Company may, at its option, [at any time][before _________, ____ and] within 90
days of the occurrence of such Tax Event or Capital Treatment Event redeem this
Security, in whole but not in part, subject to the provisions of Section 11.7
and the other provisions of Article XI of the Indenture, at a redemption price
equal to [describe formulation].]
In the event of redemption of this Security in part only, a new Security or
Securities of this series for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Company with certain
conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and obligations
of the Company and of the Holders of the Securities, with the consent of the
Holders of not less than a majority in principal amount of the Outstanding
Securities of each series to be affected by such supplemental indenture. The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
[If the Security is not a Discount Security,--As provided in and subject to
the provisions of the Indenture, if an Event of Default with respect to the
Securities of this series at the time Outstanding occurs and is continuing, then
and in every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities of this series may declare the
principal amount of all the Securities of this series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), provided that, in the
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case of the Securities of this series issued to a BankAmerica Trust, if upon an
Event of Default, the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Securities of this series fails to declare the
principal of all the Securities of this series to be immediately due and
payable, the holders of at least 25% in aggregate Liquidation Amount of the
Preferred Securities of such BankAmerica Trust then outstanding shall have such
right by a notice in writing to the Company and the Trustee; and upon any such
declaration the principal amount of and the accrued interest (including any
Additional Interest) on all the Securities of this series shall become
immediately due and payable, provided that the payment of principal and interest
(including any Additional Interest) on such Securities shall remain subordinated
to the extent provided in Article XIII of the Indenture.]
[If the Security is a Discount Security,--As provided in and subject to the
provisions of the Indenture, if an Event of Default with respect to the
Securities of this series at the time Outstanding occurs and is continuing, then
and in every such case the Trustee or the Holders of not less than such portion
of the principal amount as may be specified in the terms of this series may
declare an amount of principal of the Securities of this series to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), provided that, in the case of the Securities of this
series issued to a BankAmerica Trust, if upon an Event of Default, the Trustee
or the Holders of not less than 25% in principal amount of the Outstanding
Securities of this series fails to declare the principal of all the Securities
of this series to be immediately due and payable, the holders of at least 25% in
aggregate Liquidation Amount of the Preferred Securities of such BankAmerica
Trust then outstanding shall have such right by a notice in writing to the
Company and the Trustee. Such amount shall be calculated by the Company and
shall be equal to--insert formula for determining the amount. Upon any such
declaration, such amount of the principal of and the accrued interest (including
any Additional Interest) on all the Securities of this series shall become
immediately due and payable, provided that the payment of principal and interest
(including any Additional Interest) on such Securities shall remain subordinated
to the extent provided in Article XIII of the Indenture. Upon payment (i) of the
amount of principal so declared due and payable and (ii) of interest on any
overdue principal and overdue interest (in each case to the extent that the
payment of such interest shall be legally enforceable), all of the Company's
obligations in respect of the payment of the principal of and interest, if any,
on this Security shall terminate.]
No reference herein to the indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Securities Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company maintained under Section 10.2 of the Indenture duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees. No service charge shall be made for any such registration of
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transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee shall treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Securities of this series are issuable only in registered form without
coupons in minimum denominations of $[25] and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of such series of a different authorized denomination, as
requested by the Holder surrendering the same.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agree that for United States Federal, state and local
tax purposes it is intended that this Security constitute indebtedness.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, EXCEPT THAT THE RIGHTS,
DUTIES AND OBLIGATIONS OF THE TRUSTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 2.4. Additional Provisions Required in Global Security.
Any Global Security issued hereunder shall, in addition to the provisions
contained in Sections 2.2 and 2.3, bear a legend in substantially the following
form:
"THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY."
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SECTION 2.5. Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within mentioned
Indenture.
Dated:
Bankers Trust Company
as Trustee
By: ___________________________
Authorized Signatory
ARTICLE III
THE SECURITIES
SECTION 3.1. Title and Terms.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of Securities of a series:
(a)the title of the securities of such series, which shall distinguish the
Securities of the series from all other Securities;
(b)the limit, if any, upon the aggregate principal amount of the Securities
of such series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities of the series pursuant
to Section 3.4, 3.5, 3.6, 9.6 or 11.6 and except for any Securities which,
pursuant to Section 3.3, are deemed never to have been authenticated and
delivered hereunder); provided, however, that the authorized aggregate principal
amount of such series may be increased above such amount by a Board Resolution
to such effect;
(c)the Stated Maturity or Maturities on which the principal of the
Securities of such series is payable or the method of determination thereof;
(d)the rate or rates, if any, at which the Securities of such series shall
bear interest, if any, the rate or rates and extent to which Additional
Interest, if any, shall be payable in respect of any Securities of such series,
the Interest Payment Dates on which such interest shall be payable, the right,
pursuant to Section 3.11 or as otherwise set forth therein, of the Company to
defer or extend an Interest Payment Date, and the Regular Record Date for the
interest payable on any Interest Payment Date or the method by which any of the
foregoing shall be determined;
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(e)the place or places where the principal of (and premium, if any) and
interest on the Securities of such series shall be payable, the place or places
where the Securities of such series may be presented for registration of
transfer or exchange, and the place or places where notices and demands to or
upon the Company in respect of the Securities of such series may be made;
(f) the period or periods within or the date or dates on which, if any, the
price or prices at which and the terms and conditions upon which the Securities
of such series may be redeemed, in whole or in part, at the option of the
Company;
(g) the obligation or the right, if any, of the Company to redeem, repay or
purchase the Securities of such series pursuant to any sinking fund,
amortization or analogous provisions, or at the option of a Holder thereof, and
the period or periods within which, the price or prices at which, the currency
or currencies (including currency unit or units) in which and the other terms
and conditions upon which Securities of the series shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation;
(h) the denominations in which any Securities of such series shall be
issuable, if other than denominations of $25 and any integral multiple thereof;
(i) if other than Dollars, the currency or currencies (including currency
unit or units) in which the principal of (and premium, if any) and interest, if
any, on the Securities of the series shall be payable, or in which the
Securities of the series shall be denominated and the manner of determining the
equivalent thereof in Dollars for purposes of the definition of Outstanding;
j) the additions, modifications or deletions, if any, in the Events of
Default or covenants of the Company set forth herein with respect to the
Securities of such series;
(k) if other than the principal amount thereof, the portion of the
principal amount of Securities of such series that shall be payable upon
declaration of acceleration of the Maturity thereof;
(1) the additions or changes, if any, to this Indenture with respect to the
Securities of such series as shall be necessary to permit or facilitate the
issuance of the Securities of such series in bearer form, registrable or not
registrable as to principal, and with or without interest coupons;
(m) any index or indices used to determine the amount of payments of
principal of and premium, if any, on the Securities of such series or the manner
in which such amounts will be determined;
(n) whether the Securities of the series, or any portion thereof, shall
initially be issuable in the form of a temporary Global Security representing
all or such portion of the Securities of such series and provisions for the
exchange of such temporary Global Security for definitive Securities of such
series;
(o) if applicable, that any Securities of the series shall be issuable in
whole or in part in the form of one or more Global Securities and, in such case,
the respective Depositories for such
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Global Securities, the form of any legend or legends which shall be borne by any
such Global Security in addition to or in lieu of that set forth in Section 2.4
and any circumstances in addition to or in lieu of those set forth in Section
3.5 in which any such Global Security may be exchanged in whole or in part for
Securities registered, and any transfer of such Global Security in whole or in
part may be registered, in the name or names of Persons other than the
Depository for such Global Security or a nominee thereof;
(p) the appointment of any Paying Agent or Agents for the Securities of
such series;
(q) the terms of any right to convert or exchange Securities of such series
into any other securities or property of the Company, and the additions or
changes, if any, to this Indenture with respect to the Securities of such series
to permit or facilitate such conversion or exchange;
(r) the form or forms of the Trust Agreement, Amended and Restated Trust
Agreement and Guarantee Agreement, if different from the forms attached hereto
as Annexes A, B and C, respectively;
(s) the relative degree, if any, to which the Securities of the series
shall be senior to or be subordinated to other series of Securities in right of
payment, whether such other series of Securities are Outstanding or not; and
(t) any other terms of the Securities of such series (which terms shall not
be inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided herein or in or pursuant
to such Board Resolution and set forth in such Officers' Certificate or in any
such indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article XIII.
Unless otherwise provided with respect to the Securities of any series, at
the option of the Company, interest on the Securities of any series that bears
interest may be paid (i) by mailing a check to the address of the person
entitled thereto as such address shall appear in the Security Register or (ii)
by wire transfer in immediately available funds at such place and to such
account as may be designated by the person entitled thereto as specified in the
Security Register.
SECTION 3.2. Denominations.
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The Securities of each series shall be in registered form without coupons
and shall be issuable in denominations of $25 and any integral multiple thereof,
unless otherwise specified as contemplated by Section 3.1.
SECTION 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its President,
one of its Vice Presidents, its Treasurer or an Assistant Treasurer under its
corporate seal reproduced or impressed thereon and attested by its Secretary or
one of its Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities. At any time and from time to
time after the execution and delivery of this Indenture, the Company may deliver
Securities of any series executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities. If the form or terms of
the Securities of the series have been established by or pursuant to one or more
Board Resolutions as permitted by Sections 2.1 and 3.1, in authenticating such
Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities, the Trustee shall be entitled to receive, and
(subject to Section 6.1) shall be fully protected in relying upon, an Opinion of
Counsel stating,
(1)if the form of such Securities has been established by or pursuant to
Board Resolution as permitted by Section 2.1, that such form has been
established in conformity with the provisions of this Indenture;
(2)if the terms of such Securities have been established by or pursuant to
Board Resolution as permitted by Section 3.1, that such terms have been
established in conformity with the provisions of this Indenture; and
(3) that such Securities, when authenticated and delivered by the Trustee
and issued by the Company in the manner and subject to any conditions specified
in such Opinion of Counsel, will constitute valid and legally binding
obligations of the Company enforceable in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
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Notwithstanding the provisions of Section 3.1 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 3.1 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder. Notwithstanding the foregoing, if any Security shall have
been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 3.9, for all purposes of this Indenture such
Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
SECTION 3.4. Temporary Securities.
Pending the preparation of definitive Securities of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any denomination, substantially of the tenor of the
definitive Securities of such series in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of such series to be prepared without unreasonable delay.
After the preparation of definitive Securities, the temporary Securities shall
be exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for that purpose
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more definitive Securities
of the same series, of any authorized denominations having the same Original
Issue Date and Stated Maturity and having the same terms as such temporary
Securities. Until so exchanged, the temporary Securities of any series shall in
all respects be entitled to the same benefits under this Indenture as definitive
Securities of such series.
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SECTION 3.5. Registration, Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities and of
transfers of Securities. Such register is herein sometimes referred to as the
"Securities Register." The Trustee is hereby appointed "Securities Registrar"
for the purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security at the office
or agency of the Company designated for that purpose the Company shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Securities of the same series of any
authorized denominations, of a like aggregate principal amount, of the same
Original Issue Date and Stated Maturity and having the same terms.
At the option of the Holder, Securities may be exchanged for other
Securities of the same series of any authorized denominations, of a like
aggregate principal amount, of the same Original Issue Date and Stated Maturity
and having the same terms, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any transfer or exchange of Securities shall be
the valid obligations of the Company, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
Every Security presented or surrendered for transfer or exchange shall (if
so required by the Company or the Securities Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Securities.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only to
Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depository designated for such Global Security or
a nominee thereof and delivered to such Depository or a nominee thereof or
custodian therefor, and each such Global Security shall constitute a single
Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than the Depository for such Global Security or a nominee
thereof unless (A) such Depository (i) has notified the Company that it is
unwilling or unable to continue as Depository for such Global Security or
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(ii) has ceased to be a clearing agency registered under the Exchange Act at a
time when the Depository is required to be so registered to act as depositary,
in each case unless the Company has approved a successor Depository within 90
days, (B) there shall have occurred and be continuing an Event of Default with
respect to such Global Security, (C) the Company in its sole discretion
determines that such Global Security will be so exchangeable or transferable or
(D) there shall exist such circumstances, if any, in addition to or in lieu of
the foregoing as have been specified for this purpose as contemplated by Section
3.1.
(3) Subject to Clause (2) above, any exchange of a Global Security for
other Securities may be made in whole or in part, and all Securities issued in
exchange for a Global Security or any portion thereof shall be registered in
such names as the Depository for such Global Security shall direct.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Section, Section 3.4, 3.6, 9.6 or 11.6 or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Security, unless such Security is registered in the name of a Person
other than the Depository for such Global Security or a nominee thereof.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (a) to issue, transfer or exchange any Security of
any series during a period beginning at the opening of business 15 days before
the day of selection for redemption of Securities pursuant to Article XI and
ending at the close of business on the day of mailing of notice of redemption or
(b) to transfer or exchange any Security so selected for redemption in whole or
in part, except, in the case of any Security to be redeemed in part, any portion
thereof not to be redeemed.
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee together with such
security or indemnity as may be required by the Company or the Trustee to save
each of them harmless, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of the same issue
and series of like tenor and principal amount, having the same Original Issue
Date and Stated Maturity, and bearing a number not contemporaneously
outstanding.
If there shall be delivered to the Company and to the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security, and
(ii) such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and upon its request the Trustee shall authenticate and deliver, in lieu of any
such destroyed, lost or stolen Security, a new Security of the same issue and
series of like tenor and principal amount, having the same Original Issue Date
and Stated Maturity as such destroyed, lost or stolen Security, and bearing a
number not contemporaneously outstanding.
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In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company 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 Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.7. Payment of Interest; Interest Rights Preserved.
Interest on any Security of any series which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date, shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
in respect of Securities of such series, except that, unless otherwise provided
in the Securities of such series, interest payable on the Stated Maturity of the
principal of a Security shall be paid to the Person to whom principal is paid.
The initial payment of interest on any Security of any series which is issued
between a Regular Record Date and the related Interest Payment Date shall be
payable as provided in such Security or in the Board Resolution pursuant to
Section 3.1 with respect to the related series of Securities.
Any interest on any Security which is payable, but is not timely paid or
duly provided for, on any Interest Payment Date for Securities of such series
(herein called "Defaulted Interest"), shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
(1)The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Securities of such series in respect of which
interest is in default (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when
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deposited to be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall be
not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first class, postage prepaid,
to each Holder of a Security of such series at the address of such Holder as it
appears in the Securities Register not less than 10 days prior to such Special
Record Date. The Trustee may, in its discretion, in the name and at the expense
of the Company, cause a similar notice to be published at least once in a
newspaper, customarily published in the English language on each Business Day
and of general circulation in the Borough of Manhattan, The City of New York,
but such publication shall not be a condition precedent to the establishment of
such Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been mailed as aforesaid,
such Defaulted Interest shall be paid to the Persons in whose names the
Securities of such series (or their respective Predecessor Securities) are
registered on such Special Record Date and shall no longer be payable pursuant
to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of the series in respect of which interest is in default
may be listed and, upon such notice as may be required by such exchange (or by
the Trustee if the Securities are not listed), if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause, such
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
SECTION 3.8. Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name any Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and (subject to
Section 3.7) any interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
No holder of any beneficial interest in any Global Security held on its
behalf by a Depository shall have any rights under this Indenture with respect
to such Global Security, and such Depository may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by a Depository or impair, as between a Depository and
such holders of beneficial
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interests, the operation of customary practices governing the exercise of the
rights of the Depository (or its nominee) as Holder of any Security.
SECTION 3.9. Cancellation.
All Securities surrendered for payment, redemption, transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee, and any such Securities and Securities surrendered directly to the
Trustee for any such purpose shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly canceled by
the Trustee. No Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Securities shall be destroyed by the
Trustee and the Trustee shall deliver to the Company a certificate of such
destruction.
SECTION 3.10. Computation of Interest.
Except as otherwise specified as contemplated by Section 3.1 for Securities
of any series, interest on the Securities of each series for any partial period
shall be computed on the basis of a 360-day year of twelve 30-day months and the
actual days elapsed in a partial month in such period, and interest on the
Securities of each series for a full period shall be computed by dividing the
rate per annum by the number of interest periods that together constitute a full
twelve months.
SECTION 3.11. Deferrals of Interest Payment Dates.
If specified as contemplated by Section 2.1 or Section 3.1 with respect to
the Securities of a particular series, so long as no Event of Default has
occurred and is continuing, the Company shall have the right, at any time during
the term of such series, from time to time to defer the payment of interest on
such Securities for such period or periods as may be specified as contemplated
by Section 3.1 (each, an "Extension Period ") during which Extension Periods the
Company shall have the right to make partial payments of interest on any
Interest Payment Date. No Extension Period shall end on a date other than an
Interest Payment Date. At the end of any such Extension Period the Company shall
pay all interest then accrued and unpaid on the Securities (together with
Additional Interest thereon, if any, at the rate specified for the Securities of
such series to the extent permitted by applicable law); provided, however, that
no Extension Period shall extend beyond the Stated Maturity of the principal of
the Securities of such series; provided, further, that during any such Extension
Period, the Company shall not, and shall not permit any Subsidiary to, (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with. respect to, any of the Company's capital
stock, or (ii) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company that rank pari
passu in all respects with or junior in interest to the Securities of such
series or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any Subsidiary of the Company if such
guarantee ranks pari passu with or junior in interest to the securities of such
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series (other than (a) dividends or distributions in Common Stock, (b) any
declaration of a dividend in connection with the implementation of a Rights
Plan, or the issuance of any Common Stock of any class or series of preferred
stock of the Company under any Rights Plan in the future or the redemption or
repurchase of any rights pursuant thereto, (c) payments under any BankAmerica
Guarantee, and (d) purchases of Common Stock related to the issuance of Common
Stock or rights under any of the Company's (or its subsidiaries') benefit plans
for their directors, officers or employees). Prior to the termination of any
such Extension Period, the Company may further extend the interest payment
period, provided that no Extension Period shall exceed the period or periods
specified in such Securities or extend beyond the Stated Maturity of the
principal of such Securities. Upon the termination of any Extension Period and
upon the payment of all amounts then due on any Interest Payment Date, the
Company may elect to begin a new Extension Period, subject to the above
requirements. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Company shall give the Holders of the Securities
of such series and the Trustee notice of its election to begin any such
Extension Period at least one Business Day prior to the next succeeding Interest
Payment Date on which interest on Securities of such series would be payable but
for such deferral or, with respect to the Securities of a series issued to a
BankAmerica Trust, so long as such Securities are held by such BankAmerica
Trust, prior to the earlier of (i) the next succeeding date on which
Distributions on the Preferred Securities of such BankAmerica Trust would be
payable but for such deferral or (ii) the date the Administrative Trustees of
such BankAmerica Trust are required to give notice to any securities exchange or
other applicable self-regulatory organization or to holders of such Preferred
Securities of the record date or the date such Distributions are payable, but in
any event not less than one Business Day prior to such record date. For purposes
hereof, neither the Company's Senior Debt nor its Senior Subordinated Debt shall
be deemed to be pari passu with the Securities. The Trustee, at the expense of
the Company, shall promptly give notice of the Company's election to begin any
such Extension Period to the Holders of the Outstanding Securities of such
series.
SECTION 3.12. Right of Set-Off.
With respect to the Securities of a series issued to a BankAmerica Trust,
notwithstanding anything to the contrary herein, the Company shall have the
right to set-off any payment it is otherwise required to make thereunder in
respect of any such Security to the extent the Company has theretofore made, or
is concurrently on the date of such payment making, a payment under the
BankAmerica Guarantee relating to such Security or under Section 5.8 hereof.
SECTION 3.13. Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Company and, by its
acceptance of a Security or a beneficial interest therein, the Holder of, and
any Person that acquires a beneficial interest in, such Security agree that for
United States Federal, state and local tax purposes it is intended that such
Security constitutes indebtedness.
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SECTION 3.14. Shortening or Extension of Stated Maturity.
If specified as contemplated by Section 2.1 or Section 3.1 with respect to
the Securities of a particular series and except as otherwise specified therein,
the Company shall have the right to (i) shorten the Stated Maturity of the
principal of the Securities of such series at any time to any date not earlier
than the first date on which the Company has the right to redeem the Securities
of such series, and (ii) extend the Stated Maturity of the principal of the
Securities of such series at any time at its election for one or more periods,
but in no event to a date later than the 49th anniversary of the first Interest
Payment Date following the Original Issue Date of the Securities of such series;
provided that, if the Company elects to exercise its right to extend the Stated
Maturity of the principal of the Securities of such series pursuant to clause
(ii), above, at the time such election is made and at the time of extension (A)
the Company is not in bankruptcy, otherwise insolvent or in liquidation, (B) the
Company is not in default in the payment of any interest or principal on such
Securities, (C) in the case of any series of Securities issued to a BankAmerica
Trust, such BankAmerica Trust is not in arrears on payments of Distributions on
the Preferred Securities issued by such BanicAmerica Trust and no deferred
Distributions are accumulated and (D) such Securities are rated not less than
BBB- by S&P or Baa3 by Moody's or the equivalent by any other nationally
recognized statistical rating organization. In the event the Company elects to
shorten or extend the Stated Maturity of any series of Securities, it shall give
notice to the Trustee, and the Trustee shall give notice of such shortening or
extension to the Holders, no less than 30 and no more than 90 days prior to the
effectiveness thereof.
SECTION 3.15. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption or other related material as a convenience to Holders; provided
that any such notice or other related material may state that no representation
is made as to the correctness of such numbers either as printed on the
Securities or as contained in any notice of redemption or other related material
and that reliance may be placed only on the other identification numbers printed
on the Securities, and any such redemption shall not be affected by any defect
in or omission of such numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for and as otherwise provided in this
Section 4.1) and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when
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(1) either
(A) all Securities theretofore authenticated and delivered (other than
(i) Securities which have been destroyed, lost or stolen and which have
been replaced or paid, as provided in Section 3.6 and (ii) Securities for
whose payment money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 10.3) have been
delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year of the date of deposit, or
(iii)are to be called for redemption within one year by the
Trustee in the name, and at the expense, of the Company,
and the Company, in the case of Clause (B) (i), (ii) or (iii)
above, has deposited or caused to be deposited with the Trustee
as trust funds in trust for such purpose an amount in the
currency or currencies in which the Securities of such series are
payable sufficient to pay and discharge the entire indebtedness
on such Securities not theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any) and interest
(including any Additional Interest) to the date of such deposit
(in the case of Securities which have become due and payable) or
to the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this Indenture have been
complied with.
Notwithstanding the satisfaction and discharge of this Indenture, or the earlier
resignation or removal of the Trustee or any Authenticating Agent, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Company to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
SECTION 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all money
deposited with the Trustee pursuant to Section 4. 1 shall be held in trust and
applied by the Trustee, in accordance
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with the provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal (and premium. if any) and interest for the payment of which such
money or obligations have been deposited with or received by the Trustee.
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default.
"Event of Default," wherever used herein with respect to the Securities of
any series, means any one of the following events that has occurred and is
continuing (whatever the reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series, including any Additional Interest in respect thereof, when it becomes
due and payable, and continuance of such default for a period of 30 days
(subject to the deferral of any due date in the case of an Extension Period); or
(2)default in the payment of the principal of (or premium, if any, on) any
Security of that series at its Maturity; or
(3) default in the performance, or breach, in any material respect, of any
covenant of the Company in this Indenture (other than a covenant a default in
the performance of which or the breach of which is elsewhere in this Section
specifically dealt with), and continuance of such default or breach for a period
of 90 days after there has been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders of at
least 25% in principal amount of the Outstanding Securities of that series a
written notice specifying such default or breach and requiring it to be
remedied; or
(4) the entry of a decree or order for relief in respect of the Company by
a court having jurisdiction in the premises in an involuntary case under Federal
or State bankruptcy laws, as now or hereafter constituted, and the continuance
of any such decree or order unstayed and in effect for a period of 60
consecutive days; or
(5) the commencement by the Company of a voluntary case under Federal or
State bankruptcy laws, as now or hereafter constituted, or the consent by the
Company to the entry of a decree or order for relief in an involuntary case
under any such laws; or
(6)any other Event of Default provided with respect to Securities of that
series.
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SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in Section
5.1(4) or 5.1(5)) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if the
Securities of that series are Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) of all the Securities of
that series to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), provided that, in the case of
the Securities of a series issued to a BankAmerica Trust, if, upon an Event of
Default, the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series fail to declare the principal of all
the Securities of that series to be immediately due and payable, the holders of
at least 25% in aggregate Liquidation Amount (as defined in the related Trust
Agreement) of the corresponding series of Preferred Securities then outstanding
shall have such right by a notice in writing to the Company and the Trustee; and
upon any such declaration such principal amount (or specified portion thereof)
of and the accrued interest (including any Additional Interest) on all the
Securities of such series shall become immediately due and payable. Payment of
principal and interest (including any Additional Interest) on such Securities
shall remain subordinated to the extent provided in Article XIII notwithstanding
that such amount shall become immediately due and payable as herein provided. If
an Event of Default specified in Section 5.1(4) or 5.1(5) with respect to
Securities of any series at the time Outstanding occurs, the principal amount of
all the Securities of that series (or, if the Securities of that series are
Discount Securities, such portion of the principal amount of such Securities as
may be specified by the terms of that series) shall automatically, and without
any declaration or other action on the part of the Trustee or any Holder, become
immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if:
(1) The Company has paid or deposited with the Trustee a sum sufficient to
pay:
(A)all overdue installments of interest (including any Additional
Interest) on all Securities of that series,
(B)the principal of (and premium, if any, on) any Securities of that
series which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Securities, and
(C)all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
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(2) all Events of Default with respect to Securities of that series, other
than the non-payment of the principal of Securities of that series which
has become due solely by such acceleration have been cured or waived as
provided in Section 5.13.
In the case of Securities of a series issued to a BankAmerica Trust, the
holders of a majority in aggregate Liquidation Amount (as defined in the related
Trust Agreement) of the related series of Preferred Securities issued by such
BankAmerica Trust shall also have the right to rescind and annul such
declaration and its consequences by written notice to the Company and the
Trustee, subject to the satisfaction of the conditions set forth in Clauses (1)
and (2) above of this Section 5.2.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if:
(1) default is made in the payment of any installment of interest
(including any Additional Interest) on any Security when such interest becomes
due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (and premium, if
any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal, including any sinking fund payment or
analogous obligations (and premium, if any) and interest (including any
Additional Interest); and, in addition thereto, all amounts owing the Trustee
under Section 6.7.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
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SECTION 5.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors,
(a) the Trustee (irrespective of whether the principal of the Securities of
any series shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
on the Company for the payment of overdue principal (and premium, if any) or
interest (including any Additional Interest)) shall be entitled and empowered,
by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest (including any Additional Interest) owing and
unpaid in respect to the Securities and to file such other papers or
documents as may be necessary or advisable and to take any and all actions
as are authorized under the Trust Indenture Act in order to have the claims
of the Holders and any predecessor to the Trustee under Section 6.7 allowed
in any such judicial proceedings; and
(ii) in particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such
claims and to distribute the same in accordance with Section 5.6; and
(b) any custodian, receiver, assignee, trustee, liquidator, sequestrator
(or other similar official) in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee for distribution in
accordance with Section 5.6, and in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due to it and any predecessor Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of all the amounts owing the Trustee and any predecessor Trustee
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under Section 6.7, its agents and counsel, be for the ratable benefit of the
Holders of the Securities in respect of which such judgment has been recovered.
SECTION 5.6. Application of Money Collected.
Any money or property collected or to be applied by the Trustee with
respect to a series of Securities pursuant to this Article shall be applied in
the following order, at the date or dates fixed by the Trustee and, in case of
the distribution of such money or property on account of principal (or premium,
if any) or interest (including any Additional Interest), upon presentation of
the Securities and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any predecessor
Trustee;
SECOND: Subject to Article XIII, to the payment of the amounts then due and
unpaid upon such series of Securities for principal (and premium, if any) and
interest (including any Additional Interest), in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such series of
Securities for principal (and premium, if any) and interest (including any
Additional Interest), respectively; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
SECTION 5.7. Limitation on Suits.
No Holder of any Securities of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture or for the
appointment of a receiver, assignee, trustee, liquidator, sequestrator (or other
similar official) or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable indemnity
against the costs, expenses and liabilities to be incurred in compliance with
such request;
(4) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in principal
amount of the Outstanding Securities of that series;
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it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing itself of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Securities, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium
and Interest; Direct Action by Holders of Preferred Securities.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right which is absolute and unconditional to receive
payment of the principal of (and premium, if any) and (subject to Section 3.7)
interest (including any Additional Interest) on such Security on the respective
Stated Maturities expressed in such Security (or, in the case of redemption, on
the Redemption Date) and to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder. In the case of Securities of a series issued to a BankAmerica Trust, any
holder of the corresponding series of Preferred Securities issued by such
BankAmerica Trust shall have the right, upon the occurrence of an Event of
Default described in Section 5.1(1) or 5.1(2), to institute a suit directly
against the Company for enforcement of payment to such holder of principal of
(premium, if any) and (subject to Section 3.7) interest (including any
Additional Interest) on the Securities having a principal amount equal to the
aggregate Liquidation Amount (as defined in the Trust Agreement under which such
BankAmerica Trust is formed) of such Preferred Securities of the corresponding
series held by such holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Preferred Securities has
instituted any proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee, such Holder or such holder of
Preferred Securities, then and in every such case the Company, the Trustee, the
Holders and such holder of Preferred Securities shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee, the Holders and the holders of Preferred Securities shall continue as
though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section 3.6, no right
or remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
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SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee, any Holder of any Security or any
holder of any Preferred Security to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to
the Holders and the right and remedy given to the holders of Preferred
Securities by Section 5.8 may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee, the Holders or the holders of Preferred
Securities, as the case may be.
SECTION 5.12. Control by Holders.
The Holders of a majority in principal amount of the Outstanding Securities
of any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, with respect to the Securities of
such series, provided that:
(1) such direction shall not be in conflict with any rule of law or with
this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) subject to the provisions of Section 6.1, the Trustee shall have the
right to decline to follow such direction if a Responsible Officer or Officers
of the Trustee shall, in good faith, determine that the proceeding so directed
would be unjustly prejudicial to the Holders not joining in any such direction
or would involve the Trustee in personal liability.
SECTION 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series affected thereby and, in the case of any
Securities of a series issued to a BankAmerica Trust, the holders of a majority
in aggregate Liquidation Amount (as defined in the related Trust Agreement) of
the Preferred Securities issued by such BankAmerica Trust, may waive any past
default hereunder and its consequences with respect to such series except a
default:
(1) in the payment of the principal of (or premium, if any) or interest
(including any Additional Interest) on any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article IX
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
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Any such waiver shall be deemed to be on behalf of the Holders of all the
Securities of such series or, in the case of a waiver by holders of Preferred
Securities issued by such BankAmerica Trust, by all holders of Preferred
Securities issued by such BankAmerica Trust.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities of
any series, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest (including any
Additional Interest) on any Security on or after the respective Stated
Maturities expressed in such Security.
SECTION 5.15. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
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(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provisions
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of Holders pursuant to Section 5.12 relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to the Securities of such series.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
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SECTION 6.2. Notice of Defaults.
Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities of any series, the Trustee shall transmit by mail to all Holders of
Securities of such series, as their names and addresses appear in the Securities
Register, notice of such default, unless such default shall have been cured or
waived; provided, however, that, except in the case of a default in the payment
of the principal of (or premium, if any) or interest (including any Additional
Interest) on any Security of such series, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of Securities of such series; and provided, further,
that, in the case of any default of the character specified in Section 5.1(3),
no such notice to Holders of Securities of such series shall be given until at
least 30 days after the occurrence thereof. For the purpose of this Section, the
term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to Securities of such
series.
SECTION 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, Security or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officers' Certificate;
(d) the Trustee may consult with counsel and the advice of such counsel or
any Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
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(f) the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, indenture,
Security or other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may see fit, and,
if the Trustee shall determine to make such inquiry or investigation, it shall
be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(h) the Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Indenture;
(i) the Trustee shall not be charged with knowledge of any Event of Default
unless either (i) a Responsible Officer of the Trustee shall have actual
knowledge thereof or (2) the Trustee shall have received notice thereof in
accordance with Section 1.5(1) hereof from the Company or a Holder; and
(j) no permissive power or authority available to the Trustee shall be
construed as a duty.
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein [ILLEGIBLE] in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of the Securities or the proceeds thereof.
SECTION 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Securities
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
6.8 and 6.13, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Securities
Registrar or such other agent.
SECTION 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
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SECTION 6.7. Compensation and Reimbursement
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation for all
services rendered by it hereunder in such amounts as the Company and the Trustee
shall agree from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(2) to reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense (including the reasonable compensation and the
expenses and disbursements of its agents and counsel) incurred without
negligence or bad faith, arising out of or in connection with the acceptance or
administration of this trust or the performance of its duties hereunder,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder.
The obligations of the Company under this Section 6.7 shall survive the
termination of the Indenture or the earlier resignation or removal of the
Trustee.
To secure the Company's payment obligations in this Section, the Company
and the Holders agree that the Trustee shall have a lien prior to the Securities
on all money or property held or collected by the Trustee. Such lien shall
survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(4) or (5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under the Bankruptcy Reform Act of 1978 or any successor statute.
SECTION 6.8. Disqualification; Conflicting Interests.
The Trustee for the Securities of any series issued hereunder shall be
subject to the provisions of Section 310(b) of the Trust Indenture Act. Nothing
herein shall prevent the Trustee from filing with the Commission the application
referred to in the second to last paragraph of said Section 310(b).
SECTION 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
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(a) a corporation organized and doing business under the laws of the United
States of America or of any State or Territory or the District of Columbia,
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by Federal, State, Territorial or District of
Columbia authority, or
(b) a corporation or other Person organized and doing business under the
laws of a foreign government that is permitted to act as Trustee pursuant to a
rule, regulation or order of the Commission, authorized under such laws to
exercise corporate trust powers, and subject to supervision or examination by
authority of such foreign government or a political subdivision thereof
substantially equivalent to supervision or examination applicable to United
States institutional trustees,
in either case having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then,
for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article. Neither the Company nor any Person directly or indirectly
controlling, controlled by or under common control with the Company shall serve
as Trustee for the Securities of any series issued hereunder.
SECTION 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If an
instrument of acceptance by a successor Trustee shall not have been delivered to
the Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(c) The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after written request
therefor by the Company or by any Holder who has been a bona fide Holder of a
Security for at least six months, or
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(2) the Trustee shall cease to be eligible under Section 6.9 and shall fail
to resign after written request therefor by the Company or by any such Holder,
or
(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Company, acting pursuant to the authority of a
Board Resolution, may remove the Trustee with respect to all Securities, or (ii)
subject to Section 5.14. any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee with respect to all Securities and the appointment of a successor
Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause with respect
to the Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee with respect to the Securities of
that or those series. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee with respect to the Securities of such series and supersede
the successor Trustee appointed by the Company. If no successor Trustee with
respect to the Securities of any series shall have been so appointed by the
Company or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Security for at least
six months may, subject to Section 5.14, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid to the Holders
of Securities of such series as their names and addresses appear in the
Securities Register. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its Corporate
Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver
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an instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more series, the Company, the retiring
Trustee and each successor Trustee with respect to the Securities of one or more
series shall execute and deliver an instrument in writing or an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (2) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such instrument in writing or supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such instrument in writing or supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts, and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all rights, powers and trusts referred to in paragraph
(a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be eligible under this Article.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
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In case any Securities shall have been authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and deliver the
Securities so authenticated, and in case any Securities shall not have been
authenticated, any successor to the Trustee may authenticate such Securities
either in the name of any predecessor Trustee or in the name of such successor
Trustee, and in all cases the certificate of authentication shall have the full
force which it is provided anywhere in the Securities or in this Indenture that
the certificate of the Trustee shall have.
SECTION 6.13. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 6.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original issue
and upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 3.6, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, or of any State or Territory or
the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of an Authenticating Agent shall be the successor
Authenticating Agent hereunder, provided such corporation shall be otherwise
eligible under this Section, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
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An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.6 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provision of this Section.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities referred to in the within mentioned
Indenture.
Dated:
Bankers Trust Company
As Trustee
By: ____________________________
As Authenticating Agent
By: ____________________________
Authorized Officer
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ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after each Regular Record Date in
each year, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished,
excluding from any such list names and addresses received by the Trustee in its
capacity as Securities Registrar.
SECTION 7.2. Preservation of Information, Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided in the Trust
Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
SECTION 7.3. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act, at the times and in the manner provided pursuant thereto.
(b) Reports so required to be transmitted at stated intervals of not more
than 12 months shall be transmitted no later than 60 days after December 31 in
each calendar year, commencing 60 days after the first December 31 after the
first issuance of Securities under this Indenture.
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(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each securities exchange upon which any
Securities are listed and also with the Commission. The Company will notify the
Trustee when any Securities are listed on any securities exchange.
SECTION 7.4. Reports by Company.
The Company shall file with the Trustee and with the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided in the Trust Indenture Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act shall be filed with
the Trustee within 15 days after the same is required to be filed with the
Commission. Notwithstanding that the Company may not be required to remain
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall continue to file with the Commission and provide the
Trustee with the annual reports and the information, documents and other reports
which are specified in Sections 13 and 15(d) of the Exchange Act. The Company
also shall comply with the other provisions of Trust Indenture Act Section
314(a).
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and no Person shall consolidate with or merge into the Company or
convey, transfer or lease its properties and assets substantially as an entirety
to the Company, unless:
(1) in case the Company shall consolidate with or merge into another Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the corporation formed by such consolidation or into
which the Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation, partnership or trust
organized and existing under the laws of the United States of America or any
State or the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form satisfactory
to the Trustee, the due and punctual payment of the principal of (and premium,
if any) and interest (including any Additional Interest) on all the Securities
and the performance of every covenant of this Indenture on the part of the
Company to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing;
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(3) in the case of the Securities of a series issued to a BankAmerica
Trust, such consolidation, merger, conveyance, transfer or lease is permitted
under the related Trust Agreement and BankAmerica Guarantee and does not give
rise to any breach or violation of the related Trust Agreement or BankAmerica
Guarantee; and
(4) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and any such supplemental indenture comply with this Article
and that all conditions precedent herein provided for relating to such
transaction have been complied with; and the Trustee, subject to Section 6.1,
may rely upon such Officers' Certificate and Opinion of Counsel as conclusive
evidence that such transaction complies with this Section 8.1.
SECTION 8.2. Successor Corporation Substituted.
Upon any consolidation or merger by the Company with or into any other
Person, or any conveyance, transfer or lease by the Company of its properties
and assets substantially as an entirety to any Person in accordance with Section
8.1, the successor corporation formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein; and in the event of any such
conveyance, transfer or lease the Company shall be discharged from all
obligations and covenants under the Indenture and the Securities and may be
dissolved and liquidated.
Such successor Person may cause to be signed, and may issue either in its
own name or in the name of the Company, any or all of the Securities issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such successor Person instead
of the Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities which previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication pursuant to such provisions and
any Securities which such successor Person thereafter shall cause to be signed
and delivered to the Trustee on its behalf for the purpose pursuant to such
provisions. All the Securities so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Securities theretofore or
thereafter issued in accordance with the terms of this Indenture as though all
of such Securities had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form may be made in the Securities thereafter to be
issued as may be appropriate.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures without Consent of Holders
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to evidence the succession of another Person to the Company, and the
assumption by any such successor of the covenants of the Company herein and in
the Securities contained; or
(2) to convey, transfer, assign, mortgage or pledge any property to or with
the Trustee or to surrender any right or power herein conferred upon the
Company; or
(3) to establish the form or terms of Securities of any series as permitted
by Sections 2.1 or 3.1; or
(4) to add to the covenants of the Company for the benefit of the Holders
of all or any series of Securities (and if such covenants are to be for the
benefit of less than all series of Securities, stating that such covenants are
expressly being included solely for the benefit of such series) or to surrender
any right or power herein conferred upon the Company; or
(5) to add any additional Events of Default for the benefit of the Holders
of all or any series of Securities (and if such additional Events of Default are
to be for the benefit of less than all series of Securities, stating that such
additional Events of Default are expressly being included solely for the benefit
of such series); or
(6) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination (a) shall become effective only
when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit of
such provision or, (b) shall not apply to any Outstanding Securities; or
(7) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Indenture, provided that such action pursuant to this clause (7) shall not
adversely affect the interest of the Holders of Securities of any series in any
material respect or, in the case of the Securities of a series issued to a
BankAmerica Trust and for so long as any of the corresponding series of
Preferred Securities issued by such BankAmerica Trust shall remain outstanding,
the holders of such Preferred Securities; or
(8) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee with respect to the Securities of one or more series and to
add to or change any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration
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of the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 6.11(b); or
(9) to comply with the requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the Trust Indenture Act.
SECTION 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) except to the extent permitted by Section 3.11 or as otherwise
specified as contemplated by Section 2.1 or Section 3.1 with respect to the
deferral of the payment of interest on the Securities of any series, change the
Stated Maturity of the principal of, or any installment of interest (including
any Additional Interest) on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or reduce any premium payable upon the
redemption thereof, or reduce the amount of principal of a Discount Security
that would be due and payable upon a declaration of acceleration of the Maturity
thereof pursuant to Section 5.2, or change the place of payment where, or the
coin or currency in which, any Security or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of redemption, on or after
the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding Securities
of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 5.13 or Section
10.5, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Security affected thereby;
provided, further, that, in the case of the Securities of a series issued to a
BankAmerica Trust, so long as any of the corresponding series of Preferred
Securities issued by such BankAmerica Trust remains outstanding, (i) no such
amendment shall be made that adversely affects the holders of such Preferred
Securities in any material respect, and no termination of this Indenture shall
occur, and no waiver of any Event of Default or compliance with any covenant
under this Indenture shall be effective, without the prior consent of the
holders of at least a majority of the aggregate Liquidation Amount of such
Preferred Securities then outstanding unless and until the principal (and
premium, if any) of the Securities of such series and all accrued and, subject
to
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Section 3.7, unpaid interest (including any Additional Interest) thereon have
been paid in full and (ii) no amendment shall be made to Section 5.8 of this
Indenture that would impair the rights of the holders of Preferred Securities
provided therein without the prior consent of the holders of each Preferred
Security then outstanding unless and until the principal (and premium, if any)
of the Securities of such series and all accrued and (subject to Section 3.7)
unpaid interest (including any Additional Interest) thereon have been paid in
full.
A supplemental indenture that changes or eliminates any covenant or other
provision of this Indenture that has expressly been included solely for the
benefit of one or more particular series of Securities or Preferred Securities,
or which modifies the rights of the Holders of Securities or holders of
Preferred Securities of such series with respect to such covenant or other
provision, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities or holders of Preferred Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 9.3. Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 6.1) shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture, and that
all conditions precedent have been complied with. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise or
that may subject it to any liability.
SECTION 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 9.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Company, bear a notation in form approved by the Company as to any matter
provided for in such supplemental indenture. If the
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Company shall so determine, new Securities of any series so modified as to
conform, in the opinion of the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE X
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each Series of
securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of that series in accordance with the
terms of such Securities and this Indenture.
SECTION 10.2. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities, an office or agency where Securities of that series may be presented
or surrendered for payment and an office or agency where Securities of that
series may be surrendered for transfer or exchange and where notices and demands
to or upon the Company in respect of the Securities of that series and this
Indenture may be served. The Company initially appoints the Trustee, acting
through its Corporate Trust Office, as its agent for said purposes. The Company
will give prompt written notice to the Trustee of any change in the location of
any such office or agency. If at any time the Company shall fail to maintain
such office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
of such purposes, and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in each
Place of Payment for Securities of any series for such purposes. The Company
will give prompt written notice to the Trustee of any such designation and any
change in the location of any such office or agency.
SECTION 10.3. Money for Security Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of such
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided, and will promptly notify the Trustee of its
failure so to act.
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Whenever the Company shall have one or more Paying Agents, it will, prior
to 10:00 am. New York City time on each due date of the principal of or interest
on any Securities, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal and premium
(if any) or interest, and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of its failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities) in the making of any payment of principal (and
premium, if any) or interest;
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent; and
(4) comply with the provisions of the Trust Indenture Act applicable to it
as a Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Security and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall be
paid on Company Request to the Company, or (if then held by the Company) shall
(unless otherwise required by mandatory provision of applicable escheat or
abandoned or unclaimed property law) be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in the Borough of Manhattan, The City of New York,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
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SECTION 10.4. Statement as to Compliance.
The Company shall deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate executed by the principal executive officer, principal financial
officer or principal accounting officer of the Company covering the preceding
calendar year, stating whether or not to the best knowledge of the signers
thereof the Company is in default in the performance, observance or fulfillment
of or compliance with any of the terms, provisions, covenants and conditions of
this Indenture, and if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge. For
the purpose of this Section 10.4, compliance shall be determined without regard
to any grace period (other than an Extension Period) or requirement of notice
provided pursuant to the terms of this Indenture.
SECTION 10.5. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any covenant
or condition provided pursuant to Section 3.1, 9.1(3) or 9.1(4) with respect to
the Securities of any series, if before or after the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company in respect of any such covenant
or condition shall remain in full force and effect.
SECTION 10.6. Additional Sums.
In the case of the Securities of a series issued to a BankAmerica Trust, so
long as no Event of Default has occurred and is continuing and except as
otherwise specified as contemplated by Section 2.1 or Section 3.1, in the event
that (i) a BankAmerica Trust is the Holder of all of the Outstanding Securities
of such series and (ii) a Tax Event in respect of such BankAmerica Trust shall
have occurred and be continuing, the Company shall pay to such BankAmerica Trust
(and its permitted successors or assigns under the related Trust Agreement) as
Holder of the Securities of such series for so long as such BankAmerica Trust
(or its permitted successor or assignee) is the registered holder of any
Securities of such series, such additional sums as may be necessary in order
that the amount of Distributions (including any Additional Amounts (as defined
in such Trust Agreement)) paid by such BankAmerica Trust on the related
Preferred Securities and Common Securities that at any time remain outstanding
in accordance with the terms thereof shall not be reduced as a result of any
Additional Taxes (the "Additional Sums"). Whenever in this Indenture or the
Securities there is a reference in any context to the payment of principal of or
interest on the Securities, such mention shall be deemed to include mention of
the payments of the Additional Sums provided for in this paragraph to the extent
that, in such context, Additional Sums are, were or would be payable in respect
thereof pursuant to the provisions of this paragraph and express mention of the
payment of Additional Sums (if applicable) in any provisions hereof shall not be
construed as excluding Additional Sums in those provisions hereof where such
express mention is not made.
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SECTION 10.7. Additional Covenants.
The Company covenants and agrees with each Holder of Securities of each
series that it shall not, and it shall not permit any Subsidiary of the Company
to, (a) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Company's
capital stock, or (b) make any payment of principal of or interest or premium,
if any, on or repay, repurchase or redeem any debt securities of the Company
that rank pari passu in all respects with or junior in interest to the
Securities of such series or make any guarantee payments with respect to any
guarantee by the Company of debt securities of any subsidiary of the Company if
such guarantee ranks pari passu with or junior in interest to the Securities
(other than (a) dividends or distributions in Common Stock, (b) any declaration
of a dividend in connection with the implementation of a Rights Plan, the
issuance of any Common Stock of any class or series of preferred stock of the
Company under any Rights Plan in the future or the redemption or repurchase of
any such rights pursuant thereto, (c) payments under any BankAmerica Guarantee,
and (d) purchases of Common Stock related to the issuance of Common Stock or
rights under any of the Company's (or its subsidiaries') benefit plans for their
directors, officers or employees) if at such time (i) there shall have occurred
any event of which the Company has actual knowledge that (A) with the giving of
notice or the lapse of time, or both, would constitute an Event of Default with
respect to the Securities of such series and (B) in respect of which the Company
shall not have taken reasonable steps to cure, (ii) if the Securities of such
series are held by a BankAmerica Trust, the Company shall be in default with
respect to its payment of any obligations under the BankAmerica Guarantee
relating to the Preferred Securities issued by such BankAmerica Trust or (iii)
the Company shall have given notice of its election to begin an Extension Period
with respect to the Securities of such series as provided herein and shall not
have rescinded such notice, or such Extension Period, or any extension thereof,
shall be continuing. For purposes hereof, neither the Company's Senior Debt nor
its Senior Subordinated Debt shall be deemed to be pari passu with the
Securities.
The Company also covenants with each Holder of Securities of a series
issued to a BankAmerica Trust (i) to maintain directly or indirectly 100%
ownership of the Common Securities of such BankAmerica Trust; provided, however,
that any permitted successor of the Company hereunder may succeed to the
Company's ownership of such Common Securities, (ii) as holder of the
Common Securities not to voluntarily terminate, wind-up or liquidate such
BankAmerica Trust, except upon prior approval of the Federal Reserve, if then
required under applicable capital guidelines or policies of the Federal Reserve,
and (a) in connection with a distribution of the Securities of such series to
the holders of Preferred Securities in liquidation of such BankAmerica Trust or
(b) in connection with certain mergers, consolidations or amalgamations
permitted by the related Trust Agreement and (iii) to use its reasonable
efforts, consistent with the terms and provisions of such Trust Agreement, to
cause such BankAmerica Trust to remain classified as a grantor trust and not an
association taxable as a corporation for United States federal income tax
purposes.
SECTION 10.8. Original Issue Discount.
On or before December 15 of each year during which any Securities are
outstanding (or on or prior to January 15, 1997 in the case of 1996), the
Company shall furnish to each Paying
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Agent such information as may be reasonably requested by each Paying Agent in
order that each Paying Agent may prepare the information which it is required to
report for such year on Internal Revenue Service Forms 1096 and 1099 pursuant to
Section 6049 of the Internal Revenue Code of 1986, as amended. Such information
shall include the amount of original issue discount includible in income for
each $25 of principal amount at Stated Maturity of outstanding Securities during
such year.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1. Applicability of This Article.
Redemption of Securities of any series (whether by operation of a sinking
fund or otherwise) as permitted or required by any form of Security issued
pursuant to this Indenture shall be made in accordance with such form of
Security and this Article; provided, however, that if any provision of any such
form of Security shall conflict with any provision of this Article, the
provision of such form of Security shall govern. Except as otherwise set forth
in the form of Security for such series, each Security of such series shall be
subject to partial redemption only in the amount of $25 or integral multiples
thereof.
SECTION 11.2. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by
or pursuant to a Board Resolution. In case of any redemption at the election of
the Company of any of the Securities of any particular series and having the
same terms, the Company shall, not less than 30 nor more than 90 days prior to
the Redemption Date (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee and, in the case of Securities of a series held by
a BankAmerica Trust, the related Property Trustee of such date and of the
principal amount of Securities of that series to be redeemed and provide the
additional information required to be included in the notice or notices
contemplated by Section 11.4. In the case of any redemption of Securities prior
to the expiration of any restriction on such redemption provided in the terms of
such Securities, the Company shall furnish the Trustee with an Officers'
Certificate and an Opinion of Counsel evidencing compliance with such
restriction. The Company shall have received the prior approval of the Federal
Reserve if then required under applicable capital guidelines or policies of the
Federal Reserve prior to redeeming any Securities pursuant hereto.
SECTION 11.3. Selection of Securities to be Redeemed.
If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 90 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of a portion of the principal amount of any Security of such series,
provided that the unredeemed portion of the principal amount of any Security
shall be in an authorized denomination (which shall not be less than the minimum
authorized denomination)
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for such Security. If less than all the Securities of such series and of a
specified tenor are to be redeemed (unless such redemption affects only a single
Security), the particular Securities to be redeemed shall be selected not more
than 90 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series and specified tenor not previously called for
redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the Securities
selected for partial redemption and the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed. If the
Company shall so direct, Securities registered in the name of the Company, any
Affiliate or any Subsidiary thereof shall not be included in the Securities
selected for redemption.
SECTION 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not later than the thirtieth day, and not earlier than the ninetieth day,
prior to the Redemption Date, to each Holder of Securities to be redeemed, at
the address of such Holder as it appears in the Securities Register.
With respect to Securities of each series to be redeemed, each notice of
redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price or if the Redemption Price cannot be calculated
prior to the time the notice is required to be sent, the estimate of the
Redemption Price provided pursuant to the Indenture together with a statement
that it is an estimate and that the actual Redemption Price will be calculated
on the third Business Day prior to the Redemption Date (if such an estimate of
the Redemption Price is given, a subsequent notice shall be given as set forth
above setting forth the Redemption Price promptly following the calculation
thereof);
(c) if less than all Outstanding Securities of such particular series and
having the same terms are to be redeemed, the identification (and, in the case
of partial redemption, the respective principal amounts) of the particular
Securities to be redeemed;
(d) that on the Redemption Date, the Redemption Price will become due and
payable upon each such Security or portion thereof, and that interest thereon,
if any, shall cease to accrue on and after said date;
(e) the place or places where such Securities are to be surrendered for
payment of the Redemption Price;
(1) that the redemption is for a sinking fund, if such is the case; and
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(g) such other provisions as may be required in respect of the terms of a
particular series of Securities.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall not be
irrevocable. The notice if mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice. In any case, a failure to give such notice by mail or any
defect in the notice to the Holder of any Security designated for redemption as
a whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security.
SECTION 11.5. Deposit of Redemption Price.
Prior to 10:00 a.m. New York City time on the Redemption Date specified in
the notice of redemption given as provided in Section 11.4, the Company will
deposit with the Trustee or with one or more Paying Agents (or if the Company is
acting as its own Paying Agent, the Company will segregate and hold in trust as
provided in Section 10.3) an amount of money sufficient to pay the Redemption
Price of, and any accrued interest (including Additional Interest) on, all the
Securities which are to be redeemed on that date.
SECTION 11.6. Payment of Securities Called for Redemption.
If any notice of redemption has been given as provided in Section 11.4, the
Securities or portion of Securities with respect to which such notice has been
given shall become due and payable on the date and at the place or places stated
in such notice at the applicable Redemption Price, together with accrued
interest (including any Additional Interest) to the Redemption Date. On
presentation and surrender of such Securities at a Place of Payment in said
notice specified, the said securities or the specified portions thereof shall be
paid and redeemed by the Company at the applicable Redemption Price, together
with accrued interest (including any Additional Interest) to the Redemption
Date; provided, however, that, unless otherwise specified as contemplated by
Section 3.1, installments of interest whose Stated Maturity is on or prior to
the Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on the
relevant record dates according to their terms and the provisions of Section
3.7.
Upon presentation of any Security redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder thereof, at
the expense of the Company, a new Security or Securities of the same series, of
authorized denominations, in aggregate principal amount equal to the unredeemed
portion of the Security so presented and having the same Original Issue Date,
Stated Maturity and terms. If a Global Security is so surrendered, such new
Security (subject to Section 3.5) will also be a new Global Security.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal of and premium, if any, on such Security
shall, until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
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SECTION 11.7. Right of Redemption of Securities Initially Issued to a
BankAmerica Trust.
In the case of the Securities of a series initially issued to a BankAmerica
Trust, if specified as contemplated by Section 3.1, the Company, at its option,
may redeem such Securities (i) on or after the date specified as contemplated by
Section 3.1, in whole at any time or in part from time to time, or (ii) upon
the occurrence and during the continuation of a Tax Event or Capital Treatment
Event, prior to the date specified as contemplated by Section 3.1 and within 90
days following the occurrence of such Tax Event or Capital Treatment Event in
respect of such BankAmerica Trust, in whole (but not in part), in each case at a
Redemption Price specified as contemplated by Section 3.1.
ARTICLE XII
SINKING FUNDS
SECTION 12.1. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of any series except as otherwise specified as
contemplated by Section 3.1 for such Securities.
The minimum amount of any sinking fund payment provided for by the terms of
any Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any sinking fund payment in excess of such minimum amount which is
permitted to be made by the terms of such Securities of any series is herein
referred to as an "optional sinking fund payment." If provided for by the terms
of any Securities of any series, the cash amount of any sinking fund payment may
be subject to reduction as provided in Section 12.2. Each sinking fund payment
shall be applied to the redemption (or purchase by tender or otherwise) of
Securities of any series as provided for by the terms of such Securities.
SECTION 12.2. Satisfaction of Sinking Fund Payments with Securities.
In lieu of making all or any part of a mandatory sinking fund payment with
respect to any Securities of a series in cash, the Company may at its option, at
any time no more than 16 months and no less than 45 days prior to the date on
which such sinking fund payment is due, deliver to the Trustee Securities of
such series (together with the unmatured coupons, if any, appertaining thereto)
theretofore purchased or otherwise acquired by the Company, except Securities of
such series that have been redeemed through the application of mandatory or
optional sinking fund payments pursuant to the terms of the Securities of such
series, accompanied by a Company Order instructing the Trustee to credit such
obligations and stating that the Securities of such series were originally
issued by the Company by way of bona fide sale or other negotiation for value;
provided that the Securities to be so credited have not been previously so
credited. The Securities to be so credited shall be received and credited for
such purpose by the Trustee at the redemption price for such Securities, as
specified in the Securities
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so to be redeemed, for redemption through operation of the sinking fund and the
amount of such sinking fund payment shall be reduced accordingly.
SECTION 12.3. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
such Securities pursuant to the terms of such Securities, the portion thereof,
if any, which is to be satisfied by payment of cash in the currency in which the
Securities of such series are payable (except as provided pursuant to Section
3.1) and the portion thereof, if any, which is to be satisfied by delivering and
crediting Securities pursuant to Section 12.2 and will also deliver to the
Trustee any Securities to be so delivered. Such Officers' Certificate shall be
irrevocable and upon its delivery the Company shall be obligated to make the
cash payment or payments therein referred to, if any, on or before the
succeeding sinking fund payment date. In the case of the failure of the Company
to deliver such Officers' Certificate (or, as required by this Indenture, the
Securities and coupons, if any, specified in such Officers' Certificate) by the
due date therefor, the sinking fund payment due on the succeeding sinking fund
payment date for such series shall be paid entirely in cash and shall be
sufficient to redeem the principal amount of the Securities of such series
subject to a mandatory sinking fund payment without the right to deliver or
credit securities as provided in Section 12.2 and without the right to make the
optional sinking fund payment with respect to such series at such time.
Any sinking fund payment or payments (mandatory or optional) made in cash
plus any unused balance of any preceding sinking fund payments made with respect
to the Securities of any particular series shall be applied by the Trustee (or
by the Company if the Company is acting as its own Paying Agent) on the sinking
fund payment date on which such payment is made (or, if such payment is made
before a sinking fund payment date, on the sinking fund payment date immediately
following the date of such payment) to the redemption of Securities of such
series at the Redemption Price specified in such Securities with respect to the
sinking fund. Any sinking fund moneys not so applied or allocated by the Trustee
(or, if the Company is acting as its own Paying Agent, segregated and held in
trust by the Company as provided in Section 10.3) for such series and together
with such payment (or such amount so segregated) shall be applied in accordance
with the provisions of this Section 12.3. Any and all sinking fund moneys with
respect to the Securities of any particular series held by the Trustee (or if
the Company is acting as its own Paying Agent, segregated and held in trust as
provided in Section 10.3) on the last sinking fund payment date with respect to
Securities of such series and not held for the payment or redemption of
particular Securities of such series shall be applied by the Trustee (or by the
Company if the Company is acting as its own Paying Agent), together with other
moneys, if necessary, to be deposited (or segregated) sufficient for the
purpose, to the payment of the principal of the Securities of such series at
Maturity. The Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 11.3 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Company in the manner provided in Section 11.4. Such notice having been
duly given, the redemption of such Securities shall be made upon the terms and
in the manner stated in Section 11.6. On or before each sinking fund payment
date, the Company shall pay to the
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Trustee (or, if the Company is acting as its own Paying Agent, the Company shall
segregate and hold in trust as provided in Section 10.3) in cash a sum in the
currency in which Securities of such series are payable (except as provided
pursuant to Section 3.1) equal to the principal, premium, if any, and any
interest accrued to the Redemption Date for Securities or portions thereof to be
redeemed on such sinking fund payment date pursuant to this Section 12.3.
Neither the Trustee nor the Company shall redeem any Securities of a series
with sinking fund moneys or mail any notice of redemption of Securities of such
series by operation of the sinking fund for such series during the continuance
of a default in payment of interest, if any, on any Securities of such series or
of any Event of Default (other than an Event of Default occurring as a
consequence of this paragraph) with respect to the Securities of such series,
except that if the notice of redemption shall have been provided in accordance
with the provisions hereof, the Trustee (or the Company, if the Company is then
acting as its own Paying Agent) shall redeem such Securities if cash sufficient
for that purpose shall be deposited with the Trustee (or segregated by the
Company) for that purpose in accordance with the terms of this Article XII.
Except as aforesaid, any moneys in the sinking fund for such series at the time
when any such default or Event of Default shall occur and any moneys thereafter
paid into such sinking fund shall, during the continuance of such default or
Event of Default, be held as security for the payment of the Securities and
coupons, if any, of such series; provided, however, that in case such default or
Event of Default shall have been cured or waived herein, such moneys shall
thereafter be applied on the next sinking fund payment date for the Securities
of such series on which such moneys may be applied pursuant to the provisions of
this Section 12.3.
ARTICLE XIII
SUBORDINATION OF SECURITIES
SECTION 13.1. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article, the payment of the principal
of (and premium, if any) and interest (including any Additional Interest) on
each and all of the Securities are hereby expressly made subordinate and subject
in right of payment to the prior payment in full of all Senior Indebtedness.
SECTION 13.2. No Payment When Senior Indebtedness in Default; Payment Over
of Proceeds Upon Dissolution, Etc.
In the event that the Company shall default in the payment of any principal
of (or premium, if any) or interest on any Senior Indebtedness when the same
becomes due and payable, whether at maturity or at a date fixed for prepayment
or by declaration of acceleration or otherwise, then, upon written notice of
such default to the Company by the holders of Senior Indebtedness or any trustee
therefor, unless and until such default shall have been cured or waived or shall
have ceased to exist, no direct or indirect payment (in cash, property,
securities, by set-off or
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otherwise) shall be made or agreed to be made on account of the principal of (or
premium, if any) or interest on any of the Securities, or in respect of any
redemption, repayment, retirement, purchase or other acquisition of any of the
Securities.
In the event of (a) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceedings relating
to the Company, its creditors or its property, (b) any proceeding for the
liquidation, dissolution or other winding up of the Company, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings, (c)
any assignment by the Company for the benefit of Creditors or (d) any other
marshalling of the assets of the Company (each such event, if any, herein
sometimes referred to as a "Proceeding"), all Senior Indebtedness (including any
interest thereon accruing after the commencement of any such proceedings) shall
first be paid in full before any payment or distribution, whether in cash,
securities or other property, shall be made to any Holder of any of the
Securities on account thereof. Any payment or distribution, whether in cash,
securities or other property (other than securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment the payment
of which is subordinate, at least to the extent provided in these subordination
provisions with respect to the indebtedness evidenced by the Securities, to the
payment of all Senior Indebtedness at the time outstanding and to any securities
issued in respect thereof under any such plan of reorganization or
readjustment), which would otherwise (but for these subordination provisions) be
payable or deliverable in respect of the Securities of any series shall be paid
or delivered directly to the holders of Senior Indebtedness in accordance with
the priorities then existing among such holders until all Senior Indebtedness
(including any interest thereon accruing after the commencement of any
Proceeding) shall have been paid in full.
In the event of any Proceeding, after payment in full of all sums owing
with respect to Senior Indebtedness, the Holders of the Securities, together
with the holders of any obligations of the Company ranking on a parity with the
Securities (which for this purpose only shall include the Allocable Amounts of
Senior Subordinated Debt), shall be entitled to be paid from the remaining
assets of the Company the amounts at the time due and owing on account of unpaid
principal of (and premium, if any) and interest on the Securities and such other
obligations before any payment or other distribution, whether in cash, property
or otherwise, shall be made on account of any capital stock or any obligations
of the Company ranking junior to the Securities and such other obligations. In
the event that, notwithstanding the foregoing, any payment or distribution of
any character or any security, whether in cash, securities or other property
(other than securities of the Company or any other corporation provided for by a
plan of reorganization or readjustment the payment of which is subordinate, at
least to the extent provided in these subordination provisions with respect to
the indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment), shall be
received by the Trustee or any Holder in contravention of any of the terms
hereof and before all Senior Indebtedness shall have been paid in full, such
payment or distribution or security shall be received in trust for the benefit
of, and shall be paid over or delivered and transferred to, the holders of the
Senior Indebtedness at the time outstanding in accordance with the priorities
then existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in
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full. In the event of the failure of the Trustee or any Holder to endorse or
assign any such payment, distribution or security, each holder of Senior
Indebtedness is hereby irrevocably authorized to endorse or assign the same.
The Trustee and Holders will take such action (including, without
limitation, the delivery of this Indenture to an agent for the holders of Senior
Indebtedness or consent to the filing of a financing statement with respect
hereto) as may, in the opinion of counsel designated by the holders of a
majority in principal amount of the Senior Indebtedness at the time outstanding,
be necessary or appropriate to assure the effectiveness of the subordination
effected by these provisions.
The provisions of this Section 13.2 shall not impair any rights, interests,
remedies or powers of any secured creditor of the Company in respect of any
security interest the creation of which is not prohibited by the provisions of
this Indenture.
The securing of any obligations of the Company, otherwise ranking on a
parity with the Securities or ranking junior to the Securities, shall not be
deemed to prevent such obligations from constituting, respectively, obligations
ranking on a parity with the Securities or ranking junior to the Securities.
SECTION 13.3. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture, or in any
of the Securities, shall prevent (a) the Company at any time, except during the
conditions described in the first paragraph of Section 13.2 or the pendency of
any Proceeding referred to in Section 13.2, from making payments at any time of
principal of (and premium, if any) or interest (including Additional Interest)
on the Securities, or (b) the application by the Trustee of any moneys deposited
with it hereunder to the payment of or on account of the principal of (and
premium, if any) or interest (including any Additional Interest) on the
Securities or the retention of such payment by the Holders, if, at the time of
such application by the Trustee, it did not have knowledge that such payment
would have been prohibited by the provisions of this Article.
SECTION 13.4. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all amounts due or to become due on all
Senior Indebtedness, or the provision for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness, the Holders of the Securities shall be subrogated to the extent of
the payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article (equally and ratably with the holders
of all indebtedness of the Company which by its express terms is subordinated to
Senior Indebtedness of the Company to substantially the same extent as the
Securities are subordinated to the Senior Indebtedness and is entitled to like
rights of subrogation by reason of any payments or distributions made to holders
of such Senior Indebtedness) to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of (and
premium, if any) and interest on the Securities shall be paid in full. For
purposes of such subrogation, no payments or
70
<PAGE>
distributions to the holders of the Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article, and no payments over
pursuant to the provisions of this Article to the holders of Senior Indebtedness
by Holders of the Securities or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment or distribution by the Company to or on
account of the Senior Indebtedness.
SECTION 13.5. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the purpose
of defining the relative rights of the Holders of the Securities on the one hand
and the holders of Senior Indebtedness on the other hand. Nothing contained in
this Article or elsewhere in this Indenture or in the Securities is intended to
or shall (a) impair, as between the Company and the Holders of the Securities,
the obligations of the Company, which are absolute and unconditional, to pay to
the Holders of the Securities the principal of (and premium, if any) and
interest (including any Additional Interest) on the Securities as and when the
same shall become due and payable in accordance with their terms; or (b) affect
the relative rights against the Company of the Holders of the Securities and
creditors of the Company other than their rights in relation to the holders of
Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture including, without limitation, filing and voting claims in
any Proceeding, subject to the rights, if any, under this Article of the holders
of Senior Indebtedness to receive cash, property and securities otherwise
payable or deliverable to the Trustee or such Holder.
SECTION 13.6. Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof authorizes and
directs the Trustee on his or her behalf to take such action as may be necessary
or appropriate to acknowledge or effectuate the subordination provided in this
Article and appoints the Trustee his or her attorney-in-fact for any and all
such purposes.
SECTION 13.7. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the immediately preceding
paragraph, the holders of Senior Indebtedness may, at any time and from to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Senior
71
<PAGE>
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii)
release any Person liable in any manner for the collection of Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Company and any other Person.
SECTION 13.8. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee, agent or
representative therefor; provided, however, that if the Trustee shall not have
received the notice provided for in this Section at least two Business Days
prior to the date upon which by the terms hereof any monies may become payable
for any purpose (including, without limitation, the payment of the principal of
(and premium, if any) or interest (including any Additional Interest) on any
Security), then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such monies and to apply
the same to the purpose for which they were received and shall not be affected
by any notice to the contrary which may be received by it within two Business
Days prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
to be a holder of Senior Indebtedness (or a trustee or attorney-in-fact
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee or attorney-in-fact therefor). In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any Person as a holder of Senior Indebtedness to participate in
any payment or distribution pursuant to this Article, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Article, and if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 13.9. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 6.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
72
<PAGE>
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article.
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee, in its capacity as trustee under this Indenture, shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall
not be liable to any such holders if it shall in good faith mistakenly pay over
or distribute to Holders of Securities or to the Company or to any other Person
cash, property or securities to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article or otherwise.
SECTION 13.11. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article with respect to any Senior Indebtedness which may at
any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
SECTION 13.12. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall in such case (unless the context otherwise requires)
be construed as extending to and including such Paying Agent within its meaning
as fully for all intents and purposes as if such Paying Agent were named in this
Article in addition to or in place of the Trustee.
73
<PAGE>
* * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
BANKAMERICA CORPORATION
By:
-----------------------------
Attest: /s/ SUSAN JOHNSON
------------------------
Susan Johnson
Assistant Vice President
BANKERS TRUST COMPANY
as Trustee
By: /s/ JENNA KAUFMAN
----------------------------
Jenna Kaufman
Vice President
74
<PAGE>
* * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
BANKAMERICA CORPORATION
By: /S/ [ILLEGIBLE]
----------------------
Attest:
BANKERS TRUST COMPANY
as Trustee
By:
-----------------------
<PAGE>
- --------------------------------------------------------------------------------
BankAmerica Corporation
NationsBank (DE) Corporation
- --------------------------------------------------------------------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of September 15, 1998
Supplementing the Junior Subordinated Indenture,
dated as of December 20, 1996, between
BankAmerica Corporation and
Bankers Trust Company, as Trustee
- --------------------------------------------------------------------------------
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of September 15, 1998 (the "First
Supplemental Indenture"), among NationsBank (DE) Corporation, a Delaware
corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of
NationsBank Corporation, a North Carolina corporation ("NationsBank"),
BankAmerica Corporation, a Delaware corporation ("BankAmerica"), and Bankers
Trust Company, as Trustee (the "Trustee") under the Indenture referred to
herein;
WHEREAS, BankAmerica and the Trustee heretofore executed and delivered a
Junior Subordinated Indenture, dated as of December 20, 1996 (the "Indenture");
and
WHEREAS, pursuant to the Indenture BankAmerica issued and the Trustee
authenticated and delivered one or more series of BankAmerica's Notes (the
"Securities"); and
WHEREAS, NationsBank and BankAmerica have entered into the Agreement and
Plan of Reorganization, dated as of April 10, 1998, pursuant to which (i)
NationsBank will merge (the "Reincorporation Merger") with and into NationsBank
(DE), in accordance with the terms and conditions of the Plan of Reincorporation
Merger by and between NationsBank and NationsBank (DE), dated as of August 3,
1998, with NationsBank (DE) as the surviving corporation in the Reincorporation
Merger, and (ii) BankAmerica will thereafter merge (the "Merger," and together
with the Reincorporation Merger, the "Reorganization")with and into NationsBank
(DE), with NationsBank (DE) as the surviving corporation in the Merger; and
WHEREAS, the Reorganization is expected to be consummated on September
30, 1998; and
WHEREAS, Section 8.1 of the Indenture provides that in the case of the
Reorganization, NationsBank (DE) shall expressly assume by supplemental
indenture all the obligations under the Securities and the Indenture on the part
of BankAmerica to be performed or observed; and
WHEREAS, Section 9.1 of the Indenture provides that BankAmerica and the
Trustee may amend the Indenture and the Securities without notice to or consent
of any Holders of the Securities in order to comply with Article VIII of the
Indenture; and
WHEREAS, this First Supplemental Indenture has been duly authorized by
all necessary corporate action on the part of each of NationsBank (DE) and
BankAmerica.
NOW, THEREFORE, NationsBank (DE), BankAmerica and the Trustee agree as
follows for the equal and ratable benefit of the Holders of the Securities:
2
<PAGE>
ARTICLE I
ASSUMPTION BY SUCCESSOR CORPORATION
SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby
expressly assumes the due and punctual payment of the principal of (and premium,
if any) and interest (including any Additional Interest) on all the Securities
and the performance of every covenant of the Indenture on the part of
BankAmerica to be performed or observed.
SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this First
Supplemental Indenture and agrees to perform the same under the terms and
conditions set forth in the Indenture.
ARTICLE II
MISCELLANEOUS
SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur
of (i) the execution and delivery of this First Supplemental Indenture by
NationsBank (DE), BankAmerica and the Trustee and (ii) the consummation of the
Reorganization, the Indenture shall be supplemented in accordance herewith, and
this First Supplemental Indenture shall form a part of the Indenture for all
purposes, and every Holder of Securities heretofore or hereafter authenticated
and delivered under the Indenture shall be bound thereby.
SECTION 2.2. Indenture Remains in Full Force and Effect. Except as
supplemented hereby, all provisions in the Indenture shall remain in full force
and effect.
SECTION 2.3. Indenture and Supplemental Indenture Construed Together.
This First Supplemental Indenture is an indenture supplemental to and in
implementation of the Indenture, and the Indenture and this First Supplemental
Indenture shall henceforth be read and construed together.
SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture
as supplemented by this First Supplemental Indenture is in all respects
confirmed and preserved.
SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this
First Supplemental Indenture limits, qualifies or conflicts with any provision
of the Trust Indenture Act ("TIA") that is required under the TIA to be part of
and govern any provision of this First Supplemental Indenture, the provision of
the TIA shall control. If any provision of this First Supplemental Indenture
modifies or excludes any provision of the TIA that may be so modified or
excluded, the provision of the TIA shall be deemed to apply to the Indenture as
so modified or to be excluded by this First Supplemental Indenture, as the case
may be.
3
<PAGE>
SECTION 2.6. Severability. In case any provision in this First
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Indenture.
SECTION 2.8. Headings. The Article and Section headings of this First
Supplemental Indenture have been inserted for convenience of reference only, are
not to be considered part of this Supplemental Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 2.9. Benefits of First Supplemental Indenture, etc. Nothing in
this First Supplemental Indenture or the Securities, express or implied, shall
give to any Person, other than the parties hereto and thereto and their
successors hereunder and thereunder and the Holders of the Securities, any
benefit of any legal or equitable right, remedy or claim under the Indenture,
this First Supplemental Indenture or the Securities.
SECTION 2.10. Successors. All agreements of NationsBank (DE) in this
First Supplemental Indenture shall bind its successors. All agreements of the
Trustee in this First Supplemental Indenture shall bind its successors.
SECTION 2.11. Trustee Not Responsible for Recitals. The recitals
contained herein shall be taken as the statements of BankAmerica and NationsBank
(DE), and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to, and shall not be responsible for, the
validity or sufficiency of this First Supplemental Indenture.
SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In
entering into this First Supplemental Indenture, the Trustee shall be entitled
to the benefit of every provision of the Indenture relating to the conduct or
affecting the liability or affording protection to the Trustee, whether or not
elsewhere herein so provided.
SECTION 2.13. Governing Law. This First Supplemental Indenture shall be
governed by, and construed in accordance with, the laws of the jurisdiction
which govern the Indenture and its construction.
SECTION 2.14. Counterpart originals. The parties may sign any number of
copies of this First Supplemental Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement.
4
<PAGE>
IN WITNESS WHEREOF, the parties have caused this First Supplemental
Indenture to be duly executed as of the date first written above.
NationsBank (DE) Corporation
By: /s/ John E. Mack
------------------------------------
Name: John E. Mack
Title: Senior Vice President
Attest:
/s/ James W. Kiser
- ------------------------------
Secretary
BankAmerica Corporation
By: /s/ S.M. Maguire
------------------------------------
Name: S.M. Maguire
Title: Senior Vice President and
Assistant Treasurer
Attest:
/s/ Cheryl Sorokin
- ------------------------------
Secretary
Bankers Trust Company, as Trustee
By: /s/ Ednora G. Linares
------------------------------------
Name: Ednora G. Linares
Title: Assistant Vice President
Attest:
/s/ Marc Parilla
- ------------------------------
Marc Parilla
Assistant Treasurer
5
NATIONSBANK CORPORATION
Plan Amendments
WHEREAS, many employees of NationsBank Corporation and its subsidiaries
participate in employee benefit plans that provide (i) retirement and deferred
compensation benefits, (ii) equity incentive compensation and (iii) health,
welfare and severance benefits; and
WHEREAS, certain of those plans provide special benefits in the event of
a "change in control" or "change of control" (including in certain cases
accelerated vesting of benefits), including without limitation the following
plans:
1986 Restricted Stock Award Plan of NationsBank Corporation, As Amended
NationsBank Corporation Key Employee Stock Plan
The NationsBank Pension Plan
NationsBank Corporation and Designated Subsidiaries Supplemental
Executive Retirement Plan
NationsBank Corporation and Designated Subsidiaries Supplemental
Executive Retirement Plan for Senior Management Employees
NationsBank Corporation and Designated Subsidiaries Deferred
Compensation Plan for Key Employees
NationsBank Corporation and Designated Subsidiaries Supplemental
Retirement Plan
Barnett Employee Savings and Thrift Plan
but specifically excluding the NationsBank Corporation 1996 Associates Stock
Option Award Plan (collectively, the "Affected Plans"); and
WHEREAS, pursuant to the terms and provisions of the Affected Plans,
NationsBank Corporation has reserved the right to amend the Affected Plans in
the manner set forth herein;
NOW, THEREFORE, NationsBank Corporation does hereby declare that the
Affected Plans are hereby amended effective as of the date hereof as follows:
1. Effect of BankAmerica Corporation Transaction. Each Affected Plan is
hereby amended by adding the following sentence as a final section to the
Affected Plan:
"Notwithstanding anything contained herein to the contrary, the
transactions between NationsBank Corporation and BankAmerica Corporation
contemplated
<PAGE>
by that certain Agreement and Plan of Reorganization dated as of April
10, 1998 between NationsBank Corporation and BankAmerica Corporation
shall not constitute or be deemed to constitute a "Change in Control" or
"Change of Control" for purposes of this Plan or for any other
purposes."
2. Continuation of Affected Plans. Except as expressly or by necessary
implication amended hereby, the Affected Plans shall continue in full force and
effect.
IN WITNESS WHEREOF, NationsBank Corporation has caused this instrument
to be executed by its duly authorized officer as of the 10th day of April, 1998.
NATIONSBANK CORPORATION
By: /s/ C. J. Cooley
-------------------------------------------------
C. J. Cooley, Principal Corporate Personnel Officer
The undersigned, solely in its capacity as Trustee of The NationsBank
Pension Plan, hereby joins in the execution of this instrument in accordance
with Section 11.1 of The NationsBank Pension Plan.
NATIONSBANK, N.A.
By: /s/ Tom Hortenstine
-------------------------------------------
Name: Tom Hortenstine
--------------------------------------
Title: SVP
-------------------------------------
2
<PAGE>
AMENDMENT TO THE
NATIONSBANK CORPORATION AND DESIGNATED SUBSIDIARIES
SUPPLEMENTAL EXECUTIVE 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 Executive Retirement Plan (the "Plan"); and
WHEREAS, NationsBank desires to amend the Plan to modify the method of
benefit payment under the Plan; and
WHEREAS, the Compensation Committee of the Board of Directors of
NationsBank has authorized and approved said amendment to the Plan in accordance
with the provisions of Article VI of the Plan;
NOW, THEREFORE, NationsBank does hereby declare that the Plan is hereby
amended effective as of July 1, 1998 as follows:
1. Section 4.12 of the Plan is amended to read as follows:
"Section 4.12. Special Election of Single Lump Sum or
Installment Payments.
(a) Alternative Methods of Payment. Notwithstanding any
provisions of the Plan to the contrary, a Participant may irrevocably
elect pursuant to this Section 4.12 to have the benefits payable under
Sections 4.2, 4.3 or 4.4 upon the Participant's Retirement or the
benefits payable under Section 4.6 upon the Participant's death while in
Service paid in accordance with one of the following methods of payment
and in lieu of the method otherwise applicable under the provisions of
this Article IV:
(i) a single lump sum payment;
(ii) five (5) annual installments; or
(iii) ten (10) annual installments.
(b) Timing of Elections and Effective Date. Any method of payment
election under this Section 4.12 must be made during the ninety (90) day
period beginning on the latest of (i) the date the Participant commences
participation in the Plan, (ii) the date the Participant attains age
fifty-four (54) or (iii) July 1,
<PAGE>
1998. Any such election shall be made on such form and pursuant to such
procedures as are adopted by the Plan Committee for such purpose and
shall become effective upon the first anniversary of the date such
election is made.
(c) Amount of Payments. The amount of any single lump sum payment
payable under this Section 4.12 upon a Participant's Retirement shall be
the Commuted Payment Amount determined for such Participant as of the
date of such Participant's Retirement. The amount of any single lump sum
payment payable under this Section 4.12 upon a Participant's death while
in Service [or, to the extent provided in Section 4.6(b), while
Disabled] shall be the actuarially equivalent single sum value of the
benefits (if any) provided for in Section 4.6(c) determined as of the
date of the Participant's death using assumptions consistent with those
set forth in Exhibit B to the Plan. The amount of each annual
installment payment payable under this Section 4.12 upon a Participant's
Retirement or death while in Service shall be the amount necessary to
amortize the single lump sum payment that would have been payable with
respect to the Participant (if it had been elected) using the 30-year
U.S. Treasury bond ask yield for the last business day of the calendar
month immediately preceding the Participant's Retirement or death."
2. Except as expressly or by necessary implication amended hereby, the
Plan shall continue in full force and effect.
IN WITNESS WHEREOF, NationsBank has caused this instrument to be
executed by its duly authorized officer as of the 24th day of June, 1998.
NATIONSBANK CORPORATION
By: /s/ C. J. Cooley
--------------------------------
C. J. Cooley
Executive Vice President
2
<PAGE>
BANKAMERICA CORPORATION
Plan Amendments
WHEREAS, as a result of the consummation of the transactions
contemplated by the Agreement and Plan of Reorganization between NationsBank
Corporation and BankAmerica Corporation dated April 10, 1998 (the "BankAmerica
Transactions"), BankAmerica Corporation (the "Corporation") and its affiliates
sponsor numerous "employee benefit plans" within the meaning of Section 3(1) of
the Employee Retirement Income Security Act of 1974, as amended (each a "Plan"
and collectively the "Plans"); and
WHEREAS, immediately prior to the consummation of the BankAmerica
Transactions, certain of the Plans were sponsored by NationsBank Corporation and
its affiliates (the "NationsBank Group Plans") and certain of the Plans were
sponsored by BankAmerica Corporation and its affiliates (the "BankAmerica Group
Plans"); and
WHEREAS, for a period of time following the BankAmerica Transactions, it
is anticipated that the NationsBank Group Plans and the BankAmerica Group Plans
will continue to be maintained as separate employee benefit programs; and
WHEREAS, the Corporation desires to amend the Plans to clarify which
groups of employees are covered by the Plans from and after the consummation of
the BankAmerica Transactions in order to avoid duplication of coverage; and
WHEREAS, pursuant to the terms and provisions of the Plans, the
Corporation has reserved the right to amend the Plans as set forth herein;
NOW, THEREFORE, the Corporation does hereby declare that the Plans are
hereby amended effective as of the date hereof as follows:
1. Effect of BankAmerica Transactions. Each Plan is hereby amended by
adding the following Addendum:
"ADDENDUM 1998-1
Effect of BankAmerica Transactions
(a) Background. NationsBank Corporation and BankAmerica
Corporation entered into an Agreement and Plan of Reorganization dated
April 10, 1998 pursuant to which NationsBank Corporation was
re-incorporated as a Delaware corporation, BankAmerica Corporation was
merged into NationsBank Corporation, and the resulting corporation was
renamed as BankAmerica Corporation (the "BankAmerica Transactions").
Immediately prior to the consummation of the BankAmerica Transactions,
certain employee benefit plans were sponsored by NationsBank Corporation
and its subsidiaries (the "NationsBank Group Plans") and certain
employee benefit plans were sponsored by BankAmerica Corporation and its
subsidiaries (the "BankAmerica Group Plans"). The purpose of this
Addendum is to clarify which groups of employees are covered by the
NationsBank Group Plans and the
<PAGE>
BankAmerica Group Plans from and after the consummation of the
BankAmerica Transactions in order to avoid duplication of coverage.
(b) Designation of Plan Coverage. From and after the consummation
of the BankAmerica Transactions, each employee of BankAmerica
Corporation or any of its affiliates shall be classified as a member of
either the "NationsBank Group" or the "BankAmerica Group," but not both.
In that regard, each employee who immediately prior to the consummation
of the BankAmerica Transactions was employed by NationsBank Corporation
or any of its affiliates shall be classified as a NationsBank Group
member, and each employee who immediately prior to the consummation of
the BankAmerica Transactions was employed by BankAmerica Corporation or
any of its affiliates shall be classified as a BankAmerica Group member,
in either case unless and until a different determination is made by the
Principal Corporate Personnel Officer of BankAmerica Corporation, or any
other officer of the Corporate Personnel Group of BankAmerica
Corporation that is authorized by the Principal Corporate Personnel
Officer (an "Authorized Officer"). Members of the NationsBank Group
shall participate only in the NationsBank Group Plans in accordance with
the terms and provisions of such plans, and members of the BankAmerica
Group shall participate only in the BankAmerica Group Plans in
accordance with the terms and provisions of such plans, in either case
unless and until a different determination is made by an Authorized
Officer. Any Authorized Officer shall have the full power and authority
in his or her sole and exclusive discretion to determine whether an
employee is classified as a member of the NationsBank Group or the
BankAmerica Group for purposes of this Addendum, including without
limitation in connection with job transfers and persons who are first
employed after the consummation of the BankAmerica Transactions."
2. Plan Administrator for BankAmerica Group Plans. The following
paragraph (c) is added to the end of Addendum 1998-1 for each BankAmerica Group
Plan:
"(c) Plan Administrator. From and after the consummation of the
BankAmerica Transactions, "Administrative Committee," and to the extent
applicable "Investment Committee," for each BankAmerica Group Plan shall
mean the individuals then serving as the members of the Corporate
Benefits Committee of BankAmerica Corporation (which prior to the
consummation of the BankAmerica Transactions was known as the Corporate
Benefits Committee of NationsBank Corporation)."
3. Continuation of Plans. Except as expressly or by necessary
implication amended hereby, the Plans shall continue in full force and effect.
IN WITNESS WHEREOF, BankAmerica Corporation has caused this Instrument
to be executed by its duly authorized officer as of the 1st day of October,
1998.
BANKAMERICA CORPORATION
By: /s/ C. J. Cooley
-------------------------------------------
C. J. Cooley, Principal Corporate Personnel
Officer
2
THE NATIONSBANK 401(k) RESTORATION PLAN
(as amended and restated effective April 1, 1998)
<PAGE>
<TABLE>
<CAPTION>
THE NATIONSBANK 401(K) RESTORATION PLAN
TABLE OF CONTENTS
Page
----
<S> <C> <C>
ARTICLE I DEFINITIONS........................................................................1
Section 1.1 Definitions............................................................1
ARTICLE II PLAN ADMINISTRATION...............................................................3
Section 2.1 Committee..............................................................3
ARTICLE III DEFERRED COMPENSATION PROVISIONS.................................................4
Section 3.1 Employee Elections.....................................................4
Section 3.2 Deferral Accounts......................................................4
Section 3.3 Matching Contribution Restoration Accounts.............................4
Section 3.4 Account Adjustments....................................................5
Section 3.5 Account Payments.......................................................6
Section 3.6 Withdrawals on Account of an Unforeseeable Emergency...................9
ARTICLE IV AMENDMENT AND TERMINATION.........................................................9
Section 4.1 Amendment and Termination..............................................9
ARTICLE V MISCELLANEOUS PROVISIONS..........................................................10
Section 5.1 Nature of Plan and Rights.............................................10
Section 5.2 Termination of Employment.............................................10
Section 5.3 Spendthrift Provision.................................................10
Section 5.4 Employment Noncontractual.............................................10
Section 5.5 Adoption by Other Participating Employers.............................10
Section 5.6 Applicable Law........................................................10
Section 5.7 Merged Plans..........................................................10
</TABLE>
i
<PAGE>
THE NATIONSBANK 401(k) RESTORATION PLAN
(as amended and restated effective April 1, 1998)
THIS INSTRUMENT OF AMENDMENT AND RESTATEMENT is executed this ___ day of
February, 1999 and effective as of the 1st day of April, 1998, by BANKAMERICA
CORPORATION, a Delaware corporation (the "Corporation");
Statement of Purpose
--------------------
NationsBank Corporation ("NationsBank") entered into an Agreement and
Plan of Reorganization with BankAmerica Corporation, a Delaware corporation
("BankAmerica"), dated April 10, 1998 (the "Reorganization Agreement"). Pursuant
to the Reorganization Agreement, NationsBank was re-incorporated as a Delaware
corporation, BankAmerica merged into NationsBank, and the resulting Delaware
corporation was renamed "BankAmerica Corporation," all effective as of the
"Effective Time" as defined in the Reorganization Agreement. References herein
to the "Corporation" include both NationsBank (prior to the Effective Time) and
the Delaware corporation resulting from the consummation of the transactions
contemplated by the Reorganization Agreement (from and after the Effective
Time).
The Corporation sponsors The NationsBank 401(k) Restoration Plan (the
"Restoration Plan"). The purpose of the Restoration Plan is to provide benefits,
on a non-qualified and unfunded basis, to certain employees whose benefits under
The NationsBank 401(k) Plan are adversely affected by the limitations of
Sections 401(a)(17), 401(k)(3), 401(m), 402(g) and 415 of the Internal Revenue
Code, as well as certain limits placed on the contribution rates of highly
compensated participants established by the administrative committee under The
NationsBank 401(k) Plan.
By this Instrument, the Corporation is amending and restating the
Restoration Plan effective April 1, 1998 to (i) change the name of the
Restoration Plan from "The NationsBank Retirement Savings Restoration Plan" to
"The NationsBank 401(k) Restoration Plan"; (ii) provide new investment elections
to Covered Employees; and (iii) otherwise meet current needs.
NOW, THEREFORE, for the purposes aforesaid, the Corporation hereby
amends and restates the Restoration Plan effective April 1, 1998 to consist of
the following Articles I through V:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Unless the context clearly indicates otherwise,
when used in the Restoration Plan:
Account means, collectively, the Deferral Account and Matching
Contribution Restoration Account.
<PAGE>
Code means the Internal Revenue Code of 1986. References to the
Code shall include the valid and binding governmental regulations, court
decisions and other regulatory and judicial authority issued or rendered
thereunder.
Code Limitations means any one or more of the limitations and
restrictions that Sections 401(a)(17), 401(k)(3), 401(m), 402(g) and 415
of the Code place on the Pre-Tax Employee Contributions and Matching
Contributions for a Covered Employee under the 401(k) Plan. In addition,
Code Limitations also means and refers to any limitations on
contributions under the 401(k) Plan established by the 401(k) Plan
administrative committee with respect to highly compensated
participants.
Committee means the committee designated pursuant to Section 2.1
of the Restoration Plan.
Corporation means (i) prior to the "Effective Time" (as defined
in the Agreement and Plan of Reorganization dated April 10, 1998 between
NationsBank Corporation and BankAmerica Corporation), NationsBank
Corporation, a North Carolina corporation and (ii) from and after the
Effective Time, BankAmerica Corporation, a Delaware corporation, and any
successor thereto.
Covered Employee means an Employee eligible to participate in the
401(k) Plan.
Deferral Account means the account established and maintained on
the books of a Participating Employer to record a Covered Employee's
interest under the Restoration Plan attributable to amounts credited to
the Covered Employee pursuant to Section 3.2 of the Restoration Plan.
Employee means an individual employed by a Participating
Employer.
401(k) Plan means The NationsBank 401(k) Plan, as in effect from
time to time. Prior to April 1, 1998, the 401(k) Plan was named "The
NationsBank Retirement Savings Plan".
Matching Contribution Restoration Account means the account
established and maintained on the books of a Participating Employer to
record a Covered Employee's interest under the Restoration Plan
attributable to amounts credited to the Covered Employee pursuant to
Section 3.3 of the Restoration Plan. Prior to January 1, 1993, the
Restoration Plan referred to this account as the "Restoration Account".
Participating Employer means (i) the Corporation, (ii) each other
"Participating Employer" under (and as defined in) the 401(k) Plan on
the date hereof and (iii) any other incorporated or unincorporated trade
or business which may hereafter adopt both the 401(k) Plan and the
Restoration Plan.
2
<PAGE>
Payment Date, with respect to a Covered Employee who terminates
employment with the Participating Employers on or after having attained
age fifty-five (55), means the last business day of March of the
calendar year following the calendar year in which such termination of
employment occurs.
Personnel Group means the Personnel Group of the Corporation.
Plan Year means the twelve-month period commencing January 1 and
ending the following December 31.
Restoration Plan means this plan: The NationsBank 401(k)
Restoration Plan, as in effect from time to time. Prior to April 1,
1998, the Restoration Plan was named the "NationsBank Retirement Savings
Restoration Plan".
Single Sum Value of the Account of a Participant who is receiving
annual installments pursuant to Section 3.5(c) means the single sum
present value of the installments determined as of the relevant
determination date using for such purpose as the discount rate the same
rate that was used in calculating the amount of the installments
pursuant to Section 3.5(c) below.
Any capitalized terms used in the Restoration Plan that are defined in the
documents comprising the 401(k) Plan have the meanings assigned to them in the
401(k) Plan, unless such terms are otherwise defined above in this Article or
unless the context clearly indicates otherwise.
ARTICLE II
PLAN ADMINISTRATION
Section 2.1 Committee. The Restoration Plan shall be administered by the
"Committee" under (and as defined in) the 401(k) Plan (although certain
provisions of the Restoration Plan shall be administered by the Personnel Group
as specified herein). The Committee shall be empowered to interpret the
provisions of the Restoration Plan and to perform and exercise all of the duties
and powers granted to it under the terms of the Restoration Plan by action of a
majority of its members in office from time to time. The Committee may adopt
such rules and regulations for the administration of the Restoration Plan as are
consistent with the terms hereof and shall keep adequate records of its
proceedings and acts. All interpretations and decisions made (both as to law and
fact) and other action taken by the Committee with respect to the Restoration
Plan shall be conclusive and binding upon all parties having or claiming to have
an interest under the Restoration Plan. Not in limitation of the foregoing, the
Committee shall have the discretion to decide any factual or interpretative
issues that may arise in connection with its administration of the Restoration
Plan (including without limitation any determination as to claims for benefits
hereunder), and the Committee's exercise of such discretion shall be conclusive
and binding on all affected parties as long as it is not arbitrary or
capricious. The Committee may delegate any of its duties and powers hereunder to
the extent permitted by applicable law.
3
<PAGE>
ARTICLE III
DEFERRED COMPENSATION PROVISIONS
Section 3.1 Employee Elections. Prior to January 1 of a Plan Year, or at
such other times as may be established by the Personnel Group, a Covered
Employee who is expected to be a highly compensated employee within the meaning
of section 414(q) of the Code for the Plan Year of the 401(k) Plan to which such
election relates may elect to defer under the Restoration Plan the portion of
the Covered Employee's Pre-Tax Employee Contributions otherwise permissible
under the 401(k) Plan which cannot be credited to the Covered Employee under the
401(k) Plan for such Plan Year because of the Code Limitations. All elections
made under this Section 3.1 shall be made in writing on a form, or pursuant to
such other non-written procedures, as may be prescribed from time to time by the
Personnel Group and shall be irrevocable for such Plan Year. An election by a
Covered Employee under this Section 3.1 shall continue in effect for all
subsequent Plan Years (during which the Covered Employee is a highly compensated
employee) unless and until changed or terminated by the Covered Employee in
accordance with procedures established from time to time by the Personnel Group.
Any such change in or termination of an election under this Section 3.1 shall be
effective as of the January 1 of the next succeeding Plan Year. If a Covered
Employee's Pre-Tax Employee Contributions to the 401(k) Plan are suspended under
the terms of the 401(k) Plan in connection with a hardship distribution, then
all deferrals under this Plan (including deferrals by Key Executives pursuant to
Section 3.4 below) shall be suspended (to the extent such suspension is required
by Section 401(k) of the Code) for the same period that the Covered Employee's
Pre-Tax Employee Contributions are suspended.
Section 3.2 Deferral Accounts. A Participating Employer shall establish
and maintain on its books a Deferral Account for each Covered Employee employed
by such Participating Employer who elects to defer the receipt of any amount
pursuant to Section 3.1 of the Restoration Plan. Such Deferral Account shall be
designated by the name of the Covered Employee for whom established. The amount
attributable to any Pre-Tax Employee Contribution for a particular pay period
during such Plan Year which cannot be credited to the Covered Employee under the
401(k) Plan because of the Code Limitations, and which the Covered Employee has
elected to defer pursuant to Section 3.1 of the Restoration Plan, shall be
credited to such Deferral Account as of the date such amount would have
otherwise been paid to the Covered Employee.
Section 3.3 Matching Contribution Restoration Accounts. A Participating
Employer shall establish and maintain on its books a Matching Contribution
Restoration Account for each Covered Employee employed by such Participating
Employer whose Matching Contributions under the 401(k) Plan shall have been
limited, directly or indirectly, by the operation of the Code Limitations. Such
Matching Contribution Restoration Account shall be designated by the name of the
Covered Employee for whom established. If a Covered Employee is a Participant
Eligible for Matching Contributions for the Plan Year under the 401(k) Plan, the
Covered Employee's Matching Contribution Restoration Account shall be credited
as of the Valuation Date under the 401(k) Plan that occurs on the last day of
the Plan Year with an amount equal to the sum of Amount A and Amount B, where:
4
<PAGE>
Amount A is seventy-five percent (75%) of the sum of the portions (if
any) of the amounts credited to the Covered Employee's Deferral Account
for the Plan Year pursuant to Section 3.1 of the Restoration Plan that
would have been Matchable Pre-Tax Employee Contributions for the Plan
Year under the 401(k) Plan had such amounts been contributed to the
401(k) Plan as Pre-Tax Employee Contributions for the Covered Employee
and the Code Limitations not applied to the 401(k) Plan.
Amount B is seventy-five percent (75%) of the portion (if any) of the
actual Matchable Pre-Tax Employee Contributions made to the 401(k) Plan
for the Covered Employee for the Plan Year with respect to which
Matching Contribution allocations were not made under Section 5.2 of the
401(k) Plan or (if made) were forfeited under Section 5.4 of the 401(k)
Plan because of the Code Limitations.
Section 3.4 Account Adjustments.
(a) Account Adjustments for Deemed Investments. The Committee shall from
time to time designate one or more investment vehicle(s) in which the Accounts
of Covered Employees shall be deemed to be invested. The investment vehicle(s)
may be designated by reference to the investments available under other plans
sponsored by a Participating Employer (including the 401(k) Plan). Each Covered
Employee shall designate the investment vehicle(s) in which his or her Account
shall be deemed to be invested according to the procedures developed by the
Personnel Group, except as otherwise required by the terms of the Restoration
Plan. No Participating Employer shall be under an obligation to acquire or
invest in any of the deemed investment vehicle(s) under this subparagraph, and
any acquisition of or investment in a deemed investment vehicle by a
Participating Employer shall be made in the name of such Participating Employer
and shall remain the sole property of such Participating Employer. Effective
April 1, 1998, the designated investment vehicles shall be (and shall remain
until such time as changed by the Committee in its sole discretion from time to
time according to its procedures for designating investments) the following:
(i) 30-Year Treasury Bond Fund;
(ii) NationsBank Stable Capital Fund;
(iii) Nations Strategic Fixed Income Fund;
(iv) Nations Value Fund;
(v) Nations Equity Index Fund;
(vi) Nations Disciplined Equity Fund;
(vii) Nations Managed SmallCap Index Fund;
(viii) Nations International Equity Fund;
(ix) NationsBank Stock Fund;
(x) LifeGoal Balanced Growth Portfolio;
(xi) LifeGoal Growth Portfolio; and
(xii) LifeGoal Income and Growth Portfolio.
The Committee shall also establish from time to time a default Fund into which a
Covered Employee's Account shall be deemed to be invested if the Covered
Employee fails to provide
5
<PAGE>
investment instructions pursuant to this Section 3.4(a). Effective April 1,
1998, such default Fund shall be the NationsBank Stable Capital Fund.
(b) Periodic Account Adjustments. Each Account shall be adjusted from
time to time at such intervals as determined by the Personnel Group. The
Personnel Group may determine the frequency of account adjustments by reference
to the frequency of account adjustments under another plan sponsored by a
Participating Employer. The amount of the adjustment shall equal the amount that
each Covered Employee's Account would have earned (or lost) for the period since
the last adjustment had the Account actually been invested in the deemed
investment vehicle(s) designated by the Covered Employee for such period
pursuant to Section 3.4(a).
(c) Account Adjustments Prior to April 1, 1998. Prior to April 1, 1998,
Account adjustments were made in accordance with the terms of the Restoration
Plan then in effect. The Personnel Group shall determine in its discretion
procedures to transition from the methods for determining Account adjustments
prior to April 1, 1998 and the methods described in the preceding paragraphs of
this Section 3.4 for periods from and after April 1, 1998.
Section 3.5 Account Payments.
(a) Payment Options.
(i) A Covered Employee who first elects to defer amounts under
this Article III after having attained age fifty-four (54) shall, at the
time of the Covered Employee's initial deferral election, irrevocably
elect one of the payment options described in subparagraph (iii) below.
(ii) For a Covered Employee who first elects to defer amounts
under this Article III before having attained age fifty-four (54), such
Covered Employee shall, upon attainment of age fifty-four (54), be given
the opportunity to irrevocably elect one of the payment options
described in subparagraph (iii) below.
(iii) The payment options from which a Covered Employee may elect
are as follows: (A) single cash payment, (B) five (5) annual
installments or (C) ten (10) annual installments, as such methods are
more fully described below.
(iv) Any election made under this Section 3.5(a) shall be made on
such form, at such time and pursuant to such procedures as determined by
the Personnel Group in its sole discretion from time to time. An
election made under subparagraph (i) shall be effective upon the later
of the date of such election or the attainment of age fifty-five (55).
An election made under subparagraph (ii) shall not become effective
until the attainment of age fifty-five (55) (or such later date as may
be specified in the election).
(v) For a Covered Employee who does not yet have an election in
effect under this Section 3.5(a) or for a Covered Employee who fails to
elect a payment option under this Section 3.5(a), the method of payment
shall be the
6
<PAGE>
single cash payment. In addition, if the total Account balance of a
Covered Employee who is to be paid by the installment method is less
than Ten Thousand Dollars ($10,000) determined as of the first
installment payment date, then the method of payment shall be the single
cash payment.
(b) Single Cash Payments. The following provisions shall apply with
respect to single cash payments under the Restoration Plan:
(i) In the case of a Covered Employee whose termination of
employment with the Participating Employers occurs before the Covered
Employee attains age fifty-five (55), then such Covered Employee's
Account, to the extent vested, shall be determined as of the date of
such termination of employment, and such final vested Account balance
shall be paid in a single cash payment to the Covered Employee (or to
the Covered Employee's "Beneficiary" as determined under the 401(k) Plan
in the case of the Covered Employee's termination of employment as the
result of the Covered Employee's death) as soon as administratively
practicable after the date of such termination of employment.
(ii) In the case of a Covered Employee whose termination of
employment with the Participating Employers occurs on or after the
Covered Employee attains age fifty-five (55) and whose vested Account
balance is to be paid in a single cash payment in accordance with
Section 3.5(a), then such Covered Employee's Account, to the extent
vested, shall continue to be credited with adjustments under Section 3.4
through the Payment Date, except that the rate for such adjustments for
the period from March 1 immediately preceding the Payment Date through
the Payment Date shall be the rate in effect under the 30-year Treasury
Bond Fund as of such March 1. The final vested Account balance as of the
Payment Date shall be paid in a single cash payment to the Covered
Employee (or to the Covered Employee's "Beneficiary" as determined under
the 401(k) Plan in the case of the Covered Employee's termination of
employment as the result of the Covered Employee's death) on or about
the Payment Date.
(c) Annual Installments. In the event a Covered Employee's employment
with the Participating Employers terminates after the effectiveness of the
Covered Employee's election as to the method of payment under Section 3.5(a) and
such method of payment under Section 3.5(a) is annual installments, the amount
of such annual installments shall be calculated and paid pursuant to the
provisions of this Section 3.5(c). If a Covered Employee dies after the
effectiveness of the Covered Employee's election as to the method of payment
under Section 3.5(a) and such method of payment under Section 3.5(a) is annual
installments, such annual installments (or remaining annual installments in the
case of death after commencement of payment) shall be paid to the Covered
Employee's "Beneficiary" as determined under the 401(k) Plan. The first
installment shall be paid on or about the Payment Date, and each subsequent
installment shall be paid on or about each anniversary of the Payment Date
during the selected payment period. The amount of the installments shall be
calculated as follows:
7
<PAGE>
(i) For Covered Employees who Terminate Employment on or after
April 1, 1998. The Covered Employee's Account, to the extent vested,
shall continue to be credited with adjustments under Section 3.4 through
the Payment Date, except that the rate for such adjustments for the
period from March 1 immediately preceding the Payment Date through the
Payment Date shall be the rate in effect under the 30-year Treasury Bond
Fund as of such March 1. The amount of the annual installments shall
then be calculated, based on the vested Account balance as of the
Payment Date, as equal annual installments amortized over the selected
period using the same 30-year Treasury Fund rate.
(ii) For Covered Employees who Terminated Employment Prior to
April 1, 1998. For Covered Employees who terminated employment prior to
April 1, 1998, the amount of annual installments shall be calculated in
accordance with the terms of the Restoration Plan as in effect at the
time such Covered Employee terminated employment with the Participating
Employers.
(d) Vesting of Matching Contribution Restoration Account.
Notwithstanding any provision of the Restoration Plan to the contrary, if a
Covered Employee is not fully (100%) vested in the amount credited to the
Employee's Matching Contribution Account and/or the Employee's Pre-1993
Stock/Thrift Plan Matching Contribution Account under the 401(k) Plan at the
time of the Employee's termination of employment with the Participating
Employers, the amount credited to the Covered Employee's Matching Contribution
Restoration Account shall be reduced at the time of such termination of
employment to an amount equal to the product of (i) the amount then credited to
said Matching Contribution Restoration Account multiplied by (ii) the vested
percentage applicable to the Employee's Matching Contribution Account and
Pre-1993 Stock/Thrift Plan Matching Contribution Account under the 401(k) Plan
as of the date of such termination of employment. The amount by which the
Employee's Matching Contribution Restoration Account is reduced by application
of the preceding sentence shall be forfeited at the time the Employee terminates
employment.
(e) Other Payment Provisions. Subject to the provisions of Section 3.6,
a Covered Employee shall not be paid any portion of the Employee's Account prior
to the Employee's termination of employment with the Participating Employers.
Any deferral or payment hereunder shall be subject to applicable payroll and
withholding taxes. For purposes of the Restoration Plan, a Covered Employee
shall be deemed to have terminated employment with the Participating Employers
upon eligibility for benefits under the NationsBank Long-Term Disability Plan as
in effect from time to time; provided, however, that the Personnel Group may in
its discretion determine that a Covered Employee who is eligible to receive
Long-Term Disability Plan benefits has not terminated employment if the
Personnel Group concludes that the Covered Employee is likely to return to work.
In the event any amount becomes payable under the provisions of the Restoration
Plan to a Covered Employee, beneficiary or other person who is a minor or an
incompetent, whether or not declared incompetent by a court, such amount may be
paid directly to the minor or incompetent person or to such person's fiduciary
(or attorney-in-fact in the case of an incompetent) as the Personnel Group, in
its sole discretion, may decide, and the Personnel Group shall not be liable to
any person for any such decision or any payment pursuant thereto.
8
<PAGE>
Section 3.6 Withdrawals on Account of an Unforeseeable Emergency. A
Covered Employee who is in active service of a Participating Employer may, in
the Committee's sole discretion, receive a refund of all or any part of the
amounts previously credited to the Covered Employee's Deferral Account (but not
the Covered Employee's Matching Contribution Restoration Account) in the case of
an "unforeseeable emergency". A Covered Employee requesting a payment pursuant
to this Section shall have the burden of proof of establishing, to the
Committee's satisfaction, the existence of such "unforeseeable emergency", and
the amount of the payment needed to satisfy the same. In that regard, the
Covered Employee shall provide the Committee with such financial data and
information as the Committee may request. If the Committee determines that a
payment should be made to a Covered Employee under this Section such payment
shall be made within a reasonable time after the Committee's determination of
the existence of such "unforeseeable emergency" and the amount of payment so
needed. As used herein, the term "unforeseeable emergency" means a severe
financial hardship to a Covered Employee resulting from a sudden and unexpected
illness or accident of the Covered Employee or of a dependent of the Covered
Employee, loss of the Covered Employee's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Covered Employee. The circumstances that shall
constitute an "unforeseeable emergency" shall depend upon the facts of each
case, but, in any case, payment may not be made to the extent that such hardship
is or may be relieved (i) through reimbursement or compensation by insurance or
otherwise, or (ii) by liquidation of the Covered Employee's assets, to the
extent the liquidation of such assets would not itself cause severe financial
hardship. Examples of what are not considered to be "unforeseeable emergencies"
include the need to send a Covered Employee's child to college or the purchase
of a home. Withdrawals of amounts because of an "unforeseeable emergency" shall
not exceed an amount reasonably needed to satisfy the emergency need. If any
withdrawal is permitted pursuant to this Section during a Plan Year, no further
deferral of compensation shall be made during the Plan Year from and after the
effective date of the withdrawal.
ARTICLE IV
AMENDMENT AND TERMINATION
Section 4.1 Amendment and Termination. The Corporation shall have the
right and power at any time and from time to time to amend the Restoration Plan
in whole or in part, on behalf of all Participating Employers, and at any time
to terminate the Restoration Plan or any Participating Employer's participation
hereunder; provided, however, that no such amendment or termination shall reduce
the amount actually credited to the Account(s) of any current or former Covered
Employee (or beneficiary of a deceased Covered Employee) on the date of such
amendment or termination, or further defer the due dates for the payment of such
amounts, without the consent of the affected person. Notwithstanding the
provisions of Section 3.6(a), in connection with any termination of the
Restoration Plan the Committee shall have the authority to cause the Accounts of
all current and former Covered Employees (and beneficiary of any deceased
Covered Employees) to be paid in a single sum payment as of a date determined by
the Committee or to otherwise accelerate the payment of all Accounts in such
manner as the Committee shall determine in its discretion. In that regard, upon
any termination of the Restoration Plan the amount of any payment to a former
Covered Employee (or beneficiary of a deceased Covered Employee) who is
receiving annual installments pursuant to Section 3.6(c)
9
<PAGE>
shall be the Single Sum Value of the Covered Employee's Account determined as of
the selected determination date.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.1 Nature of Plan and Rights. The Restoration Plan is unfunded
and intended to constitute an incentive and deferred compensation plan for a
select group of officers and key management employees of the Participating
Employers. If necessary to preserve the above intended plan status, the
Committee, in its sole discretion, reserves the right to limit or reduce the
number of actual participants and otherwise to take any remedial or curative
action that the Committee deems necessary or advisable. The Accounts established
and maintained under the Restoration Plan by a Participating Employer are for
accounting purposes only and shall not be deemed or construed to create a trust
fund of any kind or to grant a property interest of any kind to any Employee,
designated beneficiary or estate. The amounts credited by a Participating
Employer to such Accounts are and for all purposes shall continue to be a part
of the general assets of such Participating Employer, and to the extent that an
Employee, beneficiary or estate acquires a right to receive payments from such
Participating Employer pursuant to the Restoration Plan, such right shall be no
greater than the right of any unsecured general creditor of such Participating
Employer.
Section 5.2 Termination of Employment. For the purposes of the
Restoration Plan, an Employee's employment with a Participating Employer shall
not be considered to have terminated so long as the Employee is in the employ of
any Participating Employer or other member of the Controlled Group.
Section 5.3 Spendthrift Provision. No Account balance or other right or
interest under the Restoration Plan of an Employee, beneficiary or estate may be
assigned, transferred or alienated, in whole or in part, either directly or by
operation of law, and no such balance, right or interest shall be liable for or
subject to any debt, obligation or liability of the Employee, designated
beneficiary or estate.
Section 5.4 Employment Noncontractual. The establishment of the
Restoration Plan shall not enlarge or otherwise affect the terms of any
Employee's employment with his Participating Employer, and such Participating
Employer may terminate the employment of the Employee as freely and with the
same effect as if the Restoration Plan had not been established.
Section 5.5 Adoption by Other Participating Employers. The Restoration
Plan may be adopted by any Participating Employer participating under the 401(k)
Plan, such adoption to be effective as of the date specified by such
Participating Employer at the time of adoption.
Section 5.6 Applicable Law. The Restoration Plan shall be governed and
construed in accordance with the laws of the State of North Carolina, except to
the extent such laws are preempted by the laws of the United States of America.
Section 5.7 Merged Plans. From time to time the Participating Employers
may cause other nonqualified plans to be merged into the Restoration Plan.
Schedule 5.7 attached hereto
10
<PAGE>
sets forth the names of the plans that merged into the Restoration Plan by April
1, 1998 and their respective merger dates. Schedule 5.7 shall be updated from
time to time to reflect mergers after April 1, 1998.
Upon such a merger, the account balance(s) immediately prior to the date
of merger of each participant in the merged plan shall be transferred and
credited as of the merger date to one or more accounts established under the
Restoration Plan for such participant. From and after the merger date, the
participant's rights shall be determined under the Restoration Plan, and the
participant shall be subject to all of the restrictions, limitations and other
terms and provisions of the Restoration Plan. Not in limitation of the
foregoing, each Restoration Plan Account established for the participant as a
result of the merger shall be periodically adjusted when and as provided in
Section 3.4 hereof as in effect from time to time and shall be paid at such time
and in such manner as provided in Section 3.5 and Section 3.6 hereof, except to
the extent otherwise provided on Schedule 5.7. The Personnel Group shall, in its
discretion, establish any procedures it deems necessary or advisable in order to
administer any such plan mergers, including without limitation procedures for
transitioning from the method of account adjustments under the prior plan to the
methods provided for under the Restoration Plan.
IN WITNESS WHEREOF, this instrument has been executed by the Corporation
as of the day and year first above written.
BANKAMERICA CORPORATION
By: /s/ ANN P. WEST
-----------------------------------
Title: SENIOR VICE PRESIDENT
-----------------------------
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SCHEDULE 5.7
MERGED PLANS AS OF APRIL 1, 1998
Plan Name Date of Merger
- --------- --------------
C&S Policy Committee Supplemental December 31, 1992
Savings Plan
C&S Key Executive Supplemental December 31, 1992
Savings Plan
C&S/Sovran Supplemental Retirement December 31, 1992
Plan for Former Sovran Executives
(Thrift Restoration Benefits)
First & Merchants Corporation Deferred March 31, 1993
Management Incentive Compensation
Plan
Sovran Deferred Compensation Plan March 31, 1993
NationsBank of Texas, N.A. Profit March 31, 1993
Sharing Restoration Plan
Thrift Plan Reserve Account Maintained March 31, 1993
Under the NationsBank Corporation
and Designated Subsidiaries
Supplemental Executive Retirement
Plan
Bank South Executive Bonus Deferral Plan July 1, 1996
Boatmen's Bancshares, Inc. Executive Deferred December 31, 1997
Compensation Plan
Fourth Financial Corporation Executive Deferred December 31, 1997
Compensation Plan
NationsBank Corporation Key Employee Deferral Plan April 1, 1998
Deferred compensation components of the NationsBank April 1, 1998
Corporation Executive Incentive Compensation Plan
<PAGE>
THE NATIONSBANK 401(k) RESTORATION PLAN
(as amended and restated effective July 1, 1998)
<PAGE>
<TABLE>
<CAPTION>
THE NATIONSBANK 401(K) RESTORATION PLAN
TABLE OF CONTENTS
Page
----
<S> <C> <C>
ARTICLE I DEFINITIONS........................................................................1
Section 1.1 Definitions............................................................1
ARTICLE II PLAN ADMINISTRATION...............................................................4
Section 2.1 Committee..............................................................4
ARTICLE III DEFERRED COMPENSATION PROVISIONS.................................................4
Section 3.1 Employee Elections.....................................................4
Section 3.2 Deferral Accounts......................................................5
Section 3.3 Matching Contribution Restoration Accounts.............................5
Section 3.4 Key Executive Deferrals................................................6
Section 3.5 Account Adjustments....................................................7
Section 3.6 Account Payments.......................................................8
Section 3.7 Withdrawals on Account of an Unforeseeable Emergency..................11
ARTICLE IV AMENDMENT AND TERMINATION........................................................11
Section 4.1 Amendment and Termination.............................................11
ARTICLE V MISCELLANEOUS PROVISIONS..........................................................12
Section 5.1 Nature of Plan and Rights.............................................12
Section 5.2 Termination of Employment.............................................12
Section 5.3 Spendthrift Provision.................................................12
Section 5.4 Employment Noncontractual.............................................12
Section 5.5 Adoption by Other Participating Employers.............................12
Section 5.6 Applicable Law........................................................13
Section 5.7 Merged Plans..........................................................13
</TABLE>
i
<PAGE>
THE NATIONSBANK 401(k) RESTORATION PLAN
(as amended and restated effective July 1, 1998)
THIS INSTRUMENT OF AMENDMENT AND RESTATEMENT is executed as of the 3rd
day of February, 1999 and effective as of the 1st day of July, 1998, by
BANKAMERICA CORPORATION, a Delaware corporation (the "Corporation");
Statement of Purpose
--------------------
NationsBank Corporation ("NationsBank") entered into an Agreement and
Plan of Reorganization with BankAmerica Corporation, a Delaware corporation
("BankAmerica"), dated April 10, 1998 (the "Reorganization Agreement"). Pursuant
to the Reorganization Agreement, NationsBank was re-incorporated as a Delaware
corporation, BankAmerica merged into NationsBank, and the resulting Delaware
corporation was renamed "BankAmerica Corporation," all effective as of the
"Effective Time" as defined in the Reorganization Agreement. References herein
to the "Corporation" include both NationsBank (prior to the Effective Time) and
the Delaware corporation resulting from the consummation of the transactions
contemplated by the Reorganization Agreement (from and after the Effective
Time).
The Corporation sponsors The NationsBank 401(k) Restoration Plan (the
"Restoration Plan"). The purpose of the Restoration Plan is to provide benefits,
on a non-qualified and unfunded basis, to certain employees whose benefits under
The NationsBank 401(k) Plan are adversely affected by the limitations of
Sections 401(a)(17), 401(k)(3), 401(m), 402(g) and 415 of the Internal Revenue
Code, as well as certain limits placed on the contribution rates of highly
compensated participants established by the administrative committee under The
NationsBank 401(k) Plan.
By this Instrument, the Corporation is amending and restating the
Restoration Plan effective July 1, 1998 to (i) provide for special deferral
elections of annual incentive compensation for certain key employees; and (ii)
otherwise meet current needs.
NOW, THEREFORE, for the purposes aforesaid, the Corporation hereby
amends and restates the Restoration Plan effective July 1, 1998 to consist of
the following Articles I through V:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Unless the context clearly indicates otherwise,
when used in the Restoration Plan:
<PAGE>
Account means, collectively, the Deferral Account, Matching
Contribution Restoration Account, Key Executive Incentive Deferral
Account and Key Executive Incentive Matching Account.
Annual Incentive Award means, with respect to a Key Executive,
any annual incentive award payable to such Key Executive pursuant to (i)
the NationsBank Corporation Executive Incentive Compensation Plan (which
is being renamed the "Bank of America Executive Incentive Compensation
Plan" effective September 30, 1998), (ii) the Corporate Management
Incentive Plan or (iii) any other incentive compensation plan of the
Corporation or any of its Subsidiaries approved for purposes of this
Plan by the Committee. Annual Incentive Awards may be payable annually,
quarterly, or on such other basis as provided by the applicable plan.
Code means the Internal Revenue Code of 1986. References to the
Code shall include the valid and binding governmental regulations, court
decisions and other regulatory and judicial authority issued or rendered
thereunder.
Code Limitations means any one or more of the limitations and
restrictions that Sections 401(a)(17), 401(k)(3), 401(m), 402(g) and 415
of the Code place on the Pre-Tax Employee Contributions and Matching
Contributions for a Covered Employee under the 401(k) Plan. In addition,
Code Limitations also means and refers to any limitations on
contributions under the 401(k) Plan established by the 401(k) Plan
administrative committee with respect to highly compensated
participants.
Committee means the committee designated pursuant to Section 2.1
of the Restoration Plan.
Corporation means (i) prior to the "Effective Time" (as defined
in the Agreement and Plan of Reorganization dated April 10, 1998 between
NationsBank Corporation and BankAmerica Corporation), NationsBank
Corporation, a North Carolina corporation and (ii) from and after the
Effective Time, BankAmerica Corporation, a Delaware corporation, and any
successor thereto.
Covered Employee means an Employee eligible to participate in the
401(k) Plan.
Deferral Account means the account established and maintained on
the books of a Participating Employer to record a Covered Employee's
interest under the Restoration Plan attributable to amounts credited to
the Covered Employee pursuant to Section 3.2 of the Restoration Plan.
Employee means an individual employed by a Participating
Employer.
2
<PAGE>
401(k) Plan means The NationsBank 401(k) Plan, as in effect from
time to time. Prior to April 1, 1998, the 401(k) Plan was named "The
NationsBank Retirement Savings Plan".
Key Executive means a Covered Employee who is designated by the
Committee as a Key Executive for purposes of the Restoration Plan.
Key Executive Incentive Deferral Account means the account
established and maintained on the books of a Participating Employer to
record a Key Executive's interest under the Restoration Plan
attributable to amounts credited to the Covered Employee pursuant to
Section 3.4(b) of the Restoration Plan.
Key Executive Incentive Matching Account means the account
established and maintained on the books of a Participating Employer to
record a Key Executive's interest under the Restoration Plan
attributable to amounts credited to the Covered Employee pursuant to
Section 3.4(c) of the Restoration Plan.
Matching Contribution Restoration Account means the account
established and maintained on the books of a Participating Employer to
record a Covered Employee's interest under the Restoration Plan
attributable to amounts credited to the Covered Employee pursuant to
Section 3.3 of the Restoration Plan. Prior to January 1, 1993, the
Restoration Plan referred to this account as the "Restoration Account".
Participating Employer means (i) the Corporation, (ii) each other
"Participating Employer" under (and as defined in) the 401(k) Plan on
the date hereof and (iii) any other incorporated or unincorporated trade
or business which may hereafter adopt both the 401(k) Plan and the
Restoration Plan.
Payment Date, with respect to a Covered Employee who terminates
employment with the Participating Employers on or after having attained
age fifty-five (55), means the last business day of March of the
calendar year following the calendar year in which such termination of
employment occurs.
Personnel Group means the Personnel Group of the Corporation.
Plan Year means the twelve-month period commencing January 1 and
ending the following December 31.
Restoration Plan means this plan: The NationsBank 401(k)
Restoration Plan as in effect from time to time. Prior to April 1, 1998,
the Restoration Plan was named the "NationsBank Retirement Savings
Restoration Plan".
Single Sum Value of the Account of a Participant who is receiving
annual installments pursuant to Section 3.6(c) means the single sum
present value of the installments determined as of the relevant
determination date using for such
3
<PAGE>
purpose as the discount rate the same rate that was used in calculating
the amount of the installments pursuant to Section 3.6(c) below.
Any capitalized terms used in the Restoration Plan that are defined in the
documents comprising the 401(k) Plan have the meanings assigned to them in the
401(k) Plan, unless such terms are otherwise defined above in this Article or
unless the context clearly indicates otherwise.
ARTICLE II
PLAN ADMINISTRATION
Section 2.1 Committee. The Restoration Plan shall be administered by the
"Committee" under (and as defined in) the 401(k) Plan (although certain
provisions of the Restoration Plan shall be administered by the Personnel Group
as specified herein). The Committee shall be empowered to interpret the
provisions of the Restoration Plan and to perform and exercise all of the duties
and powers granted to it under the terms of the Restoration Plan by action of a
majority of its members in office from time to time. The Committee may adopt
such rules and regulations for the administration of the Restoration Plan as are
consistent with the terms hereof and shall keep adequate records of its
proceedings and acts. All interpretations and decisions made (both as to law and
fact) and other action taken by the Committee with respect to the Restoration
Plan shall be conclusive and binding upon all parties having or claiming to have
an interest under the Restoration Plan. Not in limitation of the foregoing, the
Committee shall have the discretion to decide any factual or interpretative
issues that may arise in connection with its administration of the Restoration
Plan (including without limitation any determination as to claims for benefits
hereunder), and the Committee's exercise of such discretion shall be conclusive
and binding on all affected parties as long as it is not arbitrary or
capricious. The Committee may delegate any of its duties and powers hereunder to
the extent permitted by applicable law.
ARTICLE III
DEFERRED COMPENSATION PROVISIONS
Section 3.1 Employee Elections. Prior to January 1 of a Plan Year, or at
such other times as may be established by the Personnel Group, a Covered
Employee who is expected to be a highly compensated employee within the meaning
of section 414(q) of the Code for the Plan Year of the 401(k) Plan to which such
election relates may elect to defer under the Restoration Plan the portion of
the Covered Employee's Pre-Tax Employee Contributions otherwise permissible
under the 401(k) Plan which cannot be credited to the Covered Employee under the
401(k) Plan for such Plan Year because of the Code Limitations. All elections
made under this Section 3.1 shall be made in writing on a form, or pursuant to
such other non-written procedures, as may be prescribed from time to time by the
Personnel Group and shall be irrevocable for such Plan Year. An election by a
Covered Employee under this Section 3.1 shall continue in effect for all
subsequent Plan Years (during which the Covered Employee is a highly compensated
employee) unless and until changed or terminated by the Covered Employee in
accordance with procedures established from time to time by the Personnel Group.
Any such change in or termination of an election under this Section 3.1 shall be
effective as of the January 1 of the next succeeding Plan Year. If a Covered
Employee's Pre-Tax Employee Contributions to the 401(k) Plan are suspended under
the terms of the 401(k) Plan in connection with a hardship distribution,
4
<PAGE>
then all deferrals under this Plan (including deferrals by Key Executives
pursuant to Section 3.4 below) shall be suspended (to the extent such suspension
is required by Section 401(k) of the Code) for the same period that the Covered
Employee's Pre-Tax Employee Contributions are suspended.
Section 3.2 Deferral Accounts. A Participating Employer shall establish
and maintain on its books a Deferral Account for each Covered Employee employed
by such Participating Employer who elects to defer the receipt of any amount
pursuant to Section 3.1 of the Restoration Plan. Such Deferral Account shall be
designated by the name of the Covered Employee for whom established. The amount
attributable to any Pre-Tax Employee Contribution for a particular pay period
during such Plan Year which cannot be credited to the Covered Employee under the
401(k) Plan because of the Code Limitations, and which the Covered Employee has
elected to defer pursuant to Section 3.1 of the Restoration Plan, shall be
credited to such Deferral Account as of the date such amount would have
otherwise been paid to the Covered Employee.
Section 3.3 Matching Contribution Restoration Accounts. A Participating
Employer shall establish and maintain on its books a Matching Contribution
Restoration Account for each Covered Employee employed by such Participating
Employer whose Matching Contributions under the 401(k) Plan shall have been
limited, directly or indirectly, by the operation of the Code Limitations. Such
Matching Contribution Restoration Account shall be designated by the name of the
Covered Employee for whom established. If a Covered Employee is a Participant
Eligible for Matching Contributions for the Plan Year under the 401(k) Plan, the
Covered Employee's Matching Contribution Restoration Account shall be credited
as of the Valuation Date under the 401(k) Plan that occurs on the last day of
the Plan Year with an amount equal to the sum of Amount A and Amount B, where:
Amount A is seventy-five percent (75%) of the sum of the portions (if
any) of the amounts credited to the Covered Employee's Deferral Account
for the Plan Year pursuant to Section 3.1 of the Restoration Plan that
would have been Matchable Pre-Tax Employee Contributions for the Plan
Year under the 401(k) Plan had such amounts been contributed to the
401(k) Plan as Pre-Tax Employee Contributions for the Covered Employee
and the Code Limitations not applied to the 401(k) Plan.
Amount B is seventy-five percent (75%) of the portion (if any) of the
actual Matchable Pre-Tax Employee Contributions made to the 401(k) Plan
for the Covered Employee for the Plan Year with respect to which
Matching Contribution allocations were not made under Section 5.2 of the
401(k) Plan or (if made) were forfeited under Section 5.4 of the 401(k)
Plan because of the Code Limitations.
Notwithstanding the foregoing, (i) no amount shall be credited to the Matching
Contribution Restoration Account of a Covered Employee for a Plan Year to the
extent it relates to incentive compensation payable to the Covered Employee for
the Plan Year in excess of One Million Dollars ($1,000,000) (prior to the fifty
percent (50%) reduction to the incentive compensation for
5
<PAGE>
purposes of being considered eligible "Compensation" under and as defined in the
401(k) Plan) and (ii) any matching contributions related to the deferral of a
Key Executive's Annual Incentive Award under Section 3.4 shall be determined
exclusively pursuant to the provisions of Section 3.4 and not pursuant to the
provisions of this Section 3.3 (although a Key Executive may be credited with
matching contributions pursuant to this Section 3.3 related to any non-Annual
Incentive Award components of the Key Executive's compensation deferred pursuant
to the provisions of Section 3.1).
Section 3.4 Key Executive Deferrals.
(a) Annual Incentive Award Deferral Elections. A Key Executive with
respect to a Plan Year may irrevocably elect, on a form or pursuant to such
procedures as the Personnel Group shall establish from time to time, to defer
all or a portion of the Key Executive's Annual Incentive Award for a given Plan
Year. In order to be effective, a Key Executive's election to defer must be made
on or before the date specified by the Personnel Group for such purpose. Such
election must normally be made prior to the beginning of the Plan Year to which
the election relates. However, the Personnel Group, in its sole and exclusive
discretion, may determine that in any Plan Year during which (A) a Key Executive
first becomes eligible to defer under this Section 3.4(a) (including the Plan
Year in which this deferral feature is first implemented under the Restoration
Plan) or (B) a Key Executive who is already eligible to defer certain incentive
compensation covered by this Section 3.4(a) becomes eligible to defer incentive
compensation not previously covered by this Section 3.4(a), such election may be
made by such Key Executive within thirty (30) days after becoming eligible (or
at such other times as the Personnel Group may determine consistent with the
intent that the Plan operate so as to defer recognition of income taxes on
amounts deferred until the date the amounts are actually paid).
(b) Annual Incentive Award Deferral Accounts. A Participating Employer
shall establish and maintain on its books a Key Executive Incentive Deferral
Account for each Key Executive Participant. Each such Account shall be
designated by the name of the Key Executive Participant for whom established.
The amount of any Annual Incentive Award deferred by a Key Executive shall be
credited to such account as of the date such Annual Incentive Award would have
otherwise been paid to the Key Executive.
(c) Matching Contributions Related to Annual Incentive Award Deferrals.
A Participating Employer shall establish and maintain on its books a Key
Executive Incentive Matching Account for each Key Executive employed by such
Participating Employer who is credited with a matching contribution under this
Section 3.4(c). Such Key Executive Incentive Matching Account shall be
designated by the name of the Key Executive for whom established. If a Key
Executive is a Participant Eligible for Matching Contributions for a Plan Year
under the 401(k) Plan and has deferred any portion of the Key Executive's Annual
Incentive Award under Section 3.4(a) that would have otherwise been paid during
the Plan Year, then the Key Executive Incentive Matching Account of the Key
Executive shall be credited as of the Valuation Date under the 401(k) Plan that
occurs on the last day of the Plan Year with a matching contribution equal to
Amount A times Amount B, where:
Amount A is seventy-five percent (75%); and
6
<PAGE>
Amount B is the amount of the Annual Incentive Award otherwise payable
during the Plan Year that is deferred by the Key Executive pursuant to
Section 3.4(a) above, but excluding any such deferrals that exceed three
percent (3%) of the Key Executive's total Annual Incentive Award.
Notwithstanding the foregoing, the maximum amount of such matching contribution
shall equal Twenty-Two Thousand Five Hundred Dollars ($22,500).
Section 3.5 Account Adjustments.
(a) Account Adjustments for Deemed Investments. The Committee shall from
time to time designate one or more investment vehicle(s) in which the Accounts
of Covered Employees shall be deemed to be invested. The investment vehicle(s)
may be designated by reference to the investments available under other plans
sponsored by a Participating Employer (including the 401(k) Plan). Each Covered
Employee shall designate the investment vehicle(s) in which his or her Account
shall be deemed to be invested according to the procedures developed by the
Personnel Group, except as otherwise required by the terms of the Restoration
Plan. No Participating Employer shall be under an obligation to acquire or
invest in any of the deemed investment vehicle(s) under this subparagraph, and
any acquisition of or investment in a deemed investment vehicle by a
Participating Employer shall be made in the name of such Participating Employer
and shall remain the sole property of such Participating Employer. Effective
April 1, 1998, the designated investment vehicles shall be (and shall remain
until such time as changed by the Committee in its sole discretion from time to
time according to its procedures for designating investments) the following:
(i) 30-Year Treasury Bond Fund;
(ii) NationsBank Stable Capital Fund;
(iii) Nations Strategic Fixed Income Fund;
(iv) Nations Value Fund;
(v) Nations Equity Index Fund;
(vi) Nations Disciplined Equity Fund;
(vii) Nations Managed SmallCap Index Fund;
(viii) Nations International Equity Fund;
(ix) NationsBank Stock Fund (BankAmerica Stock Fund from and after
September 30, 1998);
(x) LifeGoal Balanced Growth Portfolio;
(xi) LifeGoal Growth Portfolio; and
(xii) LifeGoal Income and Growth Portfolio.
The Committee shall also establish from time to time a default Fund into which a
Covered Employee's Account shall be deemed to be invested if the Covered
Employee fails to provide investment instructions pursuant to this Section
3.4(a). Effective April 1, 1998, such default Fund shall be the NationsBank
Stable Capital Fund.
7
<PAGE>
(b) Periodic Account Adjustments. Each Account shall be adjusted from
time to time at such intervals as determined by the Personnel Group. The
Personnel Group may determine the frequency of account adjustments by reference
to the frequency of account adjustments under another plan sponsored by a
Participating Employer. The amount of the adjustment shall equal the amount that
each Covered Employee's Account would have earned (or lost) for the period since
the last adjustment had the Account actually been invested in the deemed
investment vehicle(s) designated by the Covered Employee for such period
pursuant to Section 3.5(a).
(c) Account Adjustments Prior to April 1, 1998. Prior to April 1, 1998,
Account adjustments were made in accordance with the terms of the Restoration
Plan then in effect. The Personnel Group shall determine in its discretion
procedures to transition from the methods for determining Account adjustments
prior to April 1, 1998 and the methods described in the preceding paragraphs of
this Section 3.4 for periods from and after April 1, 1998.
Section 3.6 Account Payments.
(a) Payment Options.
(i) A Covered Employee who first elects to defer amounts under
this Article III after having attained age fifty-four (54) shall, at the
time of the Covered Employee's initial deferral election, irrevocably
elect one of the payment options described in subparagraph (iii) below.
(ii) For a Covered Employee who first elects to defer amounts
under this Article III before having attained age fifty-four (54), such
Covered Employee shall, upon attainment of age fifty-four (54), be given
the opportunity to irrevocably elect one of the payment options
described in subparagraph (iii) below.
(iii) The payment options from which a Covered Employee may elect
are as follows: (A) single cash payment, (B) five (5) annual
installments or (C) ten (10) annual installments, as such methods are
more fully described below.
(iv) Any election made under this Section 3.6(a) shall be made on
such form, at such time and pursuant to such procedures as determined by
the Personnel Group in its sole discretion from time to time. An
election made under subparagraph (i) shall be effective upon the later
of the date of such election or the attainment of age fifty-five (55).
An election made under subparagraph (ii) shall not become effective
until the attainment of age fifty-five (55) (or such later date as may
be specified in the election).
(v) For a Covered Employee who does not yet have an election in
effect under this Section 3.6(a) or for a Covered Employee who fails to
elect a payment option under this Section 3.6(a), the method of payment
shall be the single cash payment. In addition, if the total Account
balance of a Covered Employee who is to be paid by the installment
method is less than Ten Thousand
8
<PAGE>
Dollars ($10,000) determined as of the first installment payment date,
then the method of payment shall be the single cash payment.
(b) Single Cash Payments. The following provisions shall apply with
respect to single cash payments under the Restoration Plan:
(i) In the case of a Covered Employee whose termination of
employment with the Participating Employers occurs before the Covered
Employee attains age fifty-five (55), then such Covered Employee's
Account, to the extent vested, shall be determined as of the date of
such termination of employment, and such final vested Account balance
shall be paid in a single cash payment to the Covered Employee (or to
the Covered Employee's "Beneficiary" as determined under the 401(k) Plan
in the case of the Covered Employee's termination of employment as the
result of the Covered Employee's death) as soon as administratively
practicable after the date of such termination of employment.
(ii) In the case of a Covered Employee whose termination of
employment with the Participating Employers occurs on or after the
Covered Employee attains age fifty-five (55) and whose vested Account
balance is to be paid in a single cash payment in accordance with
Section 3.6(a), then such Covered Employee's Account, to the extent
vested, shall continue to be credited with adjustments under Section 3.5
through the Payment Date, except that the rate for such adjustments for
the period from March 1 immediately preceding the Payment Date through
the Payment Date shall be the rate in effect under the 30-year Treasury
Bond Fund as of such March 1. The final vested Account balance as of the
Payment Date shall be paid in a single cash payment to the Covered
Employee (or to the Covered Employee's "Beneficiary" as determined under
the 401(k) Plan in the case of the Covered Employee's termination of
employment as the result of the Covered Employee's death) on or about
the Payment Date.
(c) Annual Installments. In the event a Covered Employee's employment
with the Participating Employers terminates after the effectiveness of the
Covered Employee's election as to the method of payment under Section 3.6(a) and
such method of payment under Section 3.6(a) is annual installments, the amount
of such annual installments shall be calculated and paid pursuant to the
provisions of this Section 3.6(c). If a Covered Employee dies after the
effectiveness of the Covered Employee's election as to the method of payment
under Section 3.6(a) and such method of payment under Section 3.6(a) is annual
installments, such annual installments (or remaining annual installments in the
case of death after commencement of payment) shall be paid to the Covered
Employee's "Beneficiary" as determined under the 401(k) Plan. The first
installment shall be paid on or about the Payment Date, and each subsequent
installment shall be paid on or about each anniversary of the Payment Date
during the selected payment period. The amount of the installments shall be
calculated as follows:
(i) For Covered Employees who Terminate Employment on or after
April 1, 1998. The Covered Employee's Account, to the extent vested,
shall continue to be
9
<PAGE>
credited with adjustments under Section 3.5 through the Payment Date,
except that the rate for such adjustments for the period from March 1
immediately preceding the Payment Date through the Payment Date shall be
the rate in effect under the 30-year Treasury Bond Fund as of such March
1. The amount of the annual installments shall then be calculated, based
on the vested Account balance as of the Payment Date, as equal annual
installments amortized over the selected period using the same 30-year
Treasury Fund rate.
(ii) For Covered Employees who Terminated Employment Prior to
April 1, 1998. For Covered Employees who terminated employment prior to
April 1, 1998, the amount of annual installments shall be calculated in
accordance with the terms of the Restoration Plan as in effect at the
time such Covered Employee terminated employment with the Participating
Employers.
(d) Vesting of Matching Accounts. Notwithstanding any provision of the
Restoration Plan to the contrary, if a Covered Employee is not fully (100%)
vested in the amount credited to the Employee's Matching Contribution Account
and/or the Employee's Pre-1993 Stock/Thrift Plan Matching Contribution Account
under the 401(k) Plan at the time of the Employee's termination of employment
with the Participating Employers, the amount credited to the Covered Employee's
Matching Contribution Restoration Account and (if applicable) Key Executive
Incentive Matching Account shall be reduced at the time of such termination of
employment to an amount equal to the product of (i) the amount then credited to
said Matching Contribution Restoration Account and (if applicable) Key Executive
Incentive Matching Account multiplied by (ii) the vested percentage applicable
to the Employee's Matching Contribution Account and Pre-1993 Stock/Thrift Plan
Matching Contribution Account under the 401(k) Plan as of the date of such
termination of employment. The amount by which the Employee's Matching
Contribution Restoration Account and (if applicable) Key Executive Incentive
Matching Account are reduced by application of the preceding sentence shall be
forfeited at the time the Employee terminates employment.
(e) Other Payment Provisions. Subject to the provisions of Section 3.7,
a Covered Employee shall not be paid any portion of the Employee's Account prior
to the Employee's termination of employment with the Participating Employers.
Any deferral or payment hereunder shall be subject to applicable payroll and
withholding taxes. For purposes of the Restoration Plan, a Covered Employee
shall be deemed to have terminated employment with the Participating Employers
upon eligibility for benefits under the NationsBank Long-Term Disability Plan as
in effect from time to time; provided, however, that the Personnel Group may in
its discretion determine that a Covered Employee who is eligible to receive
Long-Term Disability Plan benefits has not terminated employment if the
Personnel Group concludes that the Covered Employee is likely to return to work.
In the event any amount becomes payable under the provisions of the Restoration
Plan to a Covered Employee, beneficiary or other person who is a minor or an
incompetent, whether or not declared incompetent by a court, such amount may be
paid directly to the minor or incompetent person or to such person's fiduciary
(or attorney-in-fact in the case of an incompetent) as the Personnel Group, in
its sole discretion, may decide, and the Personnel Group shall not be liable to
any person for any such decision or any payment pursuant thereto.
10
<PAGE>
Section 3.7 Withdrawals on Account of an Unforeseeable Emergency. A
Covered Employee who is in active service of a Participating Employer may, in
the Committee's sole discretion, receive a refund of all or any part of the
amounts previously credited to the Covered Employee's Accounts (to the extent
vested) in the case of an "unforeseeable emergency". A Covered Employee
requesting a payment pursuant to this Section shall have the burden of proof of
establishing, to the Committee's satisfaction, the existence of such
"unforeseeable emergency", and the amount of the payment needed to satisfy the
same. In that regard, the Covered Employee shall provide the Committee with such
financial data and information as the Committee may request. If the Committee
determines that a payment should be made to a Covered Employee under this
Section such payment shall be made within a reasonable time after the
Committee's determination of the existence of such "unforeseeable emergency" and
the amount of payment so needed. The Committee may in its discretion establish
the order in which amounts shall be withdrawn under this Section from a Covered
Employee's Accounts. As used herein, the term "unforeseeable emergency" means a
severe financial hardship to a Covered Employee resulting from a sudden and
unexpected illness or accident of the Covered Employee or of a dependent of the
Covered Employee, loss of the Covered Employee's property due to casualty, or
other similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Covered Employee. The circumstances that
shall constitute an "unforeseeable emergency" shall depend upon the facts of
each case, but, in any case, payment may not be made to the extent that such
hardship is or may be relieved (i) through reimbursement or compensation by
insurance or otherwise, or (ii) by liquidation of the Covered Employee's assets,
to the extent the liquidation of such assets would not itself cause severe
financial hardship. Examples of what are not considered to be "unforeseeable
emergencies" include the need to send a Covered Employee's child to college or
the purchase of a home. Withdrawals of amounts because of an "unforeseeable
emergency" shall not exceed an amount reasonably needed to satisfy the emergency
need. If any withdrawal is permitted pursuant to this Section during a Plan
Year, no further deferral of compensation shall be made during the Plan Year
from and after the effective date of the withdrawal.
ARTICLE IV
AMENDMENT AND TERMINATION
Section 4.1 Amendment and Termination. The Corporation shall have the
right and power at any time and from time to time to amend the Restoration Plan
in whole or in part, on behalf of all Participating Employers, and at any time
to terminate the Restoration Plan or any Participating Employer's participation
hereunder; provided, however, that no such amendment or termination shall reduce
the amount actually credited to the Account(s) of any current or former Covered
Employee (or beneficiary of a deceased Covered Employee) on the date of such
amendment or termination, or further defer the due dates for the payment of such
amounts, without the consent of the affected person. Notwithstanding the
provisions of Section 3.6(a), in connection with any termination of the
Restoration Plan the Committee shall have the authority to cause the Accounts of
all current and former Covered Employees (and beneficiary of any deceased
Covered Employees) to be paid in a single sum payment as of a date determined by
the Committee or to otherwise accelerate the payment of all Accounts in such
manner as the Committee shall determine in its discretion. In that regard, upon
any termination of the
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Restoration Plan the amount of any payment to a former Covered Employee (or
beneficiary of a deceased Covered Employee) who is receiving annual installments
pursuant to Section 3.6(c) shall be the Single Sum Value of the Covered
Employee's Account determined as of the selected determination date.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.1 Nature of Plan and Rights. The Restoration Plan is unfunded
and intended to constitute an incentive and deferred compensation plan for a
select group of officers and key management employees of the Participating
Employers. If necessary to preserve the above intended plan status, the
Committee, in its sole discretion, reserves the right to limit or reduce the
number of actual participants and otherwise to take any remedial or curative
action that the Committee deems necessary or advisable. The Accounts established
and maintained under the Restoration Plan by a Participating Employer are for
accounting purposes only and shall not be deemed or construed to create a trust
fund of any kind or to grant a property interest of any kind to any Employee,
designated beneficiary or estate. The amounts credited by a Participating
Employer to such Accounts are and for all purposes shall continue to be a part
of the general assets of such Participating Employer, and to the extent that an
Employee, beneficiary or estate acquires a right to receive payments from such
Participating Employer pursuant to the Restoration Plan, such right shall be no
greater than the right of any unsecured general creditor of such Participating
Employer.
Section 5.2 Termination of Employment. For the purposes of the
Restoration Plan, an Employee's employment with a Participating Employer shall
not be considered to have terminated so long as the Employee is in the employ of
any Participating Employer or other member of the Controlled Group.
Section 5.3 Spendthrift Provision. No Account balance or other right or
interest under the Restoration Plan of an Employee, beneficiary or estate may be
assigned, transferred or alienated, in whole or in part, either directly or by
operation of law, and no such balance, right or interest shall be liable for or
subject to any debt, obligation or liability of the Employee, designated
beneficiary or estate.
Section 5.4 Employment Noncontractual. The establishment of the
Restoration Plan shall not enlarge or otherwise affect the terms of any
Employee's employment with his Participating Employer, and such Participating
Employer may terminate the employment of the Employee as freely and with the
same effect as if the Restoration Plan had not been established.
Section 5.5 Adoption by Other Participating Employers. The Restoration
Plan may be adopted by any Participating Employer participating under the 401(k)
Plan, such adoption to be effective as of the date specified by such
Participating Employer at the time of adoption.
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Section 5.6 Applicable Law. The Restoration Plan shall be governed and
construed in accordance with the laws of the State of North Carolina, except to
the extent such laws are preempted by the laws of the United States of America.
Section 5.7 Merged Plans. From time to time the Participating Employers
may cause other nonqualified plans to be merged into the Restoration Plan.
Schedule 5.7 attached hereto sets forth the names of the plans that merged into
the Restoration Plan by April 1, 1998 and their respective merger dates.
Schedule 5.7 shall be updated from time to time to reflect mergers after April
1, 1998.
Upon such a merger, the account balance(s) immediately prior to the date
of merger of each participant in the merged plan shall be transferred and
credited as of the merger date to one or more accounts established under the
Restoration Plan for such participant. From and after the merger date, the
participant's rights shall be determined under the Restoration Plan, and the
participant shall be subject to all of the restrictions, limitations and other
terms and provisions of the Restoration Plan. Not in limitation of the
foregoing, each Restoration Plan Account established for the participant as a
result of the merger shall be periodically adjusted when and as provided in
Section 3.5 hereof as in effect from time to time and shall be paid at such time
and in such manner as provided in Section 3.6 and Section 3.7 hereof, except to
the extent otherwise provided on Schedule 5.7. The Personnel Group shall, in its
discretion, establish any procedures it deems necessary or advisable in order to
administer any such plan mergers, including without limitation procedures for
transitioning from the method of account adjustments under the prior plan to the
methods provided for under the Restoration Plan.
IN WITNESS WHEREOF, this instrument has been executed by the Corporation
as of the day and year first above written.
BANKAMERICA CORPORATION
By: /s/ ANN P. WEST
---------------------------------------
Title: SENIOR VICE PRESIDENT
-------------------------------
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SCHEDULE 5.7
MERGED PLANS AS OF APRIL 1, 1998
Plan Name Date of Merger
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C&S Policy Committee Supplemental December 31, 1992
Savings Plan
C&S Key Executive Supplemental December 31, 1992
Savings Plan
C&S/Sovran Supplemental Retirement December 31, 1992
Plan for Former Sovran Executives
(Thrift Restoration Benefits)
First & Merchants Corporation Deferred March 31, 1993
Management Incentive Compensation
Plan
Sovran Deferred Compensation Plan March 31, 1993
NationsBank of Texas, N.A. Profit March 31, 1993
Sharing Restoration Plan
Thrift Plan Reserve Account Maintained March 31, 1993
Under the NationsBank Corporation
and Designated Subsidiaries
Supplemental Executive Retirement
Plan
Bank South Executive Bonus Deferral Plan July 1, 1996
Boatmen's Bancshares, Inc. Executive Deferred December 31, 1997
Compensation Plan
Fourth Financial Corporation Executive Deferred December 31, 1997
Compensation Plan
NationsBank Corporation Key Employee Deferral Plan April 1, 1998
Deferred compensation components of the NationsBank April 1, 1998
Corporation Executive Incentive Compensation Plan
BANK OF AMERICA
EXECUTIVE INCENTIVE COMPENSATION PLAN
(as amended and restated effective April 1, 1998)
THIS INSTRUMENT OF AMENDMENT AND RESTATEMENT is executed effective as of
April 1, 1998 by BANKAMERICA CORPORATION, a Delaware corporation (the
"Corporation").
Statement of Purpose
NationsBank Corporation ("NationsBank") entered into an Agreement and
Plan of Reorganization with BankAmerica Corporation, a Delaware corporation
("BankAmerica"), dated April 10, 1998 (the "Reorganization Agreement"). Pursuant
to the Reorganization Agreement, NationsBank was re-incorporated as a Delaware
corporation, BankAmerica merged into NationsBank, and the resulting Delaware
corporation was renamed "BankAmerica Corporation," all effective as of the
"Effective Time" as defined in the Reorganization Agreement. References herein
to the "Corporation" include both NationsBank (prior to the Effective Time) and
the Delaware corporation resulting from the consummation of the transactions
contemplated by the Reorganization Agreement (from and after the Effective
Time).
The Corporation originally established the NationsBank Corporation
Executive Incentive Compensation Plan (the "Plan") effective January 1, 1994,
and the Plan was most recently amended and restated effective January 1, 1997.
Pursuant to the Plan, certain covered employees of the Corporation may receive
annual incentive compensation based on the annual performance of the Corporation
consistent with the "performance-based compensation" requirements of Section
162(m) of the Internal Revenue Code.
Covered employees have been eligible to defer receipt of incentive
compensation that may become payable under the Plan to Accounts established and
maintained under the Plan. Effective April 1, 1998, all administration of
Accounts is being transferred to the NationsBank 401(k) Restoration Plan, and
all future deferrals of incentive compensation payable under this Plan will be
administered under the NationsBank 401(k) Restoration Plan. This amendment and
restatement of the Plan removes the deferred compensation components of the Plan
effective April 1, 1998 consistent with the administrative changes described
above.
In addition, this amendment and restatement changes the name of the Plan
and makes certain related changes in connection with the consummation of the
transactions described in the Reorganization Agreement.
In accordance with paragraph 7 of the Plan, the amendment and
restatement of the Plan set forth herein has been approved by the Board of
Directors of the Corporation.
NOW, THEREFORE, the Plan is hereby amended and restated in its entirety
to consist of the following paragraphs 1 through 9 effective as of the date
hereof:
<PAGE>
1. NAME:
This plan shall be known as (i) prior to the Effective Time, the
"NationsBank Corporation Executive Incentive Compensation Plan" and (ii) from
and after the Effective Time, the "Bank of America Executive Incentive
Compensation Plan" (the "Plan").
2. PURPOSE AND INTENT:
The Corporation established this Plan effective January 1, 1994 for the
purpose of providing certain of its senior executive officers with annual
incentive compensation based on the annual performance of the Corporation
measured by objective corporate financial performance measures. This amendment
and restatement is effective April 1, 1998. The intent of the Plan is to provide
"performance-based compensation" within the meaning of Section 162(m)(4)(C) of
the Code. The provisions of the Plan shall be construed and interpreted to
effectuate such intent.
3. DEFINITIONS:
For purposes of the Plan, the following terms shall have the following
meanings:
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and references thereto shall include the valid Treasury regulations
thereunder.
"COMMITTEE" means all of the members of the Compensation Committee of
the Board of Directors of the Corporation who are Outside Directors.
"CORPORATION" means (i) prior to the Effective Time, NationsBank
Corporation, a North Carolina corporation and (ii) from and after the Effective
Time, BankAmerica Corporation, a Delaware corporation, and any successor
thereto.
"COVERED EMPLOYEE" for a Plan Year means any employee of the Corporation
whose compensation is anticipated to be subject to the provisions of Section
162(m) of the Code and who is designated by the Committee prior to April 1 of
such Plan Year as a "Covered Employee" under the Plan for such Plan Year, and
any other key employee of the Corporation designated by the Committee prior to
April 1 of a Plan Year as a "Covered Employee" under the Plan for such Plan
Year.
"EFFECTIVE TIME" means the "Effective Time" as defined under the
Reorganization Agreement.
"NET INCOME" means, with respect to a Plan Year, "net income" of the
Corporation for such Plan Year determined in accordance with generally accepted
accounting principles that would be reported in the Corporation's Annual Report
to Shareholders for such Plan Year assuming payment of all awards under the Plan
for such Plan Year without reduction by the Committee.
2
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"OUTSIDE DIRECTOR" means an "outside director" within the meaning of
Section 162(m)(4)(C)(i) of the Code.
"PLAN YEAR" means the fiscal year of the Corporation beginning January 1
and ending December 31.
"REORGANIZATION AGREEMENT" means the Agreement and Plan of
Reorganization dated April 10, 1998 between NationsBank Corporation and
BankAmerica Corporation.
4. ADMINISTRATION:
The Committee shall be responsible for administering the Plan. The
Committee shall have all of the powers necessary to enable it to properly carry
out its duties under the Plan. Not in limitation of the foregoing, the Committee
shall have the power to construe and interpret the Plan and to determine all
questions that shall arise thereunder. The Committee shall have such other and
further specified duties, powers, authority and discretion as are elsewhere in
the Plan either expressly or by necessary implication conferred upon it. The
Committee may appoint such agents, who need not be members of the Committee, as
it may deem necessary for the effective performance of its duties, and may
delegate to such agents such powers and duties as the Committee may deem
expedient or appropriate that are not inconsistent with the intent of the Plan.
The decision of the Committee upon all matters within its scope of authority
shall be final and conclusive on all persons, except to the extent otherwise
provided by law.
5. OPERATION:
(a) Prior to April 1 of a Plan Year, the Committee shall designate the
Covered Employees for the Plan Year.
(b) Subject to the Committee's discretion to reduce awards under the
Plan, each Plan Year each Covered Employee for such Plan Year shall be entitled
to an award under the Plan equal to two-tenths of one percent (0.20%) of the
Corporation's Net Income for such Plan Year.
(c) Notwithstanding the provisions of paragraph 5(b) to the contrary,
the Committee in its sole and exclusive discretion may reduce (including a
reduction to zero) any award to a Covered Employee otherwise payable under the
Plan for a Plan Year.
(d) In accordance with Section 162(m)(4)(C)(iii) of the Code, prior to
any payment under the Plan for a Plan Year, the Committee shall certify in
writing the amount of Net Income for such Plan Year.
(e) A Covered Employee's award under the Plan for a Plan Year shall be
paid by the Corporation to such Covered Employee in cash, less applicable
payroll and withholding taxes, within seventy-five (75) days after the
certification by the Committee as provided in paragraph 5(d). Notwithstanding
the foregoing, a Covered Employee may be eligible to defer all or any portion of
the Covered Employee's award for the Plan Year pursuant to the terms and
provisions of the NationsBank 401(k) Restoration Plan (or any successor
thereto).
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(f) If the employment of a Covered Employee for a Plan Year is
terminated for any reason during the Plan Year, the Covered Employee shall not
receive any award under the Plan for such Plan Year.
(g) Notwithstanding any provision of the Plan to the contrary, a
reduction in the amount otherwise payable to a Covered Employee for a Plan Year
as provided in paragraph 5(c) or paragraph 5(f) above shall not result in a
recalculation of Net Income for such Plan Year.
6. SHAREHOLDER APPROVAL:
Shareholder approval for and ratification of the Plan was last obtained
at the annual shareholders' meeting held during April 1997. The continued
effectiveness of the Plan is subject to its approval and ratification by the
shareholders of the Corporation at such other times as and to the extent
required by Section 162(m)(4)(C)(ii) of the Code.
7. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN:
The Board of Directors of the Corporation may amend, modify or terminate
the Plan at any time, provided that no amendment, modification or termination of
the Plan shall reduce the amount payable to a Covered Employee under the Plan as
of the date of such amendment, modification or termination.
8. APPLICABLE LAW:
The Plan shall be construed, administered, regulated and governed in all
respects under and by the laws of the United States to the extent applicable,
and to the extent such laws are not applicable, by the laws of the state of
North Carolina.
9. MISCELLANEOUS:
A Covered Employee's rights and interests under the Plan may not be
assigned or transferred by the Covered Employee. To the extent the Covered
Employee acquires a right to receive payments from the Corporation under the
Plan, such right shall be no greater than the right of any unsecured general
creditor of the Corporation. Nothing contained herein shall be deemed to create
a trust of any kind or any fiduciary relationship between the Corporation and
the Covered Employee. Designation as a Covered Employee in the Plan shall not
entitle or be deemed to entitle a Covered Employee to continued employment with
the Corporation.
4
<PAGE>
IN WITNESS WHEREOF, this instrument has been executed by an authorized
officer of the Corporation as of the day and year first above written.
BANKAMERICA CORPORATION
By: /s/ ANN P. WEST
---------------------------
Ann P. West
Senior Vice President
"Corporation"
5
EXHIBIT 10(i)
BANK OF AMERICA CORPORATION DIRECTOR DEFERRAL PLAN
As Amended and Restated Effective January 27, 1999
1. NAME:
This plan shall be known as the "Bank of America Corporation Director
Deferral Plan" (the "Plan").
2. PURPOSE AND INTENT:
NationsBank Corporation, a North Carolina corporation, established this
Plan effective January 1, 1995 for the purpose of providing the nonemployee
members of its Board of Directors with the opportunity to defer payment of the
annual retainer fee and/or meetings fees payable during a year. Effective April
24, 1996, NationsBank Corporation adopted the NationsBank Corporation Directors'
Stock Plan (the "Stock Plan") which provides in part that a portion of a
director's annual retainer fee will be paid in cash and a portion in shares of
common stock of NationsBank Corporation. The Plan was amended and restated in
certain respects effective April 24, 1996 in conjunction with the adoption of
the Stock Plan.
NationsBank Corporation entered into an Agreement and Plan of
Reorganization with BankAmerica Corporation, a Delaware corporation, dated April
10, 1998 (the "Reorganization Agreement"). Pursuant to the Reorganization
Agreement, NationsBank Corporation was reincorporated as a Delaware corporation
and, following such reincorporation, was renamed "BankAmerica Corporation" (the
"Corporation").
The amendment and restatement of the Plan set forth herein incorporates
changes approved by the Board of Directors on January 27, 1999 and makes certain
other conforming changes, with the change in Plan name effective upon and
subject to shareholder approval of the change in the name of the Corporation
from BankAmerica Corporation to Bank of America Corporation. It is the intent of
the Corporation that amounts deferred under the Plan by a director shall not be
taxable to the director for income tax purposes until the time actually received
by the director. The provisions of the Plan shall be construed and interpreted
to effectuate such intent.
3. DEFINITIONS:
For purposes of the Plan, the following terms shall have the following
meanings:
(a) "Accounts" of a Participant mean collectively the Participant's Cash
Account and the Stock Account.
(b) "Cash Account" means the account maintained in dollars on the books
of the Corporation to record a Participant's interest under the Plan
attributable to the cash portion of any Annual Retainer Fee and Meetings Fees
deferred by the Participant into
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<PAGE>
the Cash Account pursuant to paragraph 5(c) below, as adjusted from time to time
pursuant to the terms of the Plan.
(c) "Claim" means a claim for benefits under the Plan.
(d) "Claimant" means a person making a Claim.
(e) "Common Stock" means the common stock of the Corporation.
(f) "Compensation Committee" means the committee of individuals who are
serving from time to time as the members of the Compensation Committee of the
Board of Directors of the Corporation.
(g) "Corporate Benefits Committee" means the committee of individuals
who are serving from time to time as the members of the Corporate Benefits
Committee of the Corporation.
(h) "Corporate Personnel Group" means the group of employees designated
as such from time to time by the Corporation.
(i) "Fair Market Value" of a share of Common Stock means the closing
price on the relevant date of a share of Common Stock as reflected in the report
of composite trading of New York Stock Exchange listed securities for that day
(or, if no shares were publicly traded on that day, the immediately preceding
day that shares were so traded) published in The Wall Street Journal (Eastern
Edition) or in any other publication selected by the Committee; provided,
however, that if the Shares are misquoted or omitted by the selected
publication(s), the Plan Administrator shall directly solicit the information
from officials of the stock exchanges or from other informed independent market
sources. If shares of Common Stock shall not have been publicly traded for more
than ten (10) days immediately preceding such date, then the Fair Market Value
of a share shall be determined by the Plan Administrator in such manner as it
shall deem appropriate.
(j) "Fees" means both (i) the annual retainer fee (the "Annual Retainer
Fee") and (ii) any meetings fees (the "Meetings Fees") payable to a Nonemployee
Director under the Corporation's compensation policies for directors in effect
from time to time.
(k) "Nonemployee Director" means an individual who is a member of the
Board of Directors of the Corporation, but who is not an employee of the
Corporation or any of its subsidiaries.
(l) "Participant" means a Nonemployee Director who has elected to
participate in the Plan as provided in paragraph 5(b) below.
(m) "Plan Administrator" means the Corporate Personnel Group, or such
other person or entity designated as the "Plan Administrator" for purposes of
the Plan by the Compensation Committee.
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(n) "Plan Year" means the twelve (12) month period beginning January 1
and ending December 31.
(o) "Stock Account" means the account maintained in Stock Units on the
books of the Corporation to record a Participant's interest under the Plan
attributable to the portion of any Annual Retainer Fee and Meeting Fees deferred
by the Participant into the Stock Account pursuant to paragraphs 5(c) and (d)
below, as adjusted from time to time pursuant to the terms of the Plan.
(p) "Stock Unit" means a unit having a value as of a given date equal to
the Fair Market Value of one (1) share of Common Stock on such date.
4. ADMINISTRATION:
The Plan Administrator shall be responsible for administering the Plan.
The Plan Administrator shall have all of the powers necessary to enable it to
properly carry out its duties under the Plan. Not in limitation of the
foregoing, the Plan Administrator shall have the power to construe and interpret
the Plan and to determine all questions that shall arise thereunder. The Plan
Administrator shall have such other and further specified duties, powers,
authority and discretion as are elsewhere in the Plan either expressly or by
necessary implication conferred upon it. The Plan Administrator may appoint such
agents as it may deem necessary for the effective performance of its duties, and
may delegate to such agents such powers and duties as the Plan Administrator may
deem expedient or appropriate that are not inconsistent with the intent of the
Plan. The decision of the Plan Administrator upon all matters within its scope
of authority shall be final and conclusive on all persons, except to the extent
otherwise provided by law.
5. OPERATION:
(a) Eligibility. Each Nonemployee Director shall be eligible to
participate in the Plan.
(b) Elections to Defer. A Nonemployee Director may become a Participant
in the Plan by irrevocably electing, on a form provided by the Plan
Administrator, to defer all or any portion of the Annual Retainer Fee payable to
the Nonemployee Director during such Plan Year and/or the Meetings Fees payable
to the Nonemployee Director for all meetings occurring during such Plan Year.
Such election shall be made separately with respect to the cash and stock
portions of the Annual Retainer Fee and the Meetings Fees. In order to be
effective, a Nonemployee Director's election to defer must be executed and
returned to the Plan Administrator on or before the date specified by the Plan
Administrator for such purpose. Such election must normally be made prior to the
beginning of the Plan Year to which the election relates. However, the Plan
Administrator, in its sole and exclusive discretion, may determine that in
certain circumstances an election may be made during a Plan Year if such
determination is not inconsistent with the intent of the Plan expressed in
paragraph 2 above.
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<PAGE>
(c) Establishment of Accounts.
(i) The Corporation shall establish and maintain on its books a
Cash Account and a Stock Account for each Participant. Each Account shall be
designated by the name of the Participant for whom established.
(ii) The Meetings Fees and the cash portion of any Annual
Retainer Fee deferred by a Participant shall be credited to the Participant's
Cash Account or Stock Account as the Participant shall elect. The election shall
be made at the time determined by the Plan Administrator and on the form
provided by the Plan Administrator. The Participant may make a separate election
for the Meeting Fees and the cash portion of the Annual Retainer Fee. If no
election is made, the amounts deferred shall be credited to the Participant's
Cash Account. To the extent Meetings Fees and/or the cash portion of the Annual
Retainer Fee are to be credited to a Participant's Cash Account, such amounts
shall be credited to the Cash Account as of the date the Fees would have
otherwise been paid to the Participant. To the extent Meetings Fees and/or the
cash portion of the Annual Retainer Fee are to be credited to a Participant's
Stock Account, the Stock Account shall be credited as of the date the Fees would
have otherwise been paid to the Participant with the number of Stock Units equal
to the dollar amount of the deferral divided by the Fair Market Value of a share
of Common Stock on such date.
(iii) The stock portion of any Annual Retainer Fee deferred by a
Participant shall be credited to the Participant's Stock Account. The Stock
Account shall be credited as of the date the Fee would have otherwise been paid
to the Participant with the number of Stock Units equal to the number of shares
of Common Stock which the Participant would have received under the Stock Plan
with respect to such deferred portion of the Annual Retainer Fee.
(d) Account Adjustments: Cash Account. As of the last day of each
calendar month, each Cash Account shall be adjusted for such month so that the
level of investment return of the Cash Account shall be substantially equal to
the ask yield of the most recent auction of 30-year Treasury bonds, as quoted
for the last business day of the immediately preceding calendar month in the
Wall Street Journal (Eastern Edition), or if such quotations are not available
in the Wall Street Journal, in a similar financial publication selected by the
Plan Administrator.
(e) Account Adjustments: Stock Account. Each Stock Account shall be
credited additional full or fractional Stock Units for cash dividends paid on
the Common Stock based on the number of Stock Units in the Stock Account on the
applicable dividend record date and calculated based on the Fair Market Value of
the Common Stock on the applicable dividend payment date. Each Stock Account
shall also be equitably adjusted as determined by the Plan Administrator in the
event of any stock dividend, stock split or similar change in the capitalization
of the Corporation.
(f) Payment Options. At the time a Participant first makes an election
to defer Fees under the Plan, the Participant shall be given the opportunity to
elect one of the
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following payment options: (i) single cash payment, (ii) five (5) annual
installments or (iii) ten (10) annual installments. The election shall be made
in writing on a form provided by the Plan Administrator and must be returned to
the Plan Administrator before such date as specified by the Plan Administrator.
Such election shall be effective with respect to all Fees deferred under the
Plan by the Participant. If a Participant fails to duly elect a payment option,
the method of payment shall be the single cash payment. After the initial
deferral election, a Participant may elect a new payment option from among the
payment options listed above by submitting a new payment option election to the
Plan Administrator. The new payment option election shall be made in writing on
the form provided by the Plan Administrator. The payment option election shall
become effective on the one year anniversary of the date the form is filed with
the Plan Administrator, provided the Participant has remained a Nonemployee
Director continuously until that date. No additional payment option election may
be submitted during such one-year period. No new payment election may shorten
the period of time during which payments would have been made in the absence of
such election. Upon becoming effective, the new payment option shall apply with
respect to all Fees deferred under the Plan by the Participant, including Fees
deferred under the Plan before the election became effective.
(g) Single Cash Payment. If a Participant to whom the single cash
payment method applies terminates services with the Corporation as a member of
the Board of Directors of the Corporation, such Participant's Accounts shall
continue to be credited with adjustments under paragraph 5(d) and paragraph 5(e)
above through December 31 of the calendar year in which such termination of
services occurred. The number of Stock Units in the Stock Account as of such
December 31 shall be converted to cash based on the Fair Market Value of the
Common Stock on such date, and such cash amount together with the final Cash
Account balance as of such December 31 shall be paid in a single cash payment to
the Participant (or to the Participant's designated beneficiary in the case of
the Participant's termination of services as the result of the Participant's
death) by January 31 of the following calendar year.
(h) Annual Installments. If a Participant to whom the annual
installments method applies terminates service with the Corporation as a member
of the Board of Directors of the Corporation, the amount of such annual
installments shall be calculated and paid pursuant to the provisions of this
paragraph 5(h). The Participant's Accounts shall continue to be credited with
adjustments under paragraph 5(d) and paragraph 5(e) above until the Accounts are
fully paid out. The first installment shall be paid by January 31 of the
calendar year immediately following the calendar year in which such termination
of services occurred, and each subsequent installment shall be paid by January
31 of each subsequent calendar year. Each payment shall be equal to (i) the sum
of the Participant's balance in each Account as of December 31 of the calendar
year immediately preceding the calendar year of payment, multiplied by (ii) a
fraction, the numerator of which is one and the denominator is the number of
installments remaining, including the current year's payment. For purposes of
the preceding sentence, the balance of the Stock Account shall be equal to the
number of the Participant's Stock Units as of each December 31 multiplied by the
Fair Market Value of
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the Common Stock on such date. In the event of the Participant's death, any
remaining annual installments shall be paid to the Participant's designated
beneficiary.
(i) Other Payment Provisions. Subject to the provisions of paragraph
5(j) and paragraph 6 below, a Participant shall not be paid any portion of the
Participant's Accounts prior to the Participant's termination of services as a
member of the Board of Directors of the Corporation. Any payment hereunder shall
be subject to applicable payroll and withholding taxes. In the event any amount
becomes payable under the provisions of the Plan to a Participant, beneficiary
or other person who is a minor or an incompetent, whether or not declared
incompetent by a court, such amount may be paid directly to the minor or
incompetent person or to such person's legal representative (or attorney-in-fact
in the case of an incompetent) as the Plan Administrator, in its sole
discretion, may decide, and the Plan Administrator shall not be liable to any
person for any such decision or any payment pursuant thereto. Participants shall
designate a beneficiary under the Plan on a form furnished by the Plan
Administrator, and if a Participant does not have a beneficiary designation in
effect, the designated beneficiary shall be the Participant's estate.
(j) Withdrawals on Account of an Unforeseeable Emergency. A Participant
who is in active service as a member of the Board of Directors of the
Corporation may, in the Plan Administrator's sole discretion, receive a payment
of all or any part of the amounts previously credited to the Participant's Cash
Account (but not Stock Account) in the case of an "unforeseeable emergency." A
Participant requesting a payment pursuant to this subparagraph (j) shall have
the burden of proof of establishing, to the Plan Administrator's satisfaction,
the existence of such "unforeseeable emergency," and the amount of the payment
needed to satisfy the same. In that regard, the Participant shall provide the
Plan Administrator with such financial data and information as the Plan
Administrator may request. If the Plan Administrator determines that a payment
should be made to a Participant under this subparagraph (j), such payment shall
be made within a reasonable time after the Plan Administrator's determination of
the existence of such "unforeseeable emergency" and the amount of payment so
needed. As used herein, the term "unforeseeable emergency" means a severe
financial hardship to a Participant resulting from a sudden and unexpected
illness or accident of the Participant or of a dependent of the Participant,
loss of the Participant's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant. The circumstances that shall constitute
an "unforeseeable emergency" shall depend upon the facts of each case, but, in
any case, payment may not be made to the extent that such hardship is or may be
relieved (i) through reimbursement or compensation by insurance or otherwise, or
(ii) by liquidation of the Participant's assets, to the extent the liquidation
of such assets would not itself cause severe financial hardship. Examples of
what are not considered to be "unforeseeable emergencies" include the need to
send a Participant's child to college or the desire to purchase a home.
Withdrawals of amounts because of an "unforeseeable emergency" shall not exceed
an amount reasonably needed to satisfy the emergency need.
-6-
<PAGE>
(k) Statements of Account. Each Participant shall receive an annual
statement of the balance in the Participant's Accounts.
6. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN:
The Compensation Committee shall have the right and power at any time
and from time to time to amend the Plan in whole or in part and at any time to
terminate the Plan; provided, however, that no such amendment or termination
shall reduce the amount actually credited to a Participant's Accounts under the
Plan on the date of such amendment or termination, or further defer the due
dates for the payment of such amounts, without the consent of the affected
Participant. Notwithstanding the provisions of paragraph 5(f), in connection
with any termination of the Plan the Compensation Committee shall have the
authority to cause the Accounts of all Participants to be paid in a single cash
payment as of a date determined by the Compensation Committee or to otherwise
accelerate the payment of Accounts in such manner as the Compensation Committee
shall determine in its discretion.
7. CLAIMS PROCEDURES:
(a) General. In the event that a Claimant has a Claim under the Plan,
such Claim shall be made by the Claimant's filing a notice thereof with the Plan
Administrator within ninety (90) days after such Claimant first has knowledge of
such Claim. Each Claimant who has submitted a Claim to the Plan Administrator
shall be afforded a reasonable opportunity to state such Claimant's position and
to present evidence and other material relevant to the Claim to the Plan
Administrator for its consideration in rendering its decision with respect
thereto. The Plan Administrator shall render its decision in writing within
ninety (90) days after the Claim is referred to it, unless special circumstances
require an extension of such time within which to render such decision, in which
event such decision shall be rendered no later than one hundred eighty (180)
days after the Claim is referred to it. A copy of such written decision shall be
furnished to the Claimant.
(b) Notice of Decision of Plan Administrator. Each Claimant whose Claim
has been denied by the Plan Administrator shall be provided written notice
thereof, which notice shall set forth:
(i) the specific reason(s) for the denial:
(ii) specific reference to pertinent provision(s) of the Plan
upon which such denial is based;
(iii) a description of any additional material or information
necessary for the Claimant to perfect such Claim and an explanation of
why such material or information is necessary; and
(iv) an explanation of the procedure hereunder for review of such
Claim;
-7-
<PAGE>
all in a manner calculated to be understood by such Claimant.
(c) Review of Decision of Plan Administrator. Each such Claimant shall
be afforded a reasonable opportunity for a full and fair review of the decision
of the Plan Administrator denying the Claim. Such review shall be by the
Corporate Benefits Committee. Such appeal shall be made within ninety (90) days
after the Claimant received the written decision of the Plan Administrator and
shall be made by the written request of the Claimant or such Claimant's duly
authorized representative of the Corporate Benefits Committee. In the event of
appeal, the Claimant or such Claimant's duly authorized representative may
review pertinent documents and submit issues and comments in writing to the
Corporate Benefits Committee. The Corporate Benefits Committee shall review the
following:
(i) the initial proceedings of the Plan Administrator with
respect to such Claim;
(ii) such issues and comments as were submitted in writing by the
Claimant or the Claimant's duly authorized representative; and
(iii) such other material and information as the Corporate
Benefits Committee, in its sole discretion, deems advisable for a full
and fair review of the decision of the Plan Administrator.
The Corporate Benefits Committee may approve, disapprove or modify the decision
of the Plan Administrator, in whole or in part, or may take such other action
with respect to such appeal as it deems appropriate. The decision of the
Corporate Benefits Committee with respect to such appeal shall be made promptly,
and in no event later than sixty (60) days after receipt of such appeal, unless
special circumstances require an extension of such time within which to render
such decision, in which event such decision shall be rendered as soon as
possible and in no event later than one hundred twenty (120) days following
receipt of such appeal. The decision of the Corporate Benefits Committee shall
be in writing and in a manner calculated to be understood by the Claimant and
shall include specific reasons for such decision and set forth specific
references to the pertinent provisions of the Plan upon which such decision is
based. The Claimant shall be furnished a copy of the written decision of the
Corporate Benefits Committee. Such decision shall be final and conclusive upon
all persons interested therein, except to the extent otherwise provided by
applicable law.
8. APPLICABLE LAW:
The Plan shall be construed, administered, regulated and governed in all
respects under and by the laws of the United States to the extent applicable,
and to the extent such laws are not applicable, by the laws of the state of
Delaware
9. MISCELLANEOUS:
A Participant's rights and interests under the Plan may not be assigned
or transferred by the Participant. The Plan shall be an unsecured, unfunded
arrangement.
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<PAGE>
To the extent the Participant acquires a right to receive payments
from the Corporation under the Plan, such right shall be no greater than the
right of any unsecured general creditor of the Corporation. Nothing contained
herein shall be deemed to create a trust of any kind or any fiduciary
relationship between the Corporation and any Participant. The Plan shall be
binding on the Corporation and any successor in interest of the Corporation.
IN WITNESS WHEREOF, this instrument has been executed by an authorized
officer of the Corporation as of the 27th day of January, 1999.
BANKAMERICA CORPORATION
By: /s/ C.J. COOLEY
----------------------------------
C.J. Cooley
Corporate Personnel Executive
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BARNETT BANKS, INC.
THE MANAGEMENT DEFERRAL PLAN
(As Amended through January 1, 1996)
<PAGE>
BARNETT BANKS, INC.
THE MANAGEMENT DEFERRAL PLAN
Pursuant to the authority granted to the Employee Benefits Committee
under subparagraph 13.1(b) of the Plan prior to its restatement, The Management
Deferral Plan (the "Plan") is hereby amended and restated this ___ day of
_______________, 1996.
W I T N E S S E T H:
WHEREAS, the Plan was adopted, effective January 1, 1991, to allow for
the deferral of compensation by certain executives and highly compensated
employees and has been subsequently amended; and
WHEREAS, the Plan Sponsor deems it appropriate to amend and restate the
Plan effective _______________, 1996.
NOW, THEREFORE, in consideration of the premises herein, the Plan
Sponsor agrees as follows:
ARTICLE I
Definition of Terms
The following words and terms as used in this Plan shall have the
meaning set forth below, unless a different meaning is clearly required by the
context:
1.1 "Act": The Employee Retirement Income Security Act of 1974, as the
same may be amended from time to time, or the corresponding sections of any
subsequent legislation which replaces it, and, to the extent not inconsistent
therewith, the regulations issued thereunder.
1.2 "Administrator": The Plan Administrator provided for in ARTICLE XII
hereof.
1.3 "Affiliate": Any subsidiary, parent, affiliate, or other related
business entity to the Plan Sponsor.
1.4 "Beneficiary": The person or persons designated by a Participant or
otherwise entitled pursuant to paragraph 8.1 to receive benefits under the Plan
attributable to such Participant after the death of such Participant.
1.5 "Benefit Commencement Date": The date irrevocably elected by the
Participant pursuant to subparagraph 3.3(c). The same Benefit Commencement Date
shall be required for all Deferral Contributions made and Deferral Benefits
attributable to a Deferral Year. Except with
<PAGE>
respect to the Benefit Commencement Date associated with a Disability Retirement
Date, there may be separate Benefit Commencement Dates for different benefits
under the Plan.
1.6 "Board": The Board of Directors of the Plan Sponsor, unless such
term is used with respect to a particular Corporation and its Employees, in
which event it shall mean the Board of Directors of that Corporation.
1.7 "Change in Control": A "Change in Control" shall be deemed to have
occurred if the conditions set forth in any one of the following paragraphs
shall have been satisfied.
(i) any person, as defined in Section 3(a)(9) of the Securities
and Exchange Act of 1934 ("Exchange Act"), as such term is modified in
Sections 13(d) and 14(d) of the Exchange Act (other than (A) any
employee plan established by any Corporation, (B) the Plan Sponsor or
any of its affiliates (as defined in Rule 12b-2 promulgated under the
Exchange Act), (C) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (D) a corporation owned,
directly or indirectly, by stockholders of the Plan Sponsor in
substantially the same proportions as their ownership of the Plan
Sponsor (a "Person"), is or becomes the beneficial owner (as defined in
Rule 13d-3) promulgated under the Exchange Act), directly or indirectly,
of securities of the Plan Sponsor (not including in the securities
beneficially owned by such Person any securities acquired directly from
the Plan Sponsor) representing 25% or more of the combined voting power
of the Plan Sponsor's then outstanding voting securities;
(ii) during any period of up to two consecutive years (not
including any period prior to November 16, 1994) individuals who, at the
beginning of such period, constitute the Board cease for any reason to
constitute at least a majority thereof, provided that any person who
becomes a director subsequent to the beginning of such period and whose
nomination for election is approved by at least two-thirds of the
directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously so approved (other than a director (A) whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the Plan
Sponsor, as such terms are used in Rule 14a-11 of Regulation 14A under
the Exchange Act or (B) who was designated by a Person who was entered
into an agreement with the Plan Sponsor to effect a transaction
described in clause (i), (iii) or (iv) of this paragraph 1.7) shall be
deemed a director as of the beginning of such period;
(iii) the stockholders of the Plan Sponsor approve a merger or
consolidation of the Plan Sponsor with any other corporation (other than
(A) a merger or consolidation that would result in the voting securities
of the Plan Sponsor outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of any Corporation at least
51% of the combined voting power of the voting securities of the Plan
Sponsor or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Plan
Sponsor (or similar transaction) in which no Person is or becomes
2
<PAGE>
the beneficial owner (as defined in clause (i) above), directly or
indirectly, of securities of the Plan Sponsor (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Plan Sponsor) representing 25% or more of the combined
voting power of the Plan Sponsor's then outstanding voting securities;
or
(iv) the stockholders of the Plan Sponsor approve a plan of
complete liquidation of the Plan Sponsor or an agreement for the sale or
disposition by the Plan Sponsor of all or substantially all of the Plan
Sponsor's assets, other than a sale or disposition by the Plan Sponsor
of all or substantially all of the Plan Sponsor's assets to an entity,
at least 75% of the combined voting power of the voting securities of
which are owned by persons in substantially the same proportions as
their ownership of the Plan Sponsor immediately prior to such sale.
All references to provisions of the federal securities laws in this and other
paragraphs of this Plan are to such provisions as in effect on January 1, 1996
without regard to any subsequent amendments of, changes to or revocation of such
provisions.
1.8 "Code": The Internal Revenue Code of 1986, as the same may be
amended from time to time, or the corresponding section of any subsequent
Internal Revenue Code, and, to the extent not inconsistent therewith,
regulations issued thereunder.
1.9 "Compensation": A Participant's (i) base salary (referred to as
"Salary") and (ii) bonuses and incentive pay (collectively referred to as
"Bonus") including that portion of such compensation which is electively
deferred under this Plan or any other plan of the Corporation such as a 401(k)
plan for such Plan Year or reduced pursuant to a salary reduction election
permitted under Section 125 of the Code, but excluding any such compensation
deferred from a prior period, expense reimbursement and allowances and benefits
not normally paid in cash to the Participant.
1.10 "Corporation":
1.10(a) Barnett Banks, Inc., a Florida corporation, or any successor
thereto; and any Affiliate executing or adopting this Plan as a participating
employer. A register of such corporations which have adopted the Plan and who
are at any time participating in the Plan shall be maintained by the
Administrator.
1.10(b) Employment with an Affiliate shall be considered employment with
the Corporation for all purposes of the Plan other than determining Eligible
Employees and Compensation.
1.11 "Death Benefit": The benefit with respect to a Participant due a
Participant's Beneficiary, determined separately for each subdivision of his
Deferral Account and as determined in accordance with ARTICLE VI hereof.
1.12 "Deferral Account": An unfunded, bookkeeping account maintained on
the books of the Corporation for a Participant which reflects his interest in
amounts attributable to his Deferred Contributions under the Plan. The Deferral
Account of a Participant consists of the following:
3
<PAGE>
(i) his Deferral Contributions made to the Deferred Compensation
Plan of Barnett Banks, Inc. and its Affiliates as it existed prior to
January 1, 1991, but only if he elects to have such amounts applied to
his Deferral Account (regardless of when such election is made).
(ii) his Deferral Contributions made to the Plan with respect to
Compensation earned after December 31, 1990, and
(iii) adjustments to the Deferral Account as provided in
paragraphs 3.3 and 3.4 hereof.
Separate subdivisions of the Deferral Account shall be maintained to reflect
Deferral Contributions made and Deferral Benefits attributable with respect to
each Deferral Year and, within each Deferral Year, the Deferral Contributions
and Deferral Benefits attributable to Deferral Contributions of Salary and
Deferral Contributions of Bonus.
1.13 "Deferral Amount": With respect to each Plan Year, the sum of:
(i) the Deferral Contribution which a Participant states in his
first or timely amended Deferred Compensation Election filed with
respect to his Salary to be paid during the Plan Year, and
(ii) the Deferral Contribution which a Participant states in his
first or timely amended Deferred Compensation Election filed with
respect to his Bonus to be paid during a Plan Year.
1.14 "Deferral Benefit": The balance in a Participant's Deferral
Account.
1.15 "Deferral Contributions": That portion of a Participant's
Compensation which is deferred under the Plan.
1.16 "Deferral Year": The Plan Year with respect to which a Deferral
Contribution is made. For purposes hereof, a Deferral Contribution is considered
made with respect to the Plan Year in which the amount would otherwise have been
paid to the Participant.
1.17 "Effective Date":
(i) The Effective Date of the Plan is January 1, 1991.
(ii) The Effective Date of this Restatement of the Plan is
__________, 1996.
With respect to any Affiliate adopting the Plan as a participating employer as
of a date after the Effective Date of the Plan, the Effective Date of the Plan
as to such Affiliate is the same as may be set forth in its adoption agreement
or in the appropriate Appendix to the Plan prepared in connection with such
adoption.
4
<PAGE>
1.18 "Eligible Employee":
1.18(a) With respect to a Plan Year, an Employee who has not yet reached
his Normal Retirement Age on the last day of the Plan Year preceding such Plan
Year and who is a member of the "highly compensated group" for such Plan Year.
1.18(b) For this purpose, the term "highly compensated group" means that
group of employees, determined as of the July 31 preceding the first day of a
Plan Year who are classified under the Corporation's personnel practices and
policies as employed in Grades 40 and above.
1.18(c) Notwithstanding the foregoing, the determination of whether an
Employee is an Eligible Employee shall be made by the Administrator, and shall
be conclusive and binding on the Corporation and the Employee, unless such
determination is arbitrary and capricious.
1.18(d) Notwithstanding the foregoing, any special rules or eligibility
criteria for employees of any Affiliate adopting the Plan as a participating
employer as of a date after the Effective Date of the Plan shall be set forth in
the appropriate Appendix to the Plan prepared in connection with such adoption.
1.19 "Employee": An individual who is employed in the service of the
Corporation as a common law employee. Employment with an Affiliate shall be
considered employment with the Corporation for all purposes of the Plan other
than determining Eligible Employees and Compensation.
1.20 "Normal Retirement Age": The age of sixty-five (65) years.
1.21 "Participant": An Eligible Employee or other person qualified to
participate in the Plan for so long as he is considered a Participant as
provided in ARTICLE II hereof; and further differentiated as follows:
(i) "Active Participant": A Participant who has an election to
make Deferral Contributions to the Plan in effect at the time in
question.
(ii) "Inactive Participant": A Participant who does not have an
election to make Deferral Contributions to the Plan in effect at the
time in question.
1.22 "Plan": This document, as contained herein or duly amended, which
shall be known as the "The Management Deferral Plan".
1.23 "Plan Sponsor": Barnett Banks, Inc., or any successor thereto.
1.24 "Plan Year": The calendar year.
1.25 "Potential Change in Control": A "Potential Change in Control"
shall be deemed to have occurred if the conditions set forth in any one of the
following paragraphs shall have been satisfied:
5
<PAGE>
(i) the Plan Sponsor enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(ii) the Plan Sponsor or any Person publicly announces an
intention to take or to consider taking actions which, if consummated,
would constitute a Change in Control; or
(iii) any Person becomes the beneficial owner (as defined in Rule
13d-3 promulgated under the Exchange Act), directly or indirectly, of
securities or the Plan Sponsor representing 15% or more of the combined
voting power of the Plan Sponsor's then outstanding securities.
1.26 "Rate of Return":
1.26(a) The annual interest rate specified by the Administrator for the
Deferral Year unless otherwise expressly provided in subparagraph 1.26(b).
1.26(b) In the event that Participant either:
(i) fails or refuses to comply with the terms of a Deferred
Compensation Election (as defined in paragraph 3.3) or to contribute at
least the minimum Deferral Amount required under clause (i) of
subparagraph 3.3(b), or
(ii) dies as a result of suicide within thirteen (13) months
following the first day of the Deferral Year,
the annual rate of interest paid with respect to one year certificates of
deposits issued by the Plan Sponsor determined as of the first day of the
applicable Deferral Year.
1.26(c) Once established with respect to a Deferral Year, the Rate of
Return for all Deferral Contributions made during such Deferral Year shall not
be adjusted during the term of the deferral; provided that the Administrator, in
its sole discretion, shall have the power, exercisable from time to time during
the term of the deferral, to increase, but not to decrease, such Rate of Return.
1.27 "Scheduled Death Benefit": The anticipated death benefit(s) payable
to or with respect to such Participant and his Deferral Account determined on
the basis of applicable facts including such Participant's age and an initial or
revised Rate of Return, assumed insurability, assumed fulfillment of the benefit
entitlement requirements of the Plan and such other facts or factors as the
Administrator deems appropriate. The Scheduled Death Benefit shall be set forth
on annual benefits statements to be provided to Participants and may be adjusted
from time to time in the event of changes in the applicable facts.
6
<PAGE>
ARTICLE II
Eligibility and Participation
2.1 Eligibility. Each Eligible Employee who is employed by the
Corporation on the July 31 (or such later date as the Administrator shall
determine in response to a decision by management made in the hiring of an
Eligible Employee) immediately preceding a Plan Year shall be eligible to become
a Participant in the Plan and to defer Compensation hereunder for such Plan
Year. In the case of an Affiliate that adopts the Plan after the Effective Date
of the Plan, for the first Plan Year for, or remainder of the first Plan Year
in, which the Plan is adopted, each Eligible Employee of such Affiliate shall be
eligible to become a Participant in the Plan and to defer Compensation hereunder
as of the Effective Date of the Plan as to such Affiliate.
2.2 Notice and Election Regarding Active Participation.
2.2(a) The Administrator shall give notice of eligibility to each
Eligible Employee who is anticipated to be eligible to make Deferral
Contributions to the Plan within a reasonable period of time prior to the
beginning of each such Plan Year or, in the case of an Eligible Employee
employed by an Affiliate that adopts the Plan effective as of a date other than
the first day of a Plan Year and for the first Plan Year for which the Plan is
adopted, prior to the Effective Date of the Plan as to such Affiliate.
2.2(b) In order to make Deferral Contributions with respect to a Plan
Year, an Eligible Employee must file with the Administrator an election which is
effective as of the first day of the Plan Year in which the services that give
rise to the Compensation to be deferred are rendered. Such election must be
filed by the date established by the Administrator, which date shall be no later
than the December 31 preceding such Plan Year. In the case of a Deferral
Contribution of Bonus, the effect of this provision is that the Deferral
Election must be filed no later than the December 31 preceding the Plan Year in
which the Bonus is to be earned. In the case of an Eligible Employee employed by
an Affiliate that adopts the Plan effective as of a date other than the first
day of a Plan Year and for the first Plan Year for which the Plan is adopted,
such election must be filed prior to, and shall be effective as of, the
Effective Date of the Plan as to such Affiliate.
2.2(c) By executing and filing such election with the Administrator, an
Eligible Employee consents and agrees to the following:
(i) to execute such applications and take such physical
examinations and to supply truthfully and completely such information as
may be requested by any health questionnaire issued by the
Administrator;
(ii) to make Deferral Contributions to the Plan as specified in
such election; and
(iii) to be bound by all terms and conditions of the Plan and all
amendments thereto.
2.3 Commencement of Active Participation. An Eligible Employee shall
become an Active participant with respect to a Plan Year only if he is expected
to have Compensation during
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<PAGE>
such Plan Year, and he timely files and has in effect a Deferred Compensation
Election for such Plan Year.
2.4 Length of Participation. An individual who is or becomes a
Participant shall be or remain an Active Participant whenever he has a Deferred
Compensation Election in effect; and he shall be or remain an Inactive
Participant whenever he is entitled to future benefits under the terms of the
Plan and is not considered an Active Participant.
ARTICLE III
Determination of Deferral Benefits
3.1 Deferral Benefit. For purposes hereof, a Participant's Deferral
Benefit shall be the balance in his Deferral Account at the time in question.
3.2 Deferral Account.
3.2(a) The Corporation shall establish and maintain on its books a
Deferral Account (and appropriate subdivisions thereof) for each Participant to
reflect the Participant's benefits under the Plan.
3.2(b) The balance in the Deferral Account of a Participant shall
consist of his Deferral Contributions made to the Plan pursuant to paragraph
3.3, subtractions pursuant to paragraph 3.4, and deemed earnings or loss thereon
determined pursuant to paragraph 3.5.
3.3 Deferred Compensation Election.
3.3(a) Subject to the restrictions and conditions hereinafter provided,
an Eligible Employee shall be entitled to elect to defer, as a Deferral
Contribution with respect to a Plan Year, an amount of his Compensation
which is specified by and in accordance with his direction in his
Deferred Compensation Election for such Plan Year. Any such election
must be filed with the Administrator at the time required under
subparagraph 2.2(b).
3.3(b) The following special rules shall apply:
(i) A Participant who elects to make a Deferral Contribution must
agree to defer a minimum Deferral Amount of at least two thousand
dollars ($2,000) with respect to the Plan Year or such Deferred
Compensation Election shall not be given effect.
(ii) The maximum Deferral Contribution of Salary with respect to
any participant for a Plan Year shall be twenty percent (20%) of his
Salary for such Plan Year.
(iii) The maximum Deferral Contribution of Bonus with respect to
any Participant for a Plan Year shall be one hundred percent (100%) of
his Bonus for such Plan Year.
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<PAGE>
3.3(c) Deferred Compensation Elections shall be subject to the following
rules:
(i) A separate Deferred Compensation Election must be filed for
each Plan Year.
(ii) Each Deferred Compensation Election must specify the
following:
(A) the Deferral Amount for the applicable period;
(B) the Compensation from which the Deferral Contribution
shall be withheld, if appropriate;
(C) his Benefit Commencement Date, which date
(I) may be his Retirement Date or some other date
for payment to the Participant,
(II) except where permitted by the Administrator,
shall be the same for all Deferral Contributions made and
Deferral Benefits payable with respect to each Deferral
Year,
(III) except in the case of a Disability Retirement
Date, shall not be earlier than five (5) years following
the applicable Deferral Year, and
(IV) shall be irrevocable;
provided however, that with respect to a Disability Retirement Date, the
Participant's Benefit Commencement Date shall be his Disability
Retirement Date, unless such Participant affirmatively elects, in his
Deferred Compensation Election last filed prior to his Disability
Retirement Date, for his otherwise applicable Benefit Commencement Date
to apply to any benefits that may become payable as a result of a
Disability Retirement. Any such election with respect to Disability
Retirement shall apply to all Deferral Benefits regardless of the
Deferral Year to which they relate;
(D) the number of years over which the Deferral Benefits
is to be paid to the Participant or his Beneficiary which period (I)
shall be the same for all Deferral Contributions made and Deferral
Benefits payable with respect to a Deferral Year, and (II) shall be
irrevocable;
(E) the Deferral Year to which it relates; and
(F) such other information as the Administrator may
require.
(iii) A Deferred Compensation Election made by a Participant who
is a member of the Corporation's Management Executive Committee or the
Corporation's Management Operations Committee with respect to any Plan
Year and stated as a percentage of Salary shall be deemed to refer to
Salary as the same may be increased or decreased during the Plan
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<PAGE>
Year. A Deferred Compensation Election made by a Participant who is not
a member of the Corporation's Management Executive Committee or the
Corporation's Management Operations Committee with respect to any Plan
Year and stated as a percentage of Salary shall be deemed to refer to
Salary determined as of the effective date of the Deferred Compensation
Election, regardless of whether such Salary is increased or decreased
during the Plan Year.
3.3(d) Each Deferral Contribution is intended to be an elective salary
reduction amount which shall be deducted from a Participant's Compensation
otherwise payable to him for a Plan Year by way of Salary or Bonus. Unless
otherwise approved by the Administrator:
(i) Deferral Contributions of Salary shall be withheld from
annual salary on a pro rata basis throughout the Plan Year (or remainder
of the Plan Year, in the case of an Affiliate that adopts the Plan
effective as of a date other than the first day of a Plan Year) to which
the Deferral Contributions of Salary relate.
(ii) Unless otherwise specifically stated in the Deferred
Compensation Election filed by the Participant, Deferral Contributions
of Bonus shall be withheld on a first dollar basis from the Bonus before
any part is paid to the Participant, provided however, a Deferral
Contribution of Bonus shall be reduced by any employment taxes required
to be withheld unless the amount required to be withheld may be withheld
from payments to be made to the Participant as a Bonus at the same time
as the Deferral Contribution would otherwise have been paid in cash, or
the Participant makes other arrangements with the Administrator to have
such employment taxes withheld from other Compensation to be paid to the
Participant during the Plan Year. The Deferred Compensation Election
filed by the Participant may provide that the Deferral Contribution of
Bonus be withheld after a threshold level of Bonus has been paid to the
Participant in cash.
3.3(e) Deferral Contributions of Salary made by a Participant for a Plan
Year shall be credited to his Deferral Account as of the first day of the Plan
Year.
3.3(f) Deferral Contributions of Bonus made by a Participant shall be
credited to his Deferral Account as of the first day of the Plan Year in which
the Bonus is paid.
3.4 Subtractions from Deferral Account. The following amounts shall be
subtracted from a Participant's Deferral Account and the applicable subdivision
thereof.
(i) All Scheduled Death Benefits payable shall be subtracted
immediately after the date of the Participant's death.
(ii) All distributions from a Participant's Deferral Account
shall be subtracted when such distributions are made.
3.5 Crediting of Deemed Earnings to Deferral Account. At the last day of
each Plan Year and at such other time as there will be a payment of a
Participant's benefit under the Plan, there shall be credited to each
Participant's Deferral
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Account or such subdivision of a Participant's Deferral Account with respect to
which payment is to be made, an amount representing deemed earnings on the
balance of such account or subdivision thereof as of the date at which such
earnings are to be credited (determined after any contributions are credited
pursuant to paragraph 3.3). Such earnings shall be based on the applicable Rate
of Return for the applicable Deferral Year. Notwithstanding the foregoing, no
earnings shall be credited with respect to the period from the end of a Plan
Year until the date of a regular benefit payment scheduled to be made on or
about February 15 of the following year. In the event that deemed earnings are
to be credited as a result of a payment date other than a February 15, then the
applicable Rate of Return shall be prorated based on the number of complete
calendar months that have elapsed between the date of the most recent crediting
of earnings and the date as of which the deemed earnings are to be credited.
3.6 Equitable Adjustment in Case of Error or Omission. Where an error or
omission is discovered in the Deferral Account of a Participant, the
Administrator shall be authorized to make such equitable adjustment as the
Administrator deems appropriate.
3.7 Statement of Benefits. Within a reasonable time after March 31 of
the Plan Year and at the date a Participant's Deferral Benefit or Death Benefit
becomes payable under the Plan, the Administrator shall provide to each
Participant (or, if deceased, to his Beneficiary) a statement of the benefit
under the Plan.
3.8 Special Rules for Adopting Affiliates. Notwithstanding the rules
relating to the Deferred Compensation Election of a Participant, any special
rules applicable to Participants who are employed by any Affiliate adopting the
Plan as a participating employer as of a date after the Effective Date of the
Plan shall be set forth in the appropriate Appendix to the Plan prepared in
connection with such adoption.
ARTICLE IV
Vesting
4.1 Vesting. A Participant's Deferral Account and Deferral Benefit shall
be fully vested and non-forfeitable at all times.
ARTICLE V
Retirement Dates
5.1 Normal Retirement Date. The Normal Retirement Date of a Participant
shall be the first day of the Plan Year coinciding with or next following the
date on which the Participant attains his Normal Retirement Age.
5.2 Delayed Retirement Date. A Participant who continues in the active
employment of the Corporation beyond his Normal Retirement Date shall continue
to participate in the Plan, and his Delayed Retirement Date shall be the date of
his retirement from the employment of the Corporation.
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5.3 Early Retirement Date. A Participant shall be considered to retire
from the employment of the Corporation on Early Retirement under the Plan if he
retires on his Early Retirement Date as defined in the Retirement Plan for
Barnett Banks, Inc. and its Affiliates.
5.4 Disability Retirement Date. A Participant who, while an Employee,
becomes and remains totally and permanently disabled for a period of at least
one hundred eighty (180) days may retire from the employment of the Corporation
prior to his Normal Retirement Date and his Disability Retirement Date shall be
the date on which such one hundred eighty day period ends. The determination of
total and permanent disability shall be made by the Administrator in accordance
with the following standard. Totally and permanently disabled shall mean the
complete inability of an Eligible Employee to perform any and every duty of his
regular occupation by reason of an injury or sickness.
ARTICLE VI
Death Benefits
6.1 Death after Benefit Commencement Date. If a Participant dies after
his Benefit Commencement Date, no benefit shall be paid under the Plan except
any Death Benefit which may be provided under this ARTICLE VI.
6.2 Death before Benefit Commencement Date. If a Participant dies before
his Benefit Commencement Date, no benefit shall be paid under the Plan except
any Death Benefit which may be provided under this ARTICLE VI.
6.3 Death Benefits.
6.3(a) In the event a Participant dies before his Benefit Commencement
Date, then the Beneficiary of such Participant shall be entitled to receive a
Death Benefit under the Plan in an amount equal to the following, determined at
the end of the calendar year of his death:
(i) the applicable Scheduled Death Benefit for each Deferral Year
for which (A) either (I) the Deferral Amount has been contributed by
him, (II) the Deferral Amount has been or is anticipated to be met for
the Plan Year of death based on his Deferred Compensation Election(s)
then in effect, if any, and assumed continued annual compensation at the
rate or in the amount last in effect prior to his death, or (III) his
Deferral contribution is suspended or waived by the Administrator under
the Plan at the time of his death, and (B) he satisfies any other
benefit entitlement requirements therefor under the Plan; plus
(ii) fifty percent (50%) of the sum of the Participant's Deferral
Amounts for each Plan Year (referred to as the "Supplemental Death
Benefit"); plus
(iii) the sum of the balance(s) in each subdivision of his
Deferral Account maintained for each Deferral Year not described in
clause (i) of this subparagraph (referred to as the "Deferral Account
Death Benefit").
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6.3(b) In the event a Participant dies after his Benefit Commencement
Date, then the Beneficiary of such Participant shall be entitled to receive a
Death Benefit under the Plan in an amount equal to the following, determined at
the end of the calendar year of his death:
(i) the benefits, if any, payable after his death under the form
of payment being made to the Participant at the time of his death; plus
(ii) the Supplemental Death Benefit.
6.3(c) Notwithstanding anything herein to the contrary, if a Participant
dies as a result of suicide within thirteen (13) months after the first day of
the Deferral Year, then the Beneficiary of such Participant shall not be
entitled to any Scheduled Death Benefit or any Supplemental Death Benefit with
respect to such Deferral Year, and his Beneficiary shall instead receive as a
Death Benefit under the Plan the balance in the subdivision of his Deferral
Account attributable to such Deferral Year.
ARTICLE VII
Payment of Benefits
7.1 Time of Payment of Deferral Benefit.
7.1(a) Except as provided in subparagraph 7.1(b) and except in the event
of a Disability Retirement Date on which a Participant's Deferral Benefits
become payable, a Participant's Deferral Benefit, if any, shall become payable
to the Participant, if then alive, on February 15 of the Plan Year following the
Plan Year during which his Benefit Commencement Date occurs. Notwithstanding the
foregoing, however, except in the case of a Disability Retirement Date, no
payment shall be made with respect to a Participant's Deferred Benefit
attributable to a Deferral Year before February 15 of the fifth (5th) Plan Year
following such Deferral Year.
7.1(b) In the case of a Participant who ceases to be an Employee during
a Deferral Year (for any reason other than his death) and therefore fails to
contribute at least the minimum Deferral Amount required under clause (i) of
subparagraph 3.3(b) for such Deferral Year, the Deferral Benefit attributable to
his Deferral Contribution of Salary with respect to such Deferral Year shall be
paid to the Participant on the date he ceases to be an Employee or as soon
thereafter as is administratively practical.
7.1(c) Notwithstanding the foregoing, payment may be delayed for a
reasonable period in the event the Participant cannot be located or is not
competent to receive the benefit payment, there is a dispute as to the proper
recipient of such benefit payment, additional time is needed to complete the
Plan allocations, or additional time is needed for other administrative reasons.
7.1(d) In the event of a Disability Retirement Date on which a
Participant's Deferral Benefits become payable, an installment payment shall
become payable to such Participant on the sixtieth (60th) day following his
Disability Retirement Date. Otherwise, the provisions of
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subparagraph 7.1(a) shall be followed. The effect of this provision may allow
two (2) installment payments to be made within one calendar year.
7.2 Time of Payment of Death Benefit.
7.2(a) The Scheduled Death Benefit and the Deferral Account Death
Benefit with respect to a Participant shall become payable to his Beneficiary on
February 15 of the Plan Year following the Plan Year in which the Participant
dies.
7.2(b) The Supplemental Death Benefit with respect to a Participant
shall become payable to his Beneficiary on the sixtieth (60th) day following the
date a claim for such Supplemental Death Benefit is filed with the
Administrator.
7.2(c) Notwithstanding the foregoing, payment of the Death Benefit may
be delayed for a reasonable period in the event the recipient cannot be located
or is not competent to receive the benefit payment, there is a dispute as to the
proper recipient of such benefit payment, additional time is needed to complete
the Plan allocations, or additional time is needed for other administrative
reasons.
7.3 Form of Payment of Deferral Benefit.
7.3(a) A Participant shall be paid the Deferral Benefit, if any, to
which he is entitled, commencing at the applicable time provided in paragraph
7.1, in periodic installments payable annually over a period of five (5), ten
(10), fifteen (15) or twenty (20) years as irrevocably elected by the
Participant pursuant to subparagraph 3.3(c).
7.3(b) Notwithstanding the foregoing, a Participant who ceases to be an
Employee during a Deferral Year (for any reason other than his death) and
therefore fails to contribute at least the minimum Deferral Amount required
under clause (i) of subparagraph 3.3(b) for such Deferral Year shall receive his
Deferral Benefit attributable to Deferral Contribution of Salary made with
respect to such Deferral Year in a lump sum payment.
7.4 Form of Payment of Death Benefit. The Death Benefit shall be paid in
the following manner:
(i) The Scheduled Death Benefit and the Deferral Account Death
Benefit shall be in periodic installment payable annually over the
period irrevocably elected by the Participant pursuant to subparagraph
3.3(c), commencing at the time provided in subparagraph 7.2(a).
(ii) The Supplemental Death Benefit shall be in a lump sum
payment made at the time described in subparagraph 7.2(b).
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7.5 Lump Sum Payments and Periodic Installments.
7.5(a) The amount of a lump sum payment to or with respect to a
Participant shall be determined by reference to the Deferral Benefit or Death
Benefit which is to be paid in the form of a lump sum payment.
7.5(b) The amount of each periodic installment payment shall equal the
applicable "Annual Term Certain" amount stated in the annual benefits statement
with respect to the Deferral Benefit or the Scheduled Death Benefit, whichever
is applicable.
7.5(c) Upon the death of a Participant after his benefit becomes payable
in periodic installments, the amount of any periodic installments remaining
unpaid shall be paid to his Beneficiary over the remaining term certain for such
installments.
7.5(d) In the event that a Participant who has begun to receive periodic
installment payments as a result of a Disability Retirement Date again becomes
an Employee of the Corporation, his periodic installments shall continue
regardless of his return to employment with the Corporation.
7.6 Acceleration of Time or Form of Payment. Notwithstanding any
provision herein to the contrary, the Administrator in its sole discretion may
accelerate the time of payment hereunder or may pay a portion or all of a
Participant's Deferral Benefit, Deferral Account or Death Benefit with respect
to the Participant in a lump sum payment in commutation of amounts otherwise to
be paid after the Participant's separation from the service of the Corporation;
provided that the Administrator shall not have such power to accelerate the time
or form of payment from and after the time of a Change in Control.
7.7 Benefit Determination and Payment Procedure. The Administrator shall
make all determinations concerning eligibility for benefits under the Plan, the
time or terms of payments, and the form or manner of payment to the Participant
or the Participant's Beneficiary, in the event of the death of the Participant.
The Administrator shall promptly notify the Corporation of each such
determination that benefit payments are due and provided to the Corporation all
other information necessary to allow the Corporation to carry out said
determination, whereupon the Corporation shall pay such benefits in accordance
with the Administrator's determination.
7.8 Payments to Minors and Incompetents. If a Participant or Beneficiary
entitled to receive any benefits hereunder is a minor or is adjudged to be
legally incapable of giving valid receipt and discharge for such benefits, or is
deemed so by the Administrator, benefits will be paid to such person as the
Administrator may designate for the benefit of such Participant or Beneficiary.
Such payments shall be considered a payment to such Participant or Beneficiary
and shall, to the extent made, be deemed a complete discharge of any liability
for such payments under the Plan.
7.9 Distribution of Benefit When Distributee Cannot Be Located. The
Administrator shall make all reasonable attempts to determine the identity
and/or whereabouts of a Participant or a Participant's Beneficiary entitled to
benefits under the Plan, including the mailing by certified mail of a notice to
the last known address shown on the Corporation's or the Administrator's
records. If the Administrator is unable to locate such a person entitled to
benefits hereunder, or if there has been
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no claim made for such benefits, the Corporation shall continue to hold the
benefit due such person, subject to any applicable statute of escheats.
7.10 Claims Procedure.
7.10(a) A Participant or Beneficiary (the "claimant") shall have the
right to request any benefit under the Plan by filing a written claim for any
such benefit with the Administrator on a form provided by the Administrator for
such purpose. The Administrator shall give such claim due consideration and
shall either approve or deny it in whole or in part. Within ninety (90) days
following receipt of such claim by the Administrator, notice of any denial
thereof, in whole or in part, shall be delivered to, and a receipt therefor
shall be obtained from, the claimant or his duly authorized representative or
such notice of denial shall be sent by registered mail to the claimant, or his
duly authorized representative, at the address shown on the claim form or such
individual's last known address. The aforesaid ninety (90) day response period
may be extended to one hundred eighty (180) days after receipt of the claimant's
claim if special circumstances exist and if written notice of the extension to
one hundred eighty (180) days indicating the special circumstances involved and
the date by which a decision is expected to be made is furnished to the claimant
within ninety (90) days after receipt of the claimant's claim. Such notice of
denial shall be written in a manner calculated to be understood by the claimant
and shall:
(i) set forth a specific reason or reasons for the denial,
(ii) make specific reference to the pertinent provisions of the
Plan on which any denial of benefits is based,
(iii) describe any additional material or information necessary
for the claimant to perfect the claim and explain why such material or
information is necessary, and
(iv) explain the claim review procedure of subparagraph 7.10(b).
If such notice of denial is not provided to the claimant within the applicable
ninety (90) day or one hundred eighty (180) day period, the claimant's claim
shall be considered denied for purposes of the claim review procedure of
subparagraph 7.10(b).
7.10(b) A Participant or Beneficiary whose claim filed pursuant to
subparagraph 7.10(a) has been denied, in whole or in part, may, within sixty
(60) days following receipt of notice of such denial, or following the
expiration of the applicable period provided for in subparagraph 7.10(a) for
notifying the claimant of the decision on the claim if no notice of denial is
provided, make written application to the Administrator for a review of such
claim, which application shall be filed with the Administrator. For purposes of
such review, the claimant or his duly authorized representative may review Plan
documents pertinent to such claim and may submit to the Administrator written
issues and comments respecting such claim. The Administrator may schedule and
hold a hearing. The Administrator shall make a full and fair review of any
denial of a claim for benefits and issue its decision thereon promptly, but no
later than sixty (60) days after receipt by the Administrator of the claimant's
request for review, or one hundred twenty (120) days after such receipt if a
hearing is to be held or if other special circumstances exist and if written
notice of the
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extension to one hundred twenty (120) days is furnished to the claimant within
sixty (60) days after the receipt of the claimant's request for a review. Such
decision shall be in writing, shall be delivered by the Administrator to the
claimant and shall:
(i) include specific reasons for the decision,
(ii) be written in a manner calculated to be understood by the
claimant, and
(iii) contain specific references to the pertinent Plan
provisions on which the decision is based.
ARTICLE VIII
Beneficiary Designation
8.1 Beneficiary Designation.
8.1(a) Each Participant shall be entitled to designate a Beneficiary
hereunder by filing a designation in writing with the Administrator on the form
provided or approved by the Administrator for such purpose. Any Beneficiary
designation made hereunder shall be effective only if signed and dated by the
Participant and delivered to the Administrator prior to the time of the
Participant's death. Any Beneficiary designation hereunder shall remain
effective until changed or revoked hereunder.
8.1(b) Any Beneficiary designation may include multiple or contingent
Beneficiaries and may specify the proportionate distribution to each
Beneficiary.
8.1(c) A Beneficiary designation may be changed by the Participant at
any time, or from time to time, by filing a new designation in writing with the
Administrator.
8.1(d) If the Participant dies without having designated a Beneficiary,
or if the Beneficiary so designated has predeceased him, then his estate shall
be deemed to be his Beneficiary.
8.1(e) If a Beneficiary of the Participant shall survive the Participant
but shall die before the Participant's entire benefit under the Plan has been
distributed, then the unpaid balance thereof shall be distributed to the such
other beneficiary named by the deceased Beneficiary to receive his interest or,
if none, to the estate of the deceased Beneficiary.
ARTICLE IX
Withdrawals
9.1 No Withdrawals Permitted. No withdrawals or other distributions
shall be permitted from the Deferral Account except as provided in ARTICLE VII.
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ARTICLE X
Funding
10.1 Funding.
10.1(a)(i) The Plan Sponsor and each other Corporation reserve the right
to take reasonable steps to secure the payment of all or part of the
Deferral Benefits payable under this Plan, to the greatest extent
possible without compromising the unfunded status of the Plan. To the
extent not provided by a rabbi trust or other vehicle which the Plan
Sponsor and/or any Corporation may establish at any time to provide for
the security of the Deferral Benefits, each Corporation will pay
Deferral Benefits from its general treasury as they become due. The
Corporations may purchase insurance contracts and other investments in
contemplation of Deferral Benefits becoming payable in the future.
(ii) In the event of a Potential Change in Control, each
Corporation will immediately fully fund, in a rabbi trust or similar
vehicle, the entire Deferral Benefit payable to each of its
Participants. In the event the Corporation fully funds the Plan upon a
Potential Change in Control, such amount may be returned to the
corporation only if a period of one (1) year shall have elapsed from the
date of such Potential Change in Control without there have occurred a
Change in Control or a subsequent Potential Change in Control (which,
for purposes hereof, shall commence a new one (1) year period).
(iii) In the event of a Change in Control, each Corporation will
immediately irrevocably deposit additional cash or other property, in a
rabbi trust or similar vehicle, an amount sufficient to pay the entire
Deferral Benefit payable to each of its Participants, to the extent not
previously funded. Furthermore, within 31 days following the end of each
Plan Year ending after there has been a Change in Control, each
Corporation will irrevocably deposit additional cash or other property
in such trust or similar vehicle in an amount sufficient to pay the
entire Deferral Benefit payable to each of its Participants as of the
close of the Plan Year, to the extent not previously funded.
10.1(b) To the extent that any person acquires a right to receive
payments from the Corporation under the Plan, such rights shall be no greater
than the right of any unsecured general creditor of the Corporation.
10.1(c) Where more than one Corporation participates in the Plan, the
funding and payment provisions hereof shall apply separately to each such
Corporation.
10.1(d) The Plan Sponsor may in its discretion make the payment of any
or all benefits under the Plan in lieu of payment by one or more Corporations.
Where the Plan Sponsor makes payments on behalf of other Corporations, the Plan
Sponsor may require contributions by participating Corporations to the Plan
Sponsor at such times (whether before, at or after the time of payment), in such
amounts and or on such basis as it may from time to time determine in order to
defray the cost of benefits and administration of the Plan.
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10.2 Exclusive Benefit. Although no Participant or Beneficiary will have
any preferred claim or beneficial ownership interest in any Plan assets, and any
rights they have under the Plan will be mere unsecured contractual rights
against the Corporation, the Corporation will use all Plan assets exclusively
for the benefit of Participants and Beneficiaries except that its general
creditors have prior rights.
ARTICLE XI
Fiduciaries
11.1 Fiduciaries and Duties and Responsibilities. Authority to control
and manage the operation and administration of the Plan shall be vested in the
following, who, together with their membership, if any, shall be the Fiduciaries
under the Plan with those powers, duties, and responsibilities specifically
allocated to them by the Plan:
11.1(a) Plan Administrator. The Administrator named and serving as
provided in ARTICLE XII hereof.
11.2 Limitation of Duties and Responsibilities of Fiduciaries. The
duties and responsibilities, and any liability therefor, of the Fiduciaries
provided for in paragraph 11.1 shall be severally limited to the duties and
responsibilities specifically allocated to each such Fiduciary in accordance
with the terms of the Plan, and there shall be no joint duty, responsibility, or
liability among any such groups of Fiduciaries in the control and management of
the operation and administration of the Plan.
11.3 Service by Fiduciaries in More Than One Capacity. Any person or
group of persons may serve in more than one Fiduciary capacity with respect to
the Plan.
11.4 Allocation or Delegation of Duties and Responsibilities by
Fiduciaries. By written agreement filed with the Administrator, any duties and
responsibilities of any Fiduciary may be allocated among Fiduciaries or may be
delegated to persons other than Fiduciaries. Any written agreement shall
specifically set forth the duties and responsibilities so allocated or
delegated, shall contain reasonable provisions for termination, and shall be
executed by the parties thereto.
11.5 Assistance and Consultation. A Fiduciary, and any delegate named
pursuant to paragraph 11.4, may engage agents to assist in its duties and may
consult with counsel, who may be counsel for the Corporation, with respect to
any matter affecting the Plan or its obligations and responsibilities hereunder,
or with respect to any action or proceeding affecting the Plan.
11.6 Compensation and Expenses. All compensation and expenses of the
Fiduciaries and their agents and counsel shall be paid or reimbursed by the
Corporation on such basis as the Plan Sponsor shall determine; provided,
however, that each person or committeeman serving as a Fiduciary shall serve
without compensation for such service unless otherwise determined by the Plan
Sponsor.
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11.7 Indemnification. The Corporation, on such basis as the Plan Sponsor
shall determine, shall indemnify and hold harmless any individual who is an
employee of the Corporation or an Affiliate and who is a Fiduciary or member of
a Fiduciary under the Plan and any other individual who is an employee of the
Corporation or an Affiliate and to whom duties of a Fiduciary are delegated
pursuant to paragraph 11.4, to the extent permitted by law, from and against any
liability, loss, cost or expense arising from their good faith action or
inaction in connection with their responsibilities under the Plan.
ARTICLE XII
Plan Administrator
12.1 Appointment of Plan Administrator.
12.1(a) The Plan Sponsor may appoint one or more persons to serve as the
Plan Administrator (the "Administrator") for the purpose of carrying out the
duties specifically imposed on the Administrator by the Plan and the Code. In
the event more than one person is appointed, the persons shall form a committee
for the purpose of functioning as the Administrator of the Plan. The person or
committeemen serving as Administrator shall serve for indefinite terms at the
pleasure of the Plan Sponsor, and may, by thirty (30) days prior written notice
to the Plan Sponsor, terminate such appointment.
12.1(b) Unless and until otherwise determined by the Board, the Employee
Benefits Committee of the Plan Sponsor which is in existence on the Effective
Date of the Plan shall initially serve as the Administrator.
12.2 Plan Sponsor as Plan Administrator. In the event that no
Administrator is appointed or in office pursuant to paragraph 12.1, the Plan
Sponsor shall be the Administrator.
12.3 Procedure if a Committee. If the Administrator is a committee, it
shall appoint from its members a Chairman and a Secretary. The Secretary shall
keep records as may be necessary of the acts and resolutions of such committee
and be prepared to furnish reports thereof to the Plan Sponsor. Except as
otherwise provided, all instruments executed on behalf of such committee may be
executed by its Chairman or Secretary.
12.4 Action by Majority Vote if a Committee. If the Administrator is a
committee, its action in all matters, questions and decisions shall be
determined by a majority vote of its members qualified to act thereon. They may
meet informally or take any action without the necessity of meeting as a group.
12.5 Appointment of Successors. Upon the death, resignation or removal
of a person serving as, or on a committee which is, the Administrator, the
Corporation may, but need not, appoint a successor.
12.6 Duties and Responsibilities of Plan Administrator. The
Administrator shall have the following duties and responsibilities under the
Plan:
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12.6(a) The Administrator shall be responsible for the fulfillment of
all relevant reporting and disclosure requirements set forth in the Plan, the
Code and the Act, the distribution thereof to Participants and their
Beneficiaries, and the filing thereof with the appropriate governmental
officials and agencies.
12.6(b) The Administrator shall maintain and retain necessary records
regarding its administration of the Plan and matters upon which disclosure is
required under the Plan, the Code and the Act.
12.6(c) The Administrator shall make any elections for the Plan required
to be made by it under the Plan, the Code and the Act.
12.6(d) The Administrator is empowered to settle claims against the Plan
and to make such equitable adjustments in a Participant's or Beneficiary's
rights or entitlements under the Plan as it deems appropriate in the event an
error or omission is discovered or claimed in the operation or administration of
the Plan. No interest shall be payable with respect to any overpayment or
underpayment.
12.6(e) The Administrator may construe the Plan, correct defects, supply
omissions or reconcile inconsistencies to the extent necessary to effectuate the
Plan, and such action shall be conclusive.
12.7 Power and Authority. The Administrator is hereby vested with all
the power and authority necessary in order to carry out its duties and
responsibilities imposed hereunder in connection with the administration of the
Plan. For such purpose, the Administrator shall have the power to adopt rules
and regulations consistent with the terms of the Plan.
12.8 Availability of Records. The Corporation shall, at the request of
the Administrator, make available necessary records and other information which
they possess which may be required by the Administrator in order to carry out
its duties hereunder.
12.9 No Action with Respect to Own Benefit. No Administrator who is a
Participant shall take any part as the Administrator in any discretionary action
in connection with his participation as an individual. Such action shall be
taken by the remaining Administrator, if any, or otherwise by the Plan Sponsor.
ARTICLE XIII
Amendment or Termination of Plan
13.1 Amendment or Termination of the Plan.
13.1(a) The Plan may be terminated at any time by the Board. The Plan
may be amended in whole or in part from time to time by the Board effective as
of any date specified. No amendment or termination shall operate or decrease a
Participant's Deferral Benefit, Deferral Account balance or Death Benefit
determined as of the earlier of the date on which the amendment or
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termination is approved by the Board or the date on which an instrument of
amendment or termination is signed on behalf of the Plan Sponsor.
13.1(b) The Board hereby delegates to the Employee Benefits Committee of
the Plan Sponsor the right to modify, alter, or amend the Plan in whole or in
part to make any technical modification, alteration or amendment which in the
opinion of counsel for the Plan Sponsor is required by law and is deemed
advisable by such Committee and the Administrator, and to make any other
modification, alteration or amendment which does not, in such Committee's view,
substantially increase costs, contributions or benefits and does not materially
affect the eligibility, vesting or benefit accrual or allocation provisions of
the Plan.
ARTICLE XIV
Miscellaneous
14.1 Non-assignability. The interests of each Participant under the Plan
are not subject to claims of the Participant's creditors; and neither the
Participant, nor his Beneficiary, shall have any right to sell, assign, transfer
or otherwise convey the right to receive any payments or any interest under the
Plan, which payments and interest are expressly declared to be non-assignable
and non-transferable.
14.2 Right to Require Information and Reliance Thereon. The Plan
Sponsor, the Corporation and the Administrator shall have the right to require
any Participant, Beneficiary or other person receiving benefit payments to
provide it with such information, in writing, and in such form as it may deem
necessary to the administration of the Plan, including but not limited to the
completion of a medical information survey or other health questionnaire where
it deems appropriate (including any physical examination in connection
therewith). The Plan Sponsor may rely on such information in carrying out its
duties hereunder. Any payment to or on behalf of a Participant or Beneficiary in
accordance with the provisions of the Plan in good faith reliance upon any such
written information provided by a Participant or any other person to whom such
payment is made shall be in full satisfaction of all claims by such Participant
and his Beneficiary; and any payment to or on behalf of a Beneficiary in
accordance with a provision of the Plan in good faith reliance upon such written
information provided by such Beneficiary or any other person to whom such
payment is made shall be in full satisfaction of all claims by such Beneficiary.
14.3 Notices and Elections. All notices required to be given in writing
and all elections required to be made in writing under any provision of the Plan
shall be invalid unless made on such forms as may be provided or approved by the
Administrator and, in the case of a notice or election by a Participant or
Beneficiary, unless executed by the Participant or Beneficiary giving such
notice or making such election.
14.4 Delegation of Authority. Whenever the Plan Sponsor or any other
participating employer is permitted or required to perform any act, such act may
be performed by its President or Chief Executive Officer or other person duly
authorized by its President or Chief Executive Officer or its Board.
22
<PAGE>
14.5 Service of Process. The Administrator shall be the agent for
service of process on the Plan.
14.6 Governing Law. The Plan shall be construed, enforced and
administered in accordance with the laws of the State of Florida.
14.7 Binding Effect. The Plan shall be binding upon and inure to the
benefit of the Corporation, its successors and assigns, and the Participant and
his heirs, executors, administrators and legal representatives.
14.8 Severability. If any provision of the Plan should for any reason be
declared invalid or unenforceable by a court of competent jurisdiction, the
remaining provisions shall nevertheless remain in full force and effect.
14.9 No Effect on Employment Agreement. The Plan shall not be considered
or construed to modify, amend or supersede any employment or other agreement
between the Corporation and the Participant heretofore or hereafter entered into
unless so specifically provided.
14.10 Gender and Number. In the construction of the Plan, the masculine
shall include the feminine or neuter and the singular shall include the plural
and vice-versa in all cases where such meanings would be appropriate.
14.11 Titles and Captions. Titles and captions and headings herein have
been inserted for convenience of reference only and are to be ignored in any
construction of the provisions hereof.
ARTICLE XV
Adoption by Additional Corporations
15.1 Adoption by Additional Corporations. Any Affiliate of the Plan
Sponsor may adopt the Plan with the consent of the Administrator and approval by
the Board of such Affiliate.
IN WITNESS WHEREOF, the undersigned Chairman or Secretary of the
Employee Benefits Committee of the Plan Sponsor has signed his name hereto to
evidence the adoption of this amendment and restatement of the Plan by the
Employee Benefits Committee as of the 1 day of January, 1996.
EMPLOYEE BENEFITS COMMITTEE
OF BARNETT BANKS, INC.
By: /s/ Donna Lange
------------------------------
Its: Secretary
-----------------------------
Attest:
Its
23
BARNETT BANKS, INC.
TRUST OWNED LIFE INSURANCE TRUST
FOR
MANAGEMENT AND DIRECTORS DEFERRAL PLANS
(As Adopted Effective January 1, 1997)
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
ARTICLE I
Definition of Terms
-------------------
Page
----
<S> <C> <C>
1.1 ACT.........................................................................1
1.2 ADMINISTRATOR...............................................................2
1.3 BENEFICIARY.................................................................2
1.4 BOARD.......................................................................2
1.5 CHANGE IN CONTROL...........................................................2
1.6 CODE........................................................................3
1.7 CORPORATION.................................................................3
1.8 EFFECTIVE DATE..............................................................3
1.9 EMPLOYEE BENEFITS COMMITTEE.................................................3
1.10 FUND........................................................................3
1.11 INCLUDED PLAN(S)............................................................3
1.12 INSURER.....................................................................4
1.13 INSOLVENCY OR INSOLVENT.....................................................4
1.14 PARTICIPANT.................................................................4
1.15 POLICY OR POLICIES..........................................................4
1.16 POTENTIAL CHANGE IN CONTROL.................................................4
1.17 TRUST.......................................................................5
1.18 TRUSTEE.....................................................................5
1.19 TRUSTEE'S CONTRACTOR........................................................5
1.20 TRUST SPONSOR...............................................................5
1.21 TRUST YEAR..................................................................5
<CAPTION>
ARTICLE II
Establishment of Trust
----------------------
2.1 TRUST ESTABLISHED.............................................................5
2.2 IRREVOCABILITY OF TRUST.......................................................5
2.3 TRUST AS GRANTOR TRUST........................................................5
2.4 PURPOSE OF TRUST..............................................................5
2.5 ADDITIONAL CONTRIBUTIONS BY CORPORATION.......................................5
2.6 DUTY TO ENFORCE CONTRIBUTIONS.................................................6
2.7 FUND AND INCLUDED PLAN EXPENSES...............................................5
<CAPTION>
ARTICLE III
Trustee's Responsibility If Change in Control and/or Failure or Refusal to Pay Occurs
------------------------------------------------------------------------------------
3.1 DUTY TO MANAGE OR SURRENDER POLICIES..........................................7
3.2 BENEFIT PAYMENTS FROM THE TRUST...............................................8
3.3 PAYMENTS TO MINORS AND INCOMPETENTS...........................................8
3.4 DISTRIBUTION OF BENEFIT WHEN DISTRIBUTEE CANNOT BE LOCATED....................9
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
ARTICLE IV
Trustee's Responsibility If Insolvency Occurs
---------------------------------------------
<S> <C> <C>
4.1 DUTY OF CORPORATION AND OFFICERS..............................................9
4.2 FUND SUBJECT TO CREDITORS OF CORPORATION......................................9
4.3 DISCONTINUANCE OF PAYMENTS UPON NOTICE OF INSOLVENCY..........................9
4.4 RESUMPTION OF PAYMENTS AFTER INSOLVENCY......................................10
<CAPTION>
ARTICLE V
Powers and Duties of Trustee
-----------------------------
5.1 TRUSTEE POWERS AND DUTIES....................................................10
5.2 INCLUDED PLANS EXEMPT OR NOT COVERED BY THE ACT..............................13
5.3 ACCOUNTS.....................................................................14
5.4 JUDICIAL SETTLEMENT OF ACCOUNTS..............................................14
5.5 ENFORCEMENT OF TRUST-LEGAL PROCEEDINGS.......................................14
5.6 TRUSTEE COMPENSATION AND EXPENSES............................................14
5.7 TRUSTEE RESIGNATION, REMOVAL OR DEATH AND APPOINTMENT OF SUCCESSOR OR
ADDITIONAL TRUSTEE...........................................................14
5.8 STANDARD OF CONDUCT..........................................................15
<CAPTION>
ARTICLE VI
Employee Benefits Committee
----------------------------
6.1 MAKEUP AND APPOINTMENT OF EMPLOYEE BENEFITS COMMITTEE........................16
6.2 EMPLOYEE BENEFITS COMMITTEE PROCEDURES.......................................16
6.3 POWER AND AUTHORITY, COSTS AND EXPENSES......................................16
6.4 RECORDS......................................................................17
6.5 NECESSARY INFORMATION........................................................17
6.6 FUNDING POLICY...............................................................17
6.7 SCOPE OF EMPLOYEE BENEFITS COMMITTEE'S DIRECT INVESTMENT AUTHORITY...........17
<CAPTION>
ARTICLE VII
Trustee's Contractor
--------------------
7.1 APPOINTMENT OF TRUSTEE'S CONTRACTOR..........................................17
7.2 REMOVAL OF TRUSTEE'S CONTRACTOR..............................................18
7.3 DUTIES OF TRUSTEE'S CONTRACTOR...............................................18
7.4 INDEMNIFICATION OF TRUSTEE'S CONTRACTOR......................................19
7.5 COMPENSATION AND EXPENSES....................................................19
7.6 SCOPE OF RESPONSIBILITY......................................................19
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
ARTICLE VIII
Amendment and Termination
-------------------------
<S> <C> <C>
8.1 AMENDMENT....................................................................20
8.2 TERMINATION..................................................................20
<CAPTION>
ARTICLE IX
Miscellaneous
-------------
9.1 HEADINGS.....................................................................20
9.2 GENDER AND NUMBER............................................................21
9.3 GOVERNING LAW................................................................21
9.4 SEVERABILITY.................................................................21
9.5 EMPLOYMENT RIGHTS............................................................21
9.6 ALIENATION AND ASSIGNMENT....................................................21
9.7 DELEGATION OF AUTHORITY......................................................21
9.8 SERVICE OF PROCESS...........................................................21
9.9 CONSTRUCTION.................................................................21
<CAPTION>
ARTICLE X
Adoption of the Trust and Designation of Included Plans
-------------------------------------------------------
10.1 DESIGNATION OF ADDITIONAL INCLUDED PLANS.....................................21
10.2 TERMINATION OF DESIGNATION OF A PLAN AS AN INCLUDED PLAN.....................22
10.3 WITHDRAWAL FROM TRUST ON INCLUDED PLAN FAILURE TO QUALITY FOR EXEMPTION
UNDER THE ACT................................................................22
</TABLE>
Appendix A - List of Included Plans
-iii-
<PAGE>
This TRUST AGREEMENT, made and entered into as of the 28th day of March,
1997 and between Barnett Banks, Inc., a Florida corporation (the "Trust
Sponsor"), and U.S. Trust Company of California, a California corporation whose
principal place of business is Los Angeles, California (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Trust Sponsor by due corporate action has approved and
authorized the execution of this Trust Agreement; and
WHEREAS, the Corporation has incurred and expects to incur liability
under the terms of its unfunded and nonqualified deferred compensation plans
(the "Included Plans") maintained by it for certain employees and directors; and
WHEREAS, the Corporation wishes to establish a trust (the "Trust") and
to contribute to the Trust assets that shall be held therein, subject to the
claims of the Corporation's creditors in the event of the Corporation's
Insolvency, as herein defined, until paid to Participants in the Included Plans
and their Beneficiaries in such manner and at such times as specified in the
Included Plans;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Included Plans as unfunded plans maintained for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees for purposes of Title I of the Act and for directors;
WHEREAS, it is the intention of the Corporation to make contributions to
the Trust to provide itself with a source of funds to assist it in the meeting
of its liabilities under the Included Plans;
NOW, THEREFORE, the parties do hereby establish the Trust and agree that
the Trust shall be comprised, held and disposed of as follows:
ARTICLE I
DEFINITION OF TERMS
-------------------
The following words and terms as used herein shall have the meaning set
forth below, unless a different meaning is clearly required by the context:
1.1 "ACT": The Employee Retirement Income Security Act of 1974, as the
same may be amended from time to time, or the corresponding sections of any
subsequent legislation which replaces it, and, to the extent not inconsistent
therewith, the regulations issued thereunder.
1.2 "ADMINISTRATOR": The Plan Administrator of the Included Plan(s)
described herein and as provided for in the respective Included Plan documents.
1.3 "BENEFICIARY": The beneficiary or beneficiaries of a Participant
entitled under the Included Plan(s).
1.4 "BOARD": The present and any succeeding Board of Directors of the
Trust Sponsor.
1.5 "CHANGE IN CONTROL": For purposes of this Trust Agreement, a "Change
in Control" shall be deemed to have occurred if the conditions set forth in any
one of the following subparagraphs shall have been satisfied:
<PAGE>
(i) Any person, as defined in Section 3(a)(9) of the Securities
and Exchange Act of 1934 (Exchange Act), as such term is modified in
Sections 13(d) and 14(d) of the Exchange Act (other than (A) any
employee plan established by any Employer, (B) the Trust Sponsor or any
of its affiliates (as defined in Rule 12b-2 issued under the Exchange
Act), (C) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (D) a corporation owned, directly or
indirectly, by stockholders of the Trust Sponsor in substantially the
same proportions as their ownership of the Trust Sponsor) (a "Person")
is or becomes the beneficial owner (as defined in Rules l3d-3
promulgated under the Exchange Act), directly or indirectly, of
securities of the Trust Sponsor (not including the securities
beneficially owned by such Person any securities acquired directly from
the Trust Sponsor) representing twenty-five percent (25%) or more of the
combined voting power of the Trust Sponsor's then outstanding voting
securities;
(ii) During any period of up to two consecutive years (not
including any period prior to the Effective Date) individuals who, at
the beginning of such period, constitute the Board cease for any reason
to constitute at least a majority thereof, provided that any person who
becomes a director subsequent to the beginning of such period and whose
nomination for election is approved by at least two-thirds of the
directors then still in office who either were directors at the
beginning of such period or whose election or nomination was previously
approved (other than a director (A) whose initial assumption of office
is in connection with an actual or threatened contest relating to the
election of directors of the Trust Sponsor, as such terms are used in
Rule 14a-11 of Regulation 14A under the Exchange Act or (B) who was
designated by a Person who has entered into an agreement with the Trust
Sponsor to effect a transaction described in clause (i), (iii), or (iv)
of this paragraph), will be deemed a director as of the beginning of the
period;
(iii) The stockholders of the Trust Sponsor approve a merger or
consolidation of the Trust Sponsor with any other corporation (other
than (A) a merger or consolidation that would result in the voting
securities of the Trust Sponsor outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustees or other
fiduciary holding securities under an employee benefit plan of an
Employer, at least fifty-one percent (51%) of the combined voting power
of the voting securities of the Trust Sponsor or such surviving entity
or any parent thereof outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to implement a
recapitalization of the Trust Sponsor (or similar transaction) in which
no Person is or becomes the beneficial owner (as defined in clause (1)
of this paragraph), directly or indirectly, of securities of the Trust
Sponsor (not including in the securities beneficially owned by such
Person any securities acquired directly from the Trust Sponsor)
representing twenty-five percent (25%) or more of the combined voting
power of the Trust Sponsor's then outstanding voting securities); or
(iv) The stockholders of the Trust Sponsor approve a plan of
complete liquidation of the Trust Sponsor or any agreement for the sale
or disposition by the Trust Sponsor of all or substantially all of the
Trust Sponsor's assets, other than a sale or disposition by the Trust
Sponsor of all or substantially all of the Trust Sponsor's assets to an
entity, at least seventy-five percent (75%) of the combined voting
securities of which are owned by persons in substantially the same
proportion as their ownership in the Trust Sponsor immediately prior to
the sale.
All references to provisions of the federal securities laws are to such
provisions as in effect on the Effective Date without regard to any subsequent
amendments of, changes to or revocation of such provisions.
-2-
<PAGE>
1.6 "CODE": The Internal Revenue Code of 1986, as the same may be
amended from time to time, or the corresponding section of any subsequent
Internal Revenue Code, and, to the extent not inconsistent therewith,
regulations issued thereunder.
1.7 "CORPORATION": The Trust Sponsor.
1.8 "EFFECTIVE DATE": January 1, 1997, except that with respect to any
plan which is subsequently designated as an Included Plan thereafter, such date
as may be set forth in its designation agreement or in the Trust. The
Administrator shall maintain as Appendix A to the Trust a list of the Effective
Dates of participation of all Included Plans for which benefits are provided
through the Trust.
1.9 "EMPLOYEE BENEFITS COMMITTEE": The committee appointed or serving
pursuant to ARTICLE VI.
1.10 "FUND": The trust fund created under and subject to the Trust,
which shall be known as the "Barnett Banks, Inc. Trust Owned Life Insurance
Trust for Management and Directors Deferral Plans".
1.11 "INCLUDED PLAN(S)": The unfunded, non-qualified deferred
compensation plans listed in Appendix A sponsored by the Corporation and
intended to be maintained as unfunded plans for the benefit of a select group of
management and highly compensated employees as those terms are used for the
purposes of the exemption from the participation and vesting, funding and
fiduciary requirements of the Act and for the benefit of non-employee directors,
as designated by the Trust Sponsor or the Administrator. When used herein, the
term "Included Plan" shall be construed as referring to a particular plan unless
the context indicates otherwise. The Administrator shall maintain as Appendix A
to the Trust a list of all such plans which are, from time to time, Included
Plan(s) in the Trust.
1.12 "INSURER": Any insurance company which issues a Policy to provide
for the accumulation of funds hereunder.
1.13 "INSOLVENCY" OR "INSOLVENT":
(i) The Corporation's inability to pay its debts as they
become due,
(ii) The Corporation is determined to be insolvent by its federal
or state bank supervisor, or
(iii) The voluntary commencement by the Corporation of any
proceeding under Title 11 of the United States Code or any other law of
any jurisdiction for the relief, liquidation or rehabilitation of
debtors (all of which shall be referred to herein collectively as
"Insolvency Proceedings"), or the involuntary commencement of an
Insolvency Proceeding against the Corporation which is not fully stayed,
timely controverted or dismissed within one hundred twenty (120) days
after filing thereof.
1.14 "PARTICIPANT": A person who is a "participant" in an Included Plan
(as that term is defined in the Included Plan).
1.15 "POLICY" OR "POLICIES": A group or individual policy or policies,
contract(s) or other agreement(s) (including a certificate) issued by an Insurer
providing for the accumulation of funds hereunder.
-3-
<PAGE>
1.16 "POTENTIAL CHANGE IN CONTROL": For purposes of this Trust
Agreement, a "Potential Change in Control" shall be deemed to have occurred if
the conditions set forth in any one of the following subparagraphs shall have
been satisfied:
(i) The Corporation enters into a definitive written agreement,
the consumption of which would result in a Change in Control;
(ii) The Corporation or any Person (as defined in clause (i) of
paragraph 1.5) publicly announces an intention to take or to consider
taking actions which, if consummated would constitute a Change in
Control; or
(iii) Any Person becomes the beneficial owner (as defined in Rule
l3d-3 promulgated under the Exchange Act), directly or indirectly, of
securities of the Corporation representing 15% or more of the combined
voting power of the Corporation's then outstanding securities.
1.17 "TRUST": This agreement by and between the Trust Sponsor and the
Trustee under which the Fund is maintained, which agreement is known as the
"Barnett Banks, Inc. Trust Owned Life Insurance Trust for Management and
Directors Deferral Plans."
1.18 "TRUSTEE": U.S. Trust Company of California, a California
corporation and any successor Trustee or Trustees including any Co-Trustee,
appointed and serving in accordance herewith.
1.19 "TRUSTEE'S CONTRACTOR": The third party administrator appointed and
serving pursuant to ARTICLE VII.
1.20 "TRUST SPONSOR": Barnett Banks, Inc., a Florida corporation (or its
corporate successor).
1.21 "TRUST YEAR": The twelve month period beginning on January 1.
ARTICLE II
ESTABLISHMENT OF TRUST
----------------------
2.1 TRUST ESTABLISHED. The Trust Sponsor hereby deposits with the
Trustee in trust such money or property (including Policies) as it deems
appropriate, which shall become the principal of the Trust to be held,
administered and disposed of by the Trustee as provided in this Trust Agreement.
2.2 IRREVOCABILITY OF TRUST. The Trust hereby established shall be
irrevocable.
2.3 TRUST AS GRANTOR TRUST. The Trust is intended to be a grantor trust,
of which the Trust Sponsor is the grantor, within the meaning of subpart E, part
1, subchapter J, chapter 1, subtitle A of the Code, and shall be construed
accordingly.
2.4 PURPOSE OF TRUST. The principal of the Trust, and any earnings
thereon shall be held separate and apart from other funds of the Corporation and
shall be used exclusively for the uses and purposes of Participants and general
creditors as herein set forth. Participants and their Beneficiaries shall have
no preferred claim on, or any beneficial ownership interest in, any assets of
the Trust. Any rights created under the Included Plans and this Trust Agreement
shall be mere unsecured contractual rights of Participants and their
Beneficiaries against the Corporation. Any assets held by the
-4-
<PAGE>
Trust will be subject to the claims of the Corporation's general creditors under
federal and state law in the event of Insolvency.
2.5 ADDITIONAL CONTRIBUTIONS BY CORPORATION.
2.5(a) The Corporation, in its sole discretion, may at any time, or from
time to time, make additional deposits of cash or other property in trust with
the Trustee to augment the principal to be held, administered and disposed of by
the Trustee as provided in this Trust Agreement.
2.5(b) Upon the occurrence of a Potential Change in Control, the
Corporation shall, as soon as possible, but in no event later than 15 days
following the occurrence of Potential Change in Control, make an irrevocable
contribution to the Fund in an amount that is sufficient to pay any remaining
scheduled premiums on the Policies held by the Trust on the date the Potential
Change in Control occurred. Sufficiency shall be determined by the
Administrator, or by the Trustee's Contractor, if one has been appointed, based
on the present value of the unpaid premiums determined using the interest rate
on the one year U.S. Treasury Bill quoted in the Wall Street Journal for the
week ending immediately prior to the date on which the Potential Change of
Control occurs.
2.6 DUTY TO ENFORCE CONTRIBUTIONS. Except as otherwise provided in this
Trust Agreement, the Trustee shall not be required to determine the amount of
any contribution for any Trust Year. However, the Trustee shall have the duty to
enforce the duty of the Corporation to make or pay over the contributions
required under subparagraph 2.5(b) upon the occurrence of a Potential Change in
Control of the Corporation. The Trustee shall be notified of the occurrence of a
Potential Change in Control by the Executive Compensation and Management
Development Committee of the Board or by a Participant. The Trustee shall have
no responsibility to independently determine or inquire about the occurrence of
this event. If the notification is received from a Participant who represents to
the Trustee that he or she is not acting in his capacity as a member of the
Executive Compensation and Management Development Committee of the Board, then
the Trustee shall request verification from the Corporation as to the occurrence
of the described event. If the Corporation fails or refuses to provide
verification of such the event or if the Participant and the Corporation fail to
reach an agreement as to whether or not such event has occurred, then the
dispute shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and the resolution by
the arbitrator of the dispute shall be binding and final and may be entered in
any court having jurisdiction. The expenses of the arbitration shall be borne by
the Corporation, unless the arbitrator determines that the claim by the
Participant is frivolous, in which case the expenses shall be borne by the
Participant. The Trustee's duties under this paragraph shall be subject to
sufficient liquid assets being available to the Trustee to pay the costs
reasonably anticipated to be associated with any enforcement action. Such liquid
assets may be in the Trust or held in a contingency trust established for the
purpose of paying legal fees associated with this and other grantor trusts
established for the benefit of participants and beneficiaries under the Included
Plans and similar plans of the Corporation.
2.7 FUND AND INCLUDED PLAN EXPENSES.
2.7(a) Unless paid by the Corporation without being advanced subject to
reimbursement (which shall be directed by the Trust Sponsor), all expenses of
the Fund and the Included Plan(s), including reasonable legal, accounting,
custodial, brokerage, actuarial, consulting and other fees and expenses incurred
in the establishment, amendment, administration and termination of the Fund and
the Included Plan(s) and/or the compensation of the Trustee and other
fiduciaries of the Fund and the Included Plan(s) to the extent provided under
the Trust and the Included Plan(s), and all taxes of any nature whatsoever,
including interest and penalties, assessed against or imposed upon the Fund or
the income thereof shall be paid out of the Fund and shall constitute a charge
upon the Fund. The Trust Sponsor may cause the Corporation to advance any
-5-
<PAGE>
or all such expenses and/or taxes on behalf of the Fund, subject to the
Corporation's right of reimbursement from the Fund if so directed by the Trust
Sponsor.
2.7(b) If the Trustee undertakes or defends any litigation arising in
connection with the Trust (including without limitation any action to compel the
Corporation to take any action under the Trust or the Included Plans, or to
determine the Trustee's obligations hereunder), the Trust Sponsor agrees to
indemnify Trustee against Trustee's costs, expenses and liabilities (including
without limitation attorney's fees and expenses) relating thereto and to be
primarily liable for such payments. The Trust Sponsor will, upon notice, pay
monthly in arrears to or on behalf of the Trustee, all reasonable attorney's
fees and expenses incurred by the Trustee. If the Trust Sponsor does not pay
such costs, expenses and liabilities in a reasonably timely manner, Trustee
shall obtain payment from the Trust. In the event that the Trustee is determined
to have incurred any liability as a result of the Trustee's negligence or
willful misconduct, the Trustee will promptly reimburse the Trust Sponsor for
all such legal fees and expenses paid by the Trust Sponsor to or on behalf of
the Trustee.
ARTICLE III
TRUSTEE'S RESPONSIBILITY IF CHANGE IN CONTROL AND/OR FAILURE OR REFUSAL TO
PAY OCCURS
3.1 DUTY TO MANAGE OR SURRENDER POLICIES.
3.1(a) Upon the occurrence of a Change in Control and/or upon the
failure or refusal by the Corporation to pay benefits in accordance with the
Included Plans and paragraph 3.2 hereof, the Trustee shall be required to manage
(including the surrender of or borrowing from), any Policies then held by the
Trustee in order to maximize the value of the Policies to the extent required to
pay benefit liabilities under the Included Plans. In exercising its duty to
surrender the Policies, the Trustee shall rely on the direction of the Trustee's
Contractor to borrow against the Policies or to delay surrender in order to
maximize the accumulation under such Policies if the borrowing or delay does not
have the potential to interfere with the Trustee's ability to later surrender
such Policies or to cause the Trustee to have insufficient funds to make benefit
payments then due.
3.1(b) The Trustee shall be notified of such Change in Control or
failure or refusal to pay benefits by the Executive Compensation and Management
Development Committee of the Board or by a Participant. The Trustee shall have
no responsibility to independently determine or inquire about the occurrence of
either of these events. If the notification is received from a Participant who
represents to the Trustee that he or she is not acting in his capacity as a
member of the Executive Compensation and Management Development Committee of the
Board, then the Trustee shall request verification from the Corporation as to
the occurrence of the described event. If the Corporation fails or refuses to
provide verification of such an event or if the Participant and the Corporation
fail to reach an agreement as to whether or not such event has occurred, then
the dispute shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and the resolution by
the arbitrator of the dispute shall be binding and final and may be entered in
any court having jurisdiction. The expenses of the arbitration shall be borne by
the Corporation, unless the arbitrator determines that the claim by the
Participant is frivolous, in which case the expenses shall be borne by the
Participant. The Trustee's duties under this paragraph shall be subject to
sufficient liquid assets being available to the Trustee to pay the costs
reasonably anticipated to be associated with any enforcement action. Such liquid
assets may be in the Trust or held in a contingency trust established for the
purpose of paying legal fees associated with this and other grantor trusts
established for the benefit of participants and beneficiaries under the Included
Plans and similar plans of the Corporation.
-6-
<PAGE>
3.1(c) If arbitration is required, the Trustee shall, upon the direction
of the Trustee's Contractor borrow from or surrender the Policies, but only to
the extent that failure to act promptly would interfere with the Trustee's
ability to later maximize the value of the Policies, to the extent required
pursuant to subparagraph 3.1(a) and shall hold such amount until the resolution
of the issues in arbitration. If the arbitrator determines that no Change in
Control or failure or refusal to pay benefits has occurred, the Trustee shall
return the amount to the Trust Sponsor.
3.2 BENEFIT PAYMENTS FROM THE TRUST.
3.2(a) Unless a Change in Control and/or a failure or refusal by the
Corporation to pay benefits under the Included Plans as described in paragraph
3.1 has occurred, the Trustee shall make payments of benefits under the Included
Plans to the Participants and Beneficiaries only at such times and in such
manner as directed by the Administrator or by the Trustee's Contractor, if one
has been appointed, to the extent that the Fund is sufficient to make such
payments.
3.2(b) After a Change in Control and unless notified in writing by the
Corporation that payments are being made by it when due under the Included Plans
and/or upon the failure or refusal by the Corporation to pay benefits in
accordance with the Included Plans, to the extent that the Fund is sufficient to
make such payments, the Trustee shall make all payments of benefits under the
Included Plans out of the Fund to the Participants or their Beneficiaries in
such manner and in such amounts as required under the Included Plans as
determined by the Trustee's Contractor.
3.2(c) If the Fund is not sufficient to make payments when due to be
made by the Trustee under the Included Plan to the Participants or their
Beneficiaries, except as otherwise expressly provided herein, the Trustee shall
undertake to collect from the Trust Sponsor sufficient assets to make such
payment. The Trustee's duties under this paragraph shall be subject to
sufficient liquid assets being available to the Trustee to pay the costs
reasonably anticipated to be associated with any enforcement action. Such liquid
assets may be in the Trust or held in a contingency trust established for the
purpose of paying legal fees associated with this and other grantor trusts
established for the benefit of participants and beneficiaries under the Included
Plans and similar plans of the Corporation.
3.3 PAYMENTS TO MINORS AND INCOMPETENTS. If a Participant or Beneficiary
entitled to receive any benefits hereunder is a minor or is adjudged to be
legally incapable of giving valid receipt and discharge for such benefits, or is
deemed so by the Administrator, or by the Trustee's Contractor, if one has been
appointed, benefits will be paid to such person as the Administrator, or by the
Trustee's Contractor, if one has been appointed, may designate for the benefit
of such Participant or Beneficiary. Such payments shall be considered a payment
to such Participant or Beneficiary and shall, to the extent made, be deemed a
complete discharge of any liability for such payments under the Trust.
3.4 DISTRIBUTION OF BENEFIT WHEN DISTRIBUTEE CANNOT BE LOCATED. The
Administrator or the Trustee's Contractor, if one has been appointed, shall make
all reasonable attempts to determine the identity and/or whereabouts of a
Participant or Beneficiary entitled to benefits under the Trust and Included
Plan(s), including the mailing by certified mail of a notice to the last known
address shown on the Corporation's, the Administrator's, the Trustee's
Contractor's or the Trustee's records. If the Administrator or the Trustee's
Contractor, if one has been appointed, is unable to locate such a person
entitled to benefits hereunder, or if there has been no claim made for such
benefits, the Trustee shall continue to hold the benefit due such person,
subject to any other disposition directed by the Administrator, or by the
Trustee's Contractor, if one has been appointed, to provide for the payment of
benefits.
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ARTICLE IV
TRUSTEE'S RESPONSIBILITY IF INSOLVENCY OCCURS
4.1 DUTY OF CORPORATION AND OFFICERS. The Board and the President and
Chief Executive Officer of the Corporation shall have the duty to inform the
Trustee in writing of the Corporation's Insolvency.
4.2 FUND SUBJECT TO CREDITORS OF CORPORATION.
4.2(a) Notwithstanding the other provisions hereof, all the assets of
the Fund shall be subject to the respective claims of the general creditors of
the Corporation but only in the event that the Trustee receives proper notice of
the Insolvency of a Corporation.
4.2(b) Proper notice of Insolvency shall be actual written notice of the
Insolvency from the Board or the President and Chief Executive Officer of the
Trust Sponsor or such Corporation or from a court of competent jurisdiction in
which event the Trustee shall have no duty or obligation to determine whether
Insolvency exists. Proper notice shall also include notice from a person
claiming to be a creditor of the Corporation alleging in writing that the
Corporation is Insolvent in which event the Trustee has a duty to determine
whether the Corporation is Insolvent. The Trustee may rely on such evidence
concerning the Corporation's solvency as may be provided to the Trustee and
which provides the Trustee with a reasonable basis for making such a
determination.
4.3 DISCONTINUANCE OF PAYMENTS UPON NOTICE OF INSOLVENCY. In the event
of the Insolvency of the Corporation and proper notice to the Trustee (and
pending the determination of whether the Corporation is Insolvent), the Trustee
shall discontinue the payment of benefits under the Included Plans attributable
to such Corporation and shall hold the assets attributable to such Corporation
for the benefit of the general creditors of such Corporation, after deduction of
any fees, expenses or taxes properly due and payable from the Fund. The Trustee
shall deliver the assets of the Fund attributable to such Corporation to satisfy
claims of the creditors of such Corporation as directed by a court of competent
jurisdiction.
4.4 RESUMPTION OF PAYMENTS AFTER INSOLVENCY. The Trustee shall resume
payment of benefits under the Included Plans only after the Trustee has been
notified in writing by the Board, the President and Chief Executive Officer of
the Trust Sponsor or a court of competent jurisdiction that the Insolvency no
longer exists. The first payment made to any Participant upon resumption of
payments shall include the aggregate amount of all benefits due to the
Participant under the Included Plans which would have been paid to the
Participant during the period of such discontinuance, less the aggregate amount
of the payments made to such Participant directly by the Corporation, in lieu of
payments from the Fund, during any such period of discontinuance.
ARTICLE V
POWERS AND DUTIES OF TRUSTEE
5.1 TRUSTEE POWERS AND DUTIES. Subject to the following provisions of
this ARTICLE V, the Trustee shall commingle and jointly invest, or where
specifically provided herein shall segregate and separately invest, the assets
of the Fund, without distinction between corpus and income.
5.1(a) The Trustee shall hold the Fund in trust, shall have the
following general powers granted in this paragraph, subject to the directions,
limitations, restrictions or prohibitions imposed hereunder, and, except as
otherwise specifically provided herein, shall have exclusive authority and
discretion in its management and control of the Trust.
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(i) The Trustee shall invest and reinvest the Fund in such
stocks, stock options (whether or not covered), warrants and rights,
puts, calls, stock-index futures, bonds, securities, commodities,
commodity futures and options, loans to Participants if and subject to
conditions expressly authorized in the Included Plan(s), real estate
mortgages, real estate investment trusts or funds, real estate,
partnership interests, mutual funds, closed-end investment companies,
regulated investment companies or trusts, common, collective or group
trust funds (except as otherwise limited hereunder) and other
investments, and in such proportion, as may be deemed suitable for the
purposes and the funding policy hereof.
(ii) Such investments shall be restricted to property and
securities of the character authorized for investment by trustees under
any present or future laws.
(iii) To the extent permitted by law, the Trustee is expressly
authorized to invest and reinvest the Fund and to execute any joinder or
similar agreement therefor on behalf of the Trust:
(A) In any general common trust fund qualifying under
Section 584 of the Code and maintained by any person, including
but not limited to the Trustee or any affiliate of the Trustee in
the same bank holding system affiliated group, as defined in
Section 1504 of the Code, as the Trustee (if the Trustee and any
such affiliate are banks or trust companies supervised by a state
or federal agency); or
(B) In any other collective or group trust fund maintained
by any person, including but not limited to any such bank or
trust company, as the Trustee (whether or not the Trustee is such
a bank or trust company), provided such collective or group trust
is so qualified and exempt under the Code; or
(C) In Policies of insurance on the lives of Participants,
(whether or not the Insurer is the Trust Sponsor or any affiliate
of the Trust Sponsor); or
(D) In whole or in part in deposits with any bank or
similar financial institution supervised by the United States or
a State, regardless of whether such bank or other institution is
a Trustee or other fiduciary hereunder, provided such deposits
shall bear a reasonable rate of interest, except that funds may
be deposited in non-interest bearing accounts to such extent and
for such time as may be reasonably required for the orderly
administration of the Trust.
(iv) If an investment is made in a common, collective or group
trust, the Trustee is expressly authorized to incorporate the terms
thereof as an investment medium under and as a part of the Trust, and
the terms of such trust shall govern the investment, disposition and
distribution of the assets of such trust.
5.1(b) Subject to the requirements imposed by law, and in furtherance
and not in limitation of the Trustee's investment authority, the Trustee shall
have all powers and authority necessary or advisable to carry out the provisions
of the Trust, and all inherent, implied and statutory powers now or subsequently
provided by law including specifically the power to do any of the following:
(i) To deal with all or any part of the Fund, including, without
limitation, to invest, reinvest and change investment;
(ii) To acquire any property by purchase, subscription, lease or
other means;
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(iii) To sell for cash or on credit, convey, lease for long or
short terms, or convert, redeem or exchange all or any part of the Fund;
(iv) To borrow money for the purpose of the Fund, and for any sum
so borrowed to issue its promissory note as Trustee and to secure the
repayment thereof by pledging all or any part of the Fund;
(v) To enforce by suit or otherwise, or to waive its rights on
behalf of the Fund and to defend claims asserted against him or the
Fund;
(vi) To compromise, adjust and settle any and all claims against
or in favor of it or the Fund;
(vii) To renew, extend or foreclose any mortgage or other
security;
(viii) To bid in property on foreclosure;
(ix) To take deeds in lieu of foreclosure, with or without paying
a consideration therefor;
(x) To vote, or give proxies to vote, any stock or other
security, and to oppose, participate in and consent to the
reorganization, merger, consolidation or readjustment of the finances of
any enterprise, to pay assessments and expenses in connection therewith,
and to deposit securities under deposit agreements;
(xi) To hold Trust assets unregistered (including in bearer
form), or to register them in its own name, in street name or in the
names of nominees who are within the jurisdiction of the district courts
of the United States and are either banks or trust companies that are
subject to supervision by the United States or a state thereof, brokers
or dealers registered under the Securities Exchange Act of 1934,
clearing agencies as defined in Section 3(a)(23) of the Securities
Exchange Act of 1934, permissible nominees of any of the foregoing, or
any other persons or entities permitted to act as nominee for the
Trustee under Section 403 of the Act, provided the books and records of
the Fund shall at all times reflect that the Fund is the beneficial
owner of such securities;
(xii) To make, execute, acknowledge and deliver any and all
instruments that it shall deem necessary or appropriate to carry out the
powers herein granted, and generally to exercise any of the powers of an
owner with respect to all or any part of the Fund; and
(xiii) Generally to exercise any of the powers of an owner with
respect to all or any portion of the Fund.
Except as provided in the Act, no person dealing with the Trustee shall be bound
to see to the application of any money or property paid or delivered to the
Trustee or to inquire into the validity or propriety of any transaction.
5.1(c) In limitation of the Trustee's investment authority under the
Trust and prior to a Change in Control and/or a failure or refusal by the
Corporation to pay benefits in accordance with the Included Plans and paragraph
3.2 hereof, the Employee Benefits Committee shall have full power and authority
to procure, renew and name the beneficiary(ies) under the Policies (including
naming the Trust Sponsor or Employer). The Employee Benefits Committee may
substitute cash or other property for the Policies at their cash value. The
Employee Benefits Committee shall direct the Trustee to continue in effect, with
such changes as it may determine, any Policy or Policies heretofore issued to
the Trust Sponsor providing insurance. The Employee Benefits Committee shall
agree with each Insurer upon all provisions to be contained in each Policy.
Except as otherwise expressly stated, all rights and privileges granted to the
policyholder by a Policy or allowed by the insurer shall be vested in the
Trustee who may take action with respect to each Policy or the insurance
provided
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thereunder permitted by the Insurer and in accordance with the terms of the
Trust and where directed by the Employee Benefits Committee.
5.1(d) Subject to subparagraph 5.1(e), all rights and privileges granted
to the policyholder by a Policy or allowed by the Insurer shall be vested in the
Trustee who may take action with respect to each Policy or the insurance
provided thereunder permitted by the Insurer and in accordance with the terms of
the Trust, and the Trustee may cancel, surrender or borrow against such
Policies.
5.1(e) In further limitation of the Trustee's investment authority under
the Trust, prior to a Change in Control and/or a failure or refusal by the
Corporation to pay benefits in accordance with the Included Plans and paragraph
3.2 hereof, the Employee Benefits Committee shall have full power and authority
to direct the Trustee as to the investment of all of the assets of the Fund.
Following a Change in Control and/or upon the failure or refusal by the
Corporation to pay benefits in accordance with the Included Plans and paragraph
3.2 hereof, the Trustee's Contractor shall have full power and authority to
direct the Trustee as to the management and disposition of the Policies
(including the naming of the beneficiaries under the Policies) and to direct the
Trustee as to the investment of all of the assets of the Fund.
5.1(f) Notwithstanding any contrary provision, the Trustee shall not
invest any portion of the Fund in any stock, securities or other obligations of
the Corporation and its affiliates or otherwise lend any money or lease any
property to the Corporation or any of its affiliates.
5.1(g) Notwithstanding any powers granted to the Trustee pursuant to
this Trust Agreement or to applicable law, the Trustee shall not have any power
that could give the Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of Section 301.7701-2 of the Procedure
and Administrative Regulations promulgated pursuant to the Code.
5.2 INCLUDED PLANS EXEMPT OR NOT COVERED BY THE ACT. The Trust Sponsor
represents to the Trustee that each Included Plan either is exempt from Part 4
of Title I of the Act as (i) an "excess benefit" plan within the meaning of
Section 4(b) of the Act or (ii) a "top hat" plan maintained primarily for the
purpose of providing deferred compensation for a select group of management or
highly compensated employees or is not covered by the Act because no Employees
are covered by the Included Plan. The Trustee is entering into this Agreement in
reliance on the Trust Sponsor's representation. Accordingly, in the event that
any Included Plan fails to qualify for the exemption from Part 4 of Title I of
the Act or is covered by the Act, then notwithstanding any other provision of
the Agreement to the contrary, the Trust Sponsor will indemnify and hold the
Trustee harmless from all liabilities, damages, costs and expenses (including,
without limitation, reasonable attorney's fees and expenses) that the Trustee
incurs as a result of the breach of fiduciary duty under the Act arising from
any action taken or omitted to be taken, by the Trustee in good faith in
accordance with this Agreement. The Trust Sponsor will, upon notice, pay
monthly, in arrears, to or on behalf of the Trustee, all reasonable attorney's
fees and expenses incurred by the Trustee in connection with such breach. In the
event the Trustee is determined to have incurred any liability as a result of
the Trustee's negligence or willful misconduct, the Trustee will promptly
reimburse the Trust Sponsor for all legal fees and expenses paid by the Trust
Sponsor on behalf of the Trustee.
5.3 ACCOUNTS. The Trustee shall keep true and accurate accounts of all
investments, receipts, and disbursements and other transactions hereunder, and
all accounts, books and records relating thereto shall be open to inspection and
audit at all reasonable times by any person or persons designated by the
Administrator, Employee Benefits Committee or the Trust Sponsor. Within
forty-five (45) days after the close of the Trust Year and within forty-five
(45) days after the removal or resignation of the Trustee, the Trustee shall
file with the Employee Benefits Committee a valuation of the assets of the Fund,
and an accounting of its transactions since the last previous such accounting.
In addition, the Employee Benefits Committee or the Trust Sponsor may require an
accounting from the Trustee at any other reasonable
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time. No Employee and no person other than those designated by the
Administrator, Employee Benefits Committee or the Trust Sponsor shall have the
right to demand or be entitled to any accounting by the Trustee except as
otherwise provided by law.
5.4 JUDICIAL SETTLEMENT OF ACCOUNTS. The Trustee, the Administrator, the
Trust Sponsor and/or the Employee Benefits Committee shall have the right to
apply at any time to a court of competent jurisdiction for the judicial
settlement of its accounts.
5.5 ENFORCEMENT OF TRUST-LEGAL PROCEEDINGS. The Trust Sponsor and/or the
Administrator shall have authority to enforce the trust hereby created on behalf
of all persons having or claiming any interest in the Trust under the Included
Plan(s).
5.6 TRUSTEE COMPENSATION AND EXPENSES. The Trustee shall be paid such
reasonable compensation and shall be reimbursed for its reasonable expenses as
shall from time to time be agreed upon by the Trust Sponsor or the Employee
Benefits Committee and the Trustee provided, however, that no compensation shall
be paid to a Trustee who is an employee of the Corporation or any affiliate
unless authorized by the Trust Sponsor or Employee Benefits Committee. By
agreement between the Trust Sponsor or Employee Benefits Committee and the
Trustee, the Trustee may be authorized to Withdraw such compensation and expense
from the Trust prior to a determination as to whether the Corporation shall pay
such amounts, and in the event that the Corporation is to pay such amounts, the
Corporation shall reimburse the Trust therefor.
5.7 TRUSTEE RESIGNATION, REMOVAL OR DEATH AND APPOINTMENT OF SUCCESSOR
OR ADDITIONAL TRUSTEE.
5.7(a) In the event the Trustee or Trustees serving hereunder have been
named Trustee by virtue of any office they may hold in connection with their
employment by the Trust Sponsor or any other Corporation, upon leaving any such
office, such Trustee shall at once cease to be a Trustee and shall be discharged
from all further duties and responsibilities as Trustee. Upon acceptance in
writing of its status as Trustee hereunder by the successor in office of any
such Trustee, he shall become a Trustee hereunder.
5.7(b) The Trustee may resign at any time upon delivering to the
Employee Benefits Committee a written notice of such resignation to take effect
not less than sixty (60) days after the delivery thereof unless the Employee
Benefits Committee shall accept as adequate a shorter notice.
5.7(c) The Trustee may be removed by the Employee Benefits Committee by
mailing notice by registered mail addressed to the Trustee at its last known
address, or by delivery of same to the Trustee to take effect not less than
sixty (60) days after mailing or delivery of such notification unless notice of
a shorter duration shall be accepted as adequate. The Administrator and the
Trust Sponsor shall be notified by the Employee Benefits Committee of any such
resignation or removal. However, the Trustee may not be removed by the Employee
Benefits Committee for two (2) years following a Change in Control.
5.7(d) In case of the resignation or removal of a Trustee, such Trustee
shall transfer, assign, convey and deliver to the successor or other Trustee the
trust estate as it may then be constituted and shall execute all documents
necessary for transferring the trust estate.
5.7(e) The Employee Benefits Committee shall forthwith appoint a
successor Trustee in case of resignation or removal of the Trustee appointed and
then serving. However, if the resignation or removal of the Trustee occurs
within two (2) years following a Change in Control, the Trustee shall select a
successor Trustee.
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5.7(f) Any successor Trustee shall qualify as such by executing,
acknowledging, and delivering to the Employee Benefits Committee an instrument
accepting such appointment hereunder in such form as may be satisfactory to the
Employee Benefits Committee, which form shall become a part of this Trust
document, and thereupon such successor Trustee shall become vested with the
rights, powers, discretion, duties and obligation of its predecessor Trustee.
The Administrator and the Trust Sponsor shall be notified by the Employee
Benefits Committee of any such successor Trustee. Except as may be required by
the Act or the Code, in no event shall any successor Trustee be liable on
account of any act or omission of any predecessor Trustee.
5.7(g) If any corporate Trustee at any time shall be merged, or
consolidated with, or shall sell or transfer substantially all of its assets and
business to another employer, domestic or foreign, or shall be in any manner
reorganized or reincorporated, then the resulting or acquiring employer shall be
substituted ipso facto for such corporate Trustee without the execution of any
instrument and without any action upon the part of the Employee Benefits
Committee any Participant or Beneficiary, or any other person having or claiming
to have an interest in the Fund.
5.8 STANDARD OF CONDUCT. The Trustee shall discharge its duties with
respect to the Trust solely in the interest of the Participants and
Beneficiaries:
(i) For the exclusive purpose of providing benefits to
Participants and Beneficiaries, and defraying reasonable expenses of
administering the Trust and Included Plan(s) to the extent permitted by
the Trust and Included Plan(s);
(ii) With the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims;
(iii) By diversifying any cash investments of the Fund so as to
minimize the risk of large losses, unless under the circumstances it is
clearly prudent not to do so; and
(iv) In accordance with the terms of the Trust and Included
Plan(s).
ARTICLE VI
EMPLOYEE BENEFITS COMMITTEE
6.1 MAKEUP AND APPOINTMENT OF EMPLOYEE BENEFITS COMMITTEE.
6.1(a) The Trust Sponsor shall appoint a Employee Benefits Committee to
review and supervise the investment and management of the Fund consisting of one
or more persons who shall serve at the pleasure of the Board and without
compensation for service on the Employee Benefits Committee. Vacancies shall be
filled by the Trust Sponsor. A person shall not be ineligible to be a member of
the Employee Benefits Committee because he is or may be a Participant or a
participant in the Included Plan(s).
6.1(b) The Trustee and the Administrator shall be notified by the Trust
Sponsor of the persons constituting the membership of the Employee Benefits
Committee (including its Chairman and Secretary) and may assume that any person
appointed (or holding the position of its Chairman or Secretary) continues to be
a member thereof (or to hold such position) until notified by the Trust
Sponsor.
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6.1(c) Unless otherwise determined by the Trust Sponsor, the Plan
Investment subcommittee of the Employee Benefits Committee of the Trust Sponsor
in existence on the Effective Date of the Trust shall be the Employee Benefits
Committee.
6.2 EMPLOYEE BENEFITS COMMITTEE PROCEDURES. The Employee Benefits
Committee shall adopt rules for the conduct of its business and performance of
its duties with respect to the Fund as it considers desirable, provided they do
not conflict with the Trust or Included Plan(s). The Employee Benefits Committee
shall hold meetings upon such notice, at such place or places, and at such
intervals as it may from time to time determine.
6.3 POWER AND AUTHORITY, COSTS AND EXPENSES. The Employee Benefits
Committee is hereby vested with all power and authority necessary in order to
carry out its duties and responsibilities in connection with the Trust. The
Employee Benefits Committee may authorize one or more of its members or any
agent to act on its behalf and may contract for legal, accounting, clerical and
other services to carry out its duties under the Trust. The costs of such
services and expenses and of any and all other necessary expenses incurred by
the Employee Benefits Committee shall be paid or reimbursed by the Trust.
6.4 RECORDS. The Employee Benefits Committee shall keep records
reflecting its deliberations and decisions with respect to the Trust which shall
be subject to inspection by the Trust Sponsor.
6.5 NECESSARY INFORMATION. The Corporation, the Trustee and the
Administrator shall supply full and timely information to the Employee Benefits
Committee of all matters relating to Participants and Beneficiaries, the Trust
and Included Plan(s) which the Employee Benefits Committee may require for the
effective discharge of its duties.
6.6 FUNDING POLICY. The Employee Benefits Committee shall establish a
funding policy consistent with the current and long-term financial needs of the
Trust and Included Plans with respect to the ages of Participants in the Plan
and other relevant information.
6.7 SCOPE OF EMPLOYEE BENEFITS COMMITTEE'S DIRECT INVESTMENT AUTHORITY.
The exercise by the Employee Benefits Committee of its authority granted under
subparagraph 5.1(e) is not limited to any specific investments or classes of
investments. The Employee Benefits Committee shall exercise its authority based
on the standards of a reasonable investor having knowledge of such matters.
ARTICLE VII
TRUSTEE'S CONTRACTOR
7.1 APPOINTMENT OF TRUSTEE'S CONTRACTOR.
7.1(a) The Corporation may engage a third party administrator as a
Trustee's Contractor, who shall not be a Plan Participant or Beneficiary (but
who may be the Trustee), to perform functions described in this ARTICLE and
elsewhere in this Trust Agreement which would otherwise be performed by the
Corporation.
7.1(b) Upon engagement of a Trustee's Contractor, as soon as practicable
but in no event longer than thirty (30) days thereafter, the Corporation shall
furnish to the Trustee's Contractor copies of the Plan documents and other
information necessary to determine the benefits which are or may become payable
by the Corporation to or with respect to each Participant in the Included Plans,
including any benefits payable after the Participant's death, and the recipient
of
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same and the procedures which the Corporation has adopted to calculate such
benefit payments. The Corporation shall regularly, at least annually, and upon
each benefit change under the Included Plans, furnish revised, updated
information to the Trustee's Contractor. In the event the Corporation fails or
refuses to provide updated Participant information as contemplated herein, the
Trustee's Contractor shall be entitled to rely on the most recent information
furnished to it by the Corporation.
7.1(c) In the event of a Change in Control and/or upon the failure or
refusal by the Corporation to pay benefits in accordance with the Included Plans
and paragraph 3.2 hereof, the Corporation shall have the duty to engage, as soon
as practicable thereafter, a Trustee's Contractor reasonably acceptable to the
Trustee if there shall at that time be no Trustee's Contractor then serving. In
the event that the Corporation fails to engage a Trustee's contractor, the
Trustee shall have the power and authority to do so. After a Change in Control
and/or a failure or refusal by the Corporation to pay benefits in accordance
with the Included Plans and paragraph 3.2 hereof, the Corporation shall not have
any control or authority with respect to the Trustee's Contractor so engaged or
then serving, or any successor Trustee's Contractor, including without
limitation any rights with respect to the removal or replacement of any such
Trustee's Contractor or its duties pursuant to this Trust Agreement.
7.2 REMOVAL OF TRUSTEE'S CONTRACTOR.
7.2(a) The Corporation may replace or remove its Trustee's Contractor
from time to time serving hereunder, in its sole discretion, prior to the
occurrence of a Change in Control and/or a failure or refusal by the Corporation
to pay benefits in accordance with the Included Plans and paragraph 3.2 hereof.
Following a Change in Control and/or a failure or refusal by the Corporation to
pay benefits in accordance with the Included Plans and paragraph 3.2 hereof, the
Trustee, in its sole discretion, may remove a Trustee's Contractor engaged by
the Corporation or any successor Trustee's Contractor and shall engage a
successor to such person if Trustee deems such person's performance as a
Trustee's Contractor unsatisfactory.
7.2(b) At all times following a Change in Control and/or a failure or
refusal by the Corporation to pay benefits in accordance with the Included Plans
and paragraph 3.2 hereof, upon any such removal, or the voluntary resignation of
any such Trustee's Contractor or the occurrence of any other event which shall
result in the cessation of performance of the Trustee's Contractor's duties
hereunder, Trustee shall use its best efforts to engage a new Trustee's
Contractor (which may be Trustee), provided, however, Trustee shall perform the
duties of the Trustee's Contractor during any period for which Trustee is unable
to find a new Trustee's Contractor (so that there will be no default in payments
under the Plan as a result of the absence of a Trustee's Contractor), and any
person engaged as a Trustee's Contractor shall in the judgment of Trustee be
independent of the Corporation. The person who removes or replaces a Trustee's
Contractor shall be responsible for assuring that there is a timely and complete
transfer of records from such Trustee's Contractor to such person's successor.
7.3 DUTIES OF TRUSTEE'S CONTRACTOR.
7.3(a) Except for the records dealing solely with the assets of the
Trust and investment of those assets, which shall be maintained by the Trustee,
if a Trustee's Contractor is engaged, the Trustee's Contractor shall maintain
all Participant records contemplated by this Trust Agreement, including the
payment schedule. All such records and copies of the Included Plan documents and
employment records of the Participants in the possession of the Trustee's
Contractor shall be made available promptly upon request of Trustee or the
Corporation. The Trustee's Contractor shall also prepare and distribute
Participant statements to Participants and Beneficiaries and shall perform such
other duties and responsibilities contemplated under the terms of this Trust
Agreement as the Corporation or Trustee, as the case may be, determines is
necessary or advisable to achieve the objectives of this Trust Agreement.
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7.3(b) Following a Change in Control and/or a failure or refusal by the
Corporation to pay benefits in accordance with the Included Plans and paragraph
3.2 hereof, the Trustee's Contractor shall have the duties described in this
Trust Agreement in connection with the management of the Policies and assets of
the Trust.
7.4 INDEMNIFICATION OF TRUSTEE'S CONTRACTOR. The Corporation shall
indemnify and hold harmless the Trustee's Contractor for any liability or
expenses, including without limitation advances for or prompt reimbursement of
reasonable fees and expenses of counsel and other agents retained by it,
incurred by the Trustee's Contractor with respect to keeping the records for
participants, benefits, reporting thereon to participants and beneficiaries,
certifying benefit information to Trustee, determining the status of benefits
hereunder and otherwise carrying out its obligations under this Trust Agreement,
other than those resulting from Trustee's Contractor's negligence or willful
misconduct or its failure to reasonably calculate and certify the amount of
benefits based on the applicable terms of the Plan documents and other
information and procedures furnished by the Corporation to the Trustee's
Contractor in accordance with this Trust Agreement.
7.5 COMPENSATION AND EXPENSES. The Trustee's Contractor shall be
entitled to reasonable compensation for services hereunder, the amount of which
shall be agreed upon from time to time by the Corporation or, following a Change
in Control and/or a failure or refusal by the Corporation to pay benefits in
accordance with the Included Plans and paragraph 3.2 hereof, the Trustee, and
the Trustee's Contractor in writing, and reimbursement for reasonable expenses
incurred in connection with its performance of such services. Following a Change
in Control and/or a failure or refusal by the Corporation to pay benefits in
accordance with the Included Plans and paragraph 3.2 hereof, Trustee's good
faith determination of compensation to be paid to a Trustee's Contractor
(including Trustee when it acts in such capacity) shall be binding on the
Corporation and each other person having an interest in the Trust. All such
compensation and expenses shall be paid by the Corporation. If not so paid, such
compensation and expenses shall be paid by the Trustee from the assets of the
Trust.
7.6 SCOPE OF RESPONSIBILITY.
7.6(a) Unless Trustee agrees to perform the functions of the Trustee's
Contractor described herein, Trustee shall have no responsibility hereunder for
any obligation assigned to a Trustee's Contractor or (subject to paragraph 7.2)
for the performance of a Trustee's Contractor's duties and responsibilities
under this Trust Agreement.
7.6(b) Except as may be otherwise agreed by the Trustee's Contractor
and the Corporation, or Trustee following a Change in Control and/or a failure
or refusal by the Corporation to pay benefits in accordance with the Included
Plans and paragraph 3.2 hereof, the Trustee's Contractor's obligations are
limited solely to those explicitly set forth herein and the Trustee's Contractor
shall have no responsibility, authority or control, direct or indirect, over the
maintenance or investment of the Trust and shall have no obligation in respect
of Trustee.
ARTICLE VIII
AMENDMENT AND TERMINATION
8.1 AMENDMENT.
8.1(a) The Trust Sponsor reserves the right to itself to modify, alter,
or amend the Trust in whole or in part; provided, however, that:
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(i) The duties and obligations of the Trustee hereunder shall not
be increased nor its compensation decreased without its written consent;
(ii) No amendment shall affect the terms of the Policy or
Policies issued by an Insurer without a written consent of the Insurer;
and
(iii) Except as otherwise expressly required or permitted herein,
no such amendment shall have the effect of revesting in the Corporation
any part of the corpus or income of the Fund, of reducing the benefits
payable from the Trust to Participants or their Beneficiaries, or of
making the Trust revocable.
Nothing in the foregoing shall prevent any amendment which accelerates the time
of payment of benefits under the Included Plan or the Trust or any amendment
which is agreed to in writing by the affected Participant(s).
8.1(b) Subject to the limitations on amendment contained in subparagraph
8.1(a)), the Executive Compensation and Management Development Committee of the
Board and the Administrator shall be and are hereby authorized to adopt on
behalf of the Trust Sponsor and to execute any technical amendment or amendments
to the Trust which in the opinion of counsel for the Trust Sponsor are required
by law and are deemed advisable by such persons, or either of them, and to so
adopt and execute any other discretionary amendment or amendments to the Trust
which do not in view of such persons, or either of them, materially affect costs
or the benefit protection provisions of the Trust and which in the opinion of
such persons, or either of them, are deemed advisable.
8.2 TERMINATION. Except as otherwise expressly provided herein, the
Trust shall be irrevocable and the Trust Sponsor shall have no power or
authority to terminate the Trust until such time as no Participant is entitled
to any payment (currently or in the future) under the Trust or any Included
Plan. Upon such termination of the Trust, any assets remaining in the Trust
shall be returned to the Corporation as directed by the Administrator or the
Trust Sponsor.
ARTICLE IX
MISCELLANEOUS
9.1 HEADINGS. The headings in the Trust have been inserted for
convenience of reference only and are to be ignored in any construction of the
provisions hereof.
9.2 GENDER AND NUMBER. In the construction of the Trust, the masculine
shall include the feminine or neuter and the singular shall include the plural
and vice-versa in all cases where such meanings would be appropriate.
9.3 GOVERNING LAW. The Trust created hereunder shall be construed,
enforced and administered in accordance with the laws of the State of Florida.
9.4 SEVERABILITY. If any provision of the Plan should for any reason be
declared invalid or unenforceable by a court of competent jurisdiction, the
remaining provisions shall nevertheless remain in full force and effect.
9.5 EMPLOYMENT RIGHTS. Neither status as a Participant of the Included
Plans nor any rights hereunder shall give any Employee the right to be retained
in the Corporation's employ nor, upon dismissal or upon his voluntary
termination of employment, to have any right or interest in the fund other than
as herein provided.
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<PAGE>
9.6 ALIENATION AND ASSIGNMENT. No amount payable to or with respect of
any Participant hereunder shall be subject in any manner to alienation, sale,
anticipation, transfer, assignment, pledge, encumbrance, garnishment,
attachment, execution or levy of any kind or other legal or equitable process.
9.7 DELEGATION OF AUTHORITY. Whenever the Trust Sponsor or any
Corporation is permitted or required to perform any act, such act may be
performed by the Executive Compensation and Management Development Committee of
the Board or the Chairman of such committee.
9.8 SERVICE OF PROCESS. The Trustee shall be the agent for service of
process on the Trust.
9.9 CONSTRUCTION. This Trust is created for the exclusive benefit of
Participants in the Included Plans and shall be interpreted in a manner
consistent with its being a trust fund for non-qualified deferred compensation
plans which are subject to the claims of the general creditors of the Employer
and treated for federal income tax purposes as a grantor trust within the
meaning of Section 671 of the Code.
ARTICLE X
ADOPTION OF THE TRUST AND DESIGNATION OF INCLUDED PLANS
10.1 DESIGNATION OF ADDITIONAL INCLUDED PLANS.
10.1(a) The Trust Sponsor may from time to time designate one or more
additional plans as Included Plans by executing a designation agreement or
adopting an amendment to the Trust. The assets or any portion thereof held by
such plan may then be paid over to the Trustee to be administered as part of the
Fund pursuant to the provisions of this Trust if so directed by the Trust
Sponsor or if so provided in the designation agreement or amendment to the
Trust.
10.1(b) In addition, and as an alternative, to designation of additional
Included Plans by action of the Board, but. subject to the limitations contained
in this subparagraph, the Chairman of the Board of Directors of the Trust
Sponsor, the President of the Trust Sponsor and the Administrator, or any of
them, shall be and are hereby authorized to designate additional Included Plans
and determine what assets, if any, of such plans should be paid over to the
Trustee.
10.1(c) No plan shall be designated as an Included Plan unless the plan
is an unfunded deferred compensation plan for a select group of management and
highly compensated employees and exempt from the participation and vesting,
funding and fiduciary requirements of the Act or an unfunded employee welfare
benefit plan.
10.2 TERMINATION OF DESIGNATION OF A PLAN AS AN INCLUDED PLAN.
10.2(a) Prior to a Change in Control, the Trust Sponsor may from time to
time terminate the designation of one or more plans as Included Plans by
executing a document to that effect or adopting an amendment to the Trust. The
assets of such formerly Included Plan shall be disposed of in the manner
directed by the Trust Sponsor consistent with the purpose of the Trust.
10.2(b) In addition, and as an alternative, to the termination of the
designation of a plan as an Included Plan by action of the Board, Executive
Compensation and Management Development Committee of the Board or the Chairman
of such committee shall be and are hereby authorized to terminate any such
designation and determine the disposition of the assets, if any, of such plan
held in the Fund in a manner consistent with the purpose of the Trust.
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<PAGE>
10.2(c) Notwithstanding the foregoing provisions of this paragraph, if an
Included Plan is sponsored by an affiliate or former affiliate (as opposed to
the Trust Sponsor), such affiliate or former affiliate may terminate the
designation of one or more plans sponsored by it as Included Plans by executing
a document to that effect and delivering the same to the Trust Sponsor, with a
copy to the Trustee and the Employee Benefits Committee. The assets of such
formerly Included Plan shall be disposed of in the manner directed by the Trust
Sponsor consistent with the purpose of the Trust.
10.3 WITHDRAWAL FROM TRUST ON INCLUDED PLAN FAILURE TO QUALITY FOR
EXEMPTION UNDER THE ACT. In the event that any Included Plan is subject to the
Act and does not qualify for an exemption from the participation, vesting,
funding and fiduciary requirements of the Act, the assets held in the Fund
attributable to such Included Plan shall be immediately withdrawn from the Fund
and paid over to such successor funding medium or other entity (to the extent
permitted under the Included Plan or the Trust) consistent with the requirements
of the Act and/or distributed to Participants and Beneficiaries as the Trust
Sponsor may direct the Trustee in writing.
IN WITNESS WHEREOF, the Trust Sponsor has caused the Trust to be
established and signed on its behalf by its duty authorized officer or member of
its Board of Directors on the day, month and year aforesaid and the Trustee has
caused its name to be signed on its behalf by its duly authorized officers.
BARNETT BANKS, INC.,
Trust Sponsor
By: /s/ Deborah Carroll
-------------------------------------
Its Sec., Employee Benefits Committee
---------------------------------
Attest
/s/ Elizabeth Nana
---------------------------------------
Its Manager, Benefits Finance & Compliance
---------------------------------------
U.S. TRUST COMPANY OF CALIFORNIA,
Trustee
By: /s/ Dennis M. Kunisaki
-----------------------------
Its Vice President
--------------------------
Attest
/s/ Miriam delaBosa
----------------------
Its Financial Officer
---------------------
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<PAGE>
<TABLE>
<CAPTION>
BARNETT BANKS, INC.
TRUST OWNED LIFE INSURANCE TRUST
FOR
MANAGEMENT AND DIRECTORS DEFERRAL PLANS
APPENDIX A
(AS OF JANUARY 1, 1997)
LIST OF INCLUDED PLANS
Effective Date Effective Date
of Inclusion as of Termination as
Included Plan Name Plan Sponsor Included Plan Included Plan
<S> <C> <C> <C> <C>
Barnett Banks, Inc. Barnett Banks, Inc. January 1, 1997
The Management
Deferral Plan
Barnett Banks, Inc. Barnett Banks, Inc. January 1, 1997
The Directors
Deferral Plan
</TABLE>
-A-1-
BARNETT BANKS, INC.
TRUST UNDER EXECUTIVE BENEFIT PLAN
----------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE NO.
-------
<S> <C> <C>
SECTION 1. ESTABLISHMENT OF TRUST........................................................1
SECTION 2. PAYMENTS TO PLAN PARTICIPANTS AND
THEIR BENEFICIARIES...........................................................2
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING
PAYMENTS TO TRUST BENEFICIARY WHEN
COMPANY IS INSOLVENT..........................................................5
SECTION 4. PAYMENTS TO COMPANY...........................................................6
SECTION 5. INVESTMENT AUTHORITY..........................................................6
SECTION 5A. SALE OF COMPANY STOCK BY TRUSTEE.............................................10
SECTION 6. DISPOSITION OF INCOME........................................................12
SECTION 7. ACCOUNTING BY TRUSTEE........................................................12
SECTION 8. RESPONSIBILITY OF TRUSTEE....................................................13
SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE.........................................14
SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE...........................................14
SECTION 11. APPOINTMENT OF SUCCESSOR.....................................................15
SECTION 12. AMENDMENT OR TERMINATION.....................................................15
SECTION 13. MISCELLANEOUS................................................................17
SECTION 14. EFFECTIVE DATE...............................................................21
</TABLE>
<PAGE>
BARNETT BANKS, INC.
TRUST UNDER EXECUTIVE BENEFIT PLAN
THIS AGREEMENT made this 5th day of December, 1996, by and between BARNETT
BANKS, INC., a Florida corporation, as grantor hereunder ("Company"), and U.S.
TRUST COMPANY OF CALIFORNIA, N.A., a national banking association ("Trustee");
(a) WHEREAS, Company has adopted the nonqualified deferred
compensation plans as listed in Appendix A ("Plans");
(b) WHEREAS, Company has incurred or expects to incur liability under
the terms of such Plans with respect to the individuals participating in such
Plans;
(c) WHEREAS, Company wishes to establish a trust ("Trust") for the
benefit of certain officers and certain key managers of Company and Company's
affiliates who participate in the Plans and to contribute to the Trust assets
that shall be held therein, subject to the claims of Company's creditors in the
event of Company's Insolvency (as herein defined) until full payment has been
made in respect of such obligations of Company to Plan participants and their
beneficiaries in such manner and at such time as specified in the Plans;
(d) WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plans
as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees or
as an excess benefit plan for purposes of Title I of the Employee Retirement
Income Security Act of 1974; and
(e) WHEREAS, it is the intention of Company to make contributions to
the Trust to provide itself with a source of funds to assist it in meeting its
liabilities under the Plans;
NOW, THEREFORE, the parties do hereby establish the Trust and agree that
the Trust shall be comprised, held and disposed of as follows:
SECTION 1. ESTABLISHMENT OF TRUST.
(a) Company hereby deposits with Trustee 8,000,000 shares of common
stock of Company, par value $2.00 per share ("Company Stock"), which shall
become the principal of the Trust to be held, administered and disposed of by
Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which Company is
the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
<PAGE>
(d) The principal of the Trust, and any earnings thereon shall be
held separate and apart from other funds of Company and shall be used
exclusively for the uses and purposes of Plan participants and general creditors
as herein set forth. Plan participants and their beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any assets of the
Trust. Any rights created under the Plans and this Trust Agreement shall be mere
unsecured contractual rights of Plan participants and their beneficiaries
against Company. Any assets held by the Trust will be subject to the claims of
Company's general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.
(e) Company, in its sole discretion, may at any time, or from time to
time, make additional deposits of cash or other property acceptable to Trustee
in trust with Trustee to augment the principal to be held, administered and
disposed of by Trustee as provided in this Trust Agreement. Neither Trustee nor
any Plan participant or beneficiary shall have any right to compel any such
additional deposits under this subsection (e).
SECTION 2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES.
(a) Company, or the Trustee's Contractor (as hereinafter defined) if
one shall have been engaged, shall deliver to Trustee a schedule (a "Payment
Schedule") that indicates the amounts payable by Company in accordance with the
terms and conditions of the Plans in respect of each Plan participant (and his
or her beneficiaries), that provides a formula or other instructions acceptable
to Trustee for determining the amounts so payable, the form in which such amount
is to be paid (as provided for or available under the Plans), and the time of
commencement for payment of such amounts. Except as otherwise provided herein,
Trustee shall make payments to the Plan participants and their beneficiaries in
accordance with such Payment Schedule (to the extent such payments are not made
by Company pursuant to subsection (c) of this Section 2). Notwithstanding the
foregoing, if a benefit which is distributable in the form of Company Stock
under the terms of a Plan becomes payable at a time when there is no (or
insufficient) Company Stock in the Trust with which to satisfy such benefit
obligation and if the Company fails or refuses to pay such benefit within a
reasonable time after notice from Trustee that it has become so payable, Trustee
shall use other assets of the Trust to acquire Company Stock, on the open market
or otherwise in its discretion, sufficient to satisfy such benefit obligation.
(b) The entitlement of a Plan participant or his or her beneficiaries
to benefits payable by Company under the Plans shall be determined in accordance
with the terms of the Plans by Company or such party as it shall designate under
the Plans, or the Trustee's Contractor if one shall have been engaged, and any
claim for such benefits shall be considered and reviewed and paid or not paid
under the procedures set out in the Plans. Neither Trustee nor Trustee's
Contractor shall have any obligation for determining whether any Plan
participant or beneficiary has died and shall be entitled to rely upon any
information in this regard furnished by Company.
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<PAGE>
(c) Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the terms of the
Plans. Company shall notify Trustee of its decision to make payment of benefits
directly prior to the time amounts are payable to participants or their
beneficiaries. In addition, if the principal of the Trust, and any earnings
thereon are not sufficient to make payments of benefits payable by Company in
accordance with the terms of the Plans, Company shall make the balance of each
such payment as it falls due. Trustee shall notify Company where principal and
earnings are not sufficient.
(d) Company may engage a third party administrator as a contractor of
the Trustee (a "Trustee's Contractor"), who shall not be a Plan participant or
beneficiary (but who may be the Trustee), to perform functions described in this
Section 2(d) and elsewhere in this Trust Agreement which would otherwise be
performed by Company.
(1) Upon engagement of a Trustee's Contractor, as soon as
practicable but in no event longer than thirty (30) days thereafter,
Company shall furnish to the Trustee's Contractor copies of the Plan
documents and other information necessary to determine the benefits
which are or may become payable by Company to or with respect to each
participant in each Plan, including any benefits payable after the
participant's death, and the recipient of same and the procedures which
Company has adopted to calculate such benefit payments. Company shall
regularly, at least annually, and upon each benefit change under the
Plans, furnish revised, updated information to the Trustee's Contractor.
In the event Company refuses or neglects to provide updated participant
information as contemplated herein, the Trustee' Contractor shall be
entitled to rely on the most recent information furnished to it by
Company.
(2) In the event of a Potential Change in Control (as hereinafter
defined), Company shall have the duty to engage, as soon as practicable
thereafter, a Trustee's Contractor reasonably acceptable to the Trustee
if there shall at that time be no Trustee's Contractor then serving.
After a Change in Control, Company shall not have any control or
authority with respect to the Trustee's Contractor so engaged or then
serving, or any successor Trustee's Contractor, including without
limitation any rights with respect to the removal or replacement of any
such Trustee's Contractor or its duties pursuant to this Trust
Agreement.
(3) Unless Trustee agrees to perform the functions of the
Trustee's Contractor described herein, Trustee shall have no
responsibility hereunder for any obligation assigned to a Trustee's
Contractor or (subject to subsection (4) below) for the performance of a
Trustee's Contractor's duties and responsibilities under this Trust
Agreement.
(4) Company may replace or remove its Trustee's Contractor from
time to time serving hereunder, in its sole discretion, prior to the
occurrence of a Change in
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<PAGE>
Control. Following a Change in Control, Trustee, in its sole discretion,
may remove a Trustee's Contractor engaged by Company or any successor
Trustee's Contractor and shall remove any such person and engage a
successor to such person if Trustee deems such person's performance as a
Trustee's Contractor unsatisfactory. At all times following a Change in
Control, upon any such removal, or the voluntary resignation of any such
Trustee's Contractor or the occurrence of any other event which shall
result in the cessation of performance of the Trustee's Contractor's
duties hereunder, Trustee shall use its best efforts to engage a new
Trustee's Contractor (which may be Trustee); provided, however, Trustee
shall perform the duties of the Trustee's Contractor during any period
for which Trustee is unable to find a new Trustee's Contractor (so that
there will be no default in payments under the Plans as a result of the
absence of a Trustee's Contractor), and any person engaged as a
Trustee's Contractor shall in the judgment of Trustee be independent of
Company. The person who removes or replaces a Trustee's Contractor shall
be responsible for assuring that there is a timely and complete transfer
of records from such Trustee's Contractor to such person's successor.
(5) Except for the records dealing solely with the assets of the
Trust and investment of those assets, which shall be maintained by the
Trustee, if a Trustee's Contractor shall be engaged, the Trustee's
Contractor shall maintain all Plan participant records contemplated by
this Agreement, including the Payment Schedule. All such records and
copies of the Plan documents and employment records of the participants
in the possession of the Trustee's Contractor shall be made available
promptly upon request of Trustee or Company. The Trustee's Contractor
shall also prepare and distribute participant statements to participants
and beneficiaries and shall perform such other duties and
responsibilities contemplated under the terms of this Trust Agreement as
Company or Trustee, as the case may be, determines is necessary or
advisable to achieve the objectives of this Trust Agreement.
(6) Company shall indemnify and hold harmless its Trustee's
Contractor for any liability or expenses, including without limitation
advances for or prompt reimbursement of reasonable fees and expenses of
counsel and other agents retained by it, incurred by the Trustee's
Contractor with respect to keeping the records for participants,
benefits, reporting thereon to participants and beneficiaries,
certifying benefit information to Trustee, determining the status of
benefits hereunder and otherwise carrying out its obligations under this
Trust Agreement, other than those resulting from Trustee's Contractor's
negligence or willful misconduct or its failure to reasonably calculate
and certify the amount of benefits based on the applicable terms of the
Plan documents and other information and procedures furnished by Company
to the Trustee's Contractor in accordance with this Trust Agreement. The
Trustee's Contractor shall be entitled to reasonable compensation for
services hereunder, the amount of which shall be agreed upon from time
to time by Company or, following a Change in Control, the Trustee, and
the Trustee's Contractor in writing, and
-4-
<PAGE>
reimbursement for reasonable expenses incurred in connection with its
performance of such services. Following a Change in Control, Trustee's
good faith determination of compensation to be paid to a Trustee's
Contractor (including Trustee when it acts in such capacity) shall be
binding on the Company and each other person having an interest in the
Trust. All such compensation and expenses shall be paid by the Company.
If not so paid, such compensation and expenses shall be paid by the
Trustee from the assets of the Trust.
(7) Except as may be otherwise agreed by the Trustee's Contractor
and Company, or Trustee following a Change in Control, the Trustee's
Contractor's obligations are limited solely to those explicitly set
forth herein and the Trustee's Contractor shall have no responsibility,
authority or control, direct or indirect, over the maintenance or
investment of the Trust and shall have no obligation in respect of
Trustee or the Trustee's compliance with the Trustee's Contractor's
certifications to Trustee.
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY
WHEN COMPANY IS INSOLVENT.
(a) Trustee shall cease payment of benefits to Plan participants and
their beneficiaries if the Company is Insolvent. Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) Company is unable to pay
its debts as they become due, or (ii) Company is subject to a pending proceeding
as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of Company under federal and state law as set forth
below.
(1) The Board of Directors and the Chief Executive Officer of
Company shall have the duty to inform Trustee in writing of Company's
Insolvency. If a person claiming to be a creditor of Company alleges in
writing to Trustee that Company has become Insolvent, Trustee shall
determine whether Company is Insolvent and, pending such determination,
Trustee shall discontinue payment of benefits to Plan participants or
their beneficiaries.
(2) Unless Trustee has actual knowledge of Company's Insolvency,
or has received notice from Company or a person claiming to be a
creditor alleging that Company is Insolvent, Trustee shall have no duty
to inquire whether Company is Insolvent. Trustee may in all events rely
on such evidence concerning Company's solvency as may be furnished to
Trustee and that provides Trustee with a reasonable basis for making a
determination concerning Company's solvency.
-5-
<PAGE>
(3) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to Plan participants or
their beneficiaries and shall hold the assets of the Trust for the
benefit of Company's general creditors. Nothing in this Trust Agreement
shall in any way diminish any rights of Plan participants or their
beneficiaries to pursue their rights as general creditors of Company
with respect to benefits due under the Plans or otherwise.
(4) Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of this
Trust Agreement only after Trustee has determined that Company is not
Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3(b)
hereof and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due from
Company to Plan participants or their beneficiaries under the terms of the Plans
for the period of such discontinuance, less the aggregate amount of any payments
made to Plan participants or their beneficiaries by Company in lieu of the
payments provided for hereunder during any such period of discontinuance.
SECTION 4. PAYMENTS TO COMPANY.
(a) Except as provided in Sections 3, 4(b), 4(c), 5(b) and 12(c)
hereof, Company shall have no right or power to direct Trustee to return to
Company or to divert to others any of the Trust assets before all payment of
benefits have been made to Plan participants and their beneficiaries pursuant to
the terms of the Plans to the extent such benefits are obligations of Company.
(b) Prior to a Change in Control, Trustee shall, if so instructed by
Company in writing within thirty (30) days after the actual filing of Company's
federal income tax return for a year, reimburse Company from the assets of the
Trust for federal, state or local income taxes, or any part thereof, which
Company certifies that it has paid, attributable to income of the Trust for such
year, as determined by Company, within thirty (30) days after receipt of such
request. No reimbursement for taxes pursuant to this Section 4(b) may be made
following a Change in Control.
(c) Notwithstanding any other provision of this Trust Agreement,
including without limitation Section 1(b) hereof, prior to a Change in Control
Company shall have the right with respect to each contribution to the Trust to
cause Trustee to return all or any portion of a contribution and any and all
income on such contribution to Company. Such right shall be exercised by giving
written notice to Trustee and shall be exercisable in a nonfiduciary capacity
without the approval or consent of Trustee or any other person. Such right shall
expire with respect to each contribution to the Trust upon the earlier of (i)
thirty days following the date
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<PAGE>
on which the contribution is made, (ii) the last day of the taxable year of
Company in which the contribution is made or (iii) a Change in Control.
Company's right under this Section 4(c) shall expire upon a Change in Control.
SECTION 5. INVESTMENT AUTHORITY.
(a). Except as otherwise provided in subsections (c), (d), (e) and (g)
of this Section 5 and in Section 5A hereof, the assets of the Trust shall be
invested and reinvested by Trustee, without distinction between principal and
income, at such time or times in such investments and pursuant to such
investment strategies or courses of action and in such shares and proportions,
as Trustee, in its sole discretion, shall deem advisable. Except as otherwise
provided herein, Trustee may invest in securities (including stock or rights to
acquire stock) or obligations issued by Company. All rights associated with
assets of the Trust shall be exercised by Trustee or the person designated by
Trustee, and shall in no event be exercisable by, or rest with Plan
participants, except that (i) the Trustee shall vote Company Stock in the same
proportion that all other Company shareholders vote their shares of Company
Stock and voting rights with respect to all other Trust assets will be exercised
by Company and; (ii) Trustee shall waive dividend rights with respect to Company
Stock and all other dividend rights with respect to Trust assets will rest with
Company. Notwithstanding anything to the contrary contained herein, in the case
of a tender offer for Company Stock, the Trustee shall have no right to tender
shares of Company Stock held by the Trust.
(b) Company shall have the right at any time, and from time to time
in its sole discretion, to substitute assets of equal fair market value for any
asset held by the Trust. This right is exercisable by Company in a nonfiduciary
capacity without the approval or consent of any person in a fiduciary capacity.
In connection with any substitution of assets described in this Section 5(b),
Company Stock may not revert to Company in kind at any time following a voting
record date for any meeting of Company stockholders and before such meeting,
unless Trustee shall have voted such shares by proxy. Such reversion may occur
immediately following the stockholders meeting to which such record date
relates. Further, any such substitution may be made only out of property
available to the Company for the purchase of shares of stock under applicable
state law, as determined by Company.
(c) Subject to the provisions of Section 5A, investment authority
over the Trust's assets, or any portion thereof may be reserved by Company to
itself from time to time in its absolute discretion, prior to a Change in
Control. Any such reservation of discretionary authority by Company shall be
communicated to Trustee in writing. In this regard, unless Company notifies
Trustee to the contrary, Company shall act through its Management Development
and Compensation Committee of Company's Board of Directors or any other person
who is authorized to act on Company's behalf by a resolution of Company's Board
of Directors. Company shall furnish Trustee from time to time with a list of the
names and signatures of all persons authorized to so act. Notwithstanding
anything to the contrary
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<PAGE>
contained herein, following a Change in Control, Company may not reserve
discretionary authority for the management and control of any assets of the
Trust and any prior reservation then in effect shall immediately be nullified.
(d) Trustee shall be under no duty or obligation to review or to
question any direction of Company pursuant to authority reserved under
subsection (c) of this Section 5, or to review securities or any other property
so held with respect to prudence or proper diversification, or to make any
suggestions or recommendation to Company with respect to the retention or
investment of any such assets and shall have no authority to take any action or
to refrain from taking any action with respect to any such assets unless and
until it is directed to do so by Company. Notwithstanding anything to the
contrary in this Trust Agreement, Company does hereby discharge, indemnify and
hold harmless Trustee, its directors, officers, employees, and agents, from and
against any and all losses, costs, damages, claims, penalties, expenses
(including reasonable attorneys, fees and expenses) or liabilities arising in
connection with Trustee's administration of the Trust consistent with Section
5(c).
(e) Trustee shall be responsible for assuring the daily investment of
cash balances, if any, unless directed otherwise by the Company pursuant to
authority reserved in subsection (c) of this Section 5, so as to maintain
uninvested cash balances at a minimum.
(f) Without in any way limiting the powers and discretions conferred
upon Trustee by the other provisions of this Trust Agreement, Trustee (and
Company acting pursuant to authority reserved under subsection (c) of this
Section 5) shall be vested with the following powers and discretions (to be
exercised in light of the nature and purpose of this Trust) with respect to the
assets of the Trust subject to its management and control:
(1) To invest and reinvest in any property, real, personal or
mixed, wherever situated and whether or not productive of income or
consisting of wasting assets, including without limitation, common and
preferred stocks, bonds, notes, debentures (including convertible stocks
and securities), leaseholds, mortgages, certificates of deposit or
demand or time deposits (including any such deposits with Trustee),
shares of investment companies and mutual funds, interests in
partnerships and trusts, insurance policies and annuity contracts, and
oil, mineral or gas properties, royalties, interests or rights, without
being limited to the classes of property in which trustees are
authorized to invest by any law or any rule of court of any state and
without regard to the proportion any such property may bear to the
entire amount of the Trust;
(2) To invest and reinvest all or any portion of the Trust
collectively through the medium of any common, collective or commingled
trust fund that may be established and maintained by Trustee, to be held
and invested subject to all of the terms and conditions thereof, and
such trust shall be deemed adopted as a part of the Trust to the extent
that assets of the Trust are invested therein;
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(3) To retain any property at any time received by the Trustee;
(4) To sell or exchange any property held by it at public or
private. sale, for cash or on credit, to grant and exercise options for
the purchase or exchange thereof, to exercise all conversion or
subscription rights pertaining to any such property and to enter into
any covenant or agreement to purchase any property in the future;
(5) To participate in any plan of reorganization, consolidation,
merger, combination, liquidation or other similar plan relating to
property held by it and to consent to or oppose any such plan or any
action thereunder or any contract, lease, mortgage, purchase, sale or
other action by any person;
(6) To deposit any property held by it with any protective,
reorganization or similar committee, to delegate discretionary power,
thereto, and to pay part of the expenses and compensation thereof and
any assessments levied with respect to any such property so deposited;
(7) To extend the time of payment of any obligation held by it;
(8) To hold uninvested any monies received by it, without
liability for interest thereon until such monies shall be invested,
reinvested or disbursed;
(9) To exercise all voting or other rights with respect to any
property held by it and to grant proxies, discretionary or otherwise;
(10) For the purposes of the Trust, to borrow money from others,
to issue its promissory note or notes therefor, and to secure the
repayment thereof by pledging any property held by it;
(11) To manage, administer, operate, insure, repair, improve,
develop, preserve, mortgage, lease or otherwise deal with, for any
period, any real property or any oil, mineral or gas properties,
royalties, interests, or rights held by joining with others, using other
Trust assets for any such purposes, to modify, extend, renew, waive or
otherwise adjust any provision for amortization of the investment in or
depreciation of the value of such property;
(12) To employ suitable agents (including but not limited to
actuarial and employee benefit consulting firms) and counsel, who may be
counsel to Company or Trustee, and to pay their reasonable expenses and
compensation from the Trust to the extent not paid by Company;
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(13) To register any securities held in the Trust in the name of
a nominee and to hold any investment in bearer form, and to combine
certificates representing such investments with certificates of the same
issue held by the Trustee in other fiduciary capacities or to deposit or
arrange for the deposit of such securities in a qualified central
depository even though, when so deposited, such securities may be merged
and held in bulk in the name of the nominee of such depository with
other securities deposited therein by any other person, or to deposit or
arrange for the deposit of any securities issued by the United States
Government, or an agency or instrumentality thereof, with a federal
reserve bank, but the books and records of Trustee shall at all times
show that all such investments are part of the Trust;
(14) To settle, compromise, or submit to arbitration any claims,
debts, or damages due or owing to or from the Trust, respectively, to
commence or defend suits or legal proceedings to protect any interest of
the Trust, and to represent the Trust in all suits or legal proceedings
in any court or before any other body or tribunal; provided, however,
Trustee shall not be required to take any such action unless it shall
have been indemnified by Company or the Trust to its reasonable
satisfaction against liability and expense it might incur therefrom;
(15) To organize under laws of any state a corporation or. trust
for the purpose of acquiring and holding title to any property which it
is authorized to acquire hereunder and to exercise with respect thereto
any or all of the powers set forth herein; and
(16) Generally, to do all acts consistent with its duties
hereunder, whether or not expressly authorized, that Trustee may deem
necessary or desirable for the protection of the Trust.
(g) Notwithstanding anything to the contrary contained herein (other
than the provisions of Section 5A hereof), unless and until directed otherwise
by Company, or the occurrence of a Change in Control, the assets of the Trust
shall be invested exclusively in the Company Stock except to the extent that
Company directs otherwise with respect to a portion of the assets in
anticipation of reasonable liquidity needs of the Trust. With respect to assets
of the Trust invested in Company Stock, Trustee shall have no obligation to
diversify investments in the Trust, and shall not be subject to any rule of
applicable law which might otherwise make necessary, require, or in any way deem
appropriate diversification of investments in the Trust, all such rules being
hereby expressly waived. Notwithstanding anything to the contrary in this Trust
Agreement, Company does hereby discharge, indemnify and hold harmless Trustee,
its directors, officers, employees and agents, from and against any and all
losses, costs, damages, claims, penalties, expenses (including reasonable
attorneys' fees and expenses) or liabilities arising in connection with such
Trustee's administration of the Trust consistent with this Section 5(g).
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(h) Following a Change in Control, Trustee may no longer invest in
Company Stock or any other securities or obligations issued by Company, and
Section 5(g) shall no longer apply. After a Change in Control, Trustee shall
have and exercise all discretionary authority for the management and control of
Trust assets and shall commence the orderly disposition of Company Stock,
subject to the provisions of Section 5A hereof to the extent applicable. Trustee
may, in its sole discretion, retain Company Stock acquired prior to a Change in
Control for such period of time as Trustee deems appropriate and in the best
interest of participants and beneficiaries in the Plans. In no event may Trustee
make additional investments in Company Stock on behalf of the Trust after a
Change in Control, other than (i) amounts held in diversified common investment
vehicles in which Trustee invests, and (ii) through the exercise of rights to
acquire Company Stock attributable to shares held at the time of the Change in
Control, in the Trustee's sole discretion, if the Trustee deems such exercise
appropriate and in best interest of the participants and beneficiaries in the
Plans.
SECTION 5A. SALE OF COMPANY STOCK BY TRUSTEE.
(a) Except as otherwise specifically permitted herein, Trustee may
not sell Company Stock except: (1) as necessary from time to time to satisfy
benefit obligations under the Plans which are required to be paid by Trustee
under this Trust; or (2) following a Change in Control; and then only as
specifically permitted herein.
(b) Trustee shall provide Company with not less than thirty (30) days
prior notice that it proposes to sell any Company Stock, unless Trustee
determines in good faith that such delay would cause irreparable harm to Trustee
or to the Trust, in which event Trustee shall provide reasonable notice of such
proposed sale. Notice shall be given by telephone, confirmed promptly by
facsimile or first class mail, postage prepaid. Trustee shall specify in any
event the number of shares proposed to be sold.
(c) Trustee shall make sales of Company Stock pursuant to an
effective registration statement under, or an exemption (including but not
limited to Rule 144) from, the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and in compliance with applicable
state securities laws.
(d) In the event the Company Stock has been registered pursuant to the
Securities Act, Company shall:
(1) from time to time within the period of effectiveness of the
registration statement (i) immediately advise Trustee of any event or
development, including a material adverse change in the financial
condition, business or affairs of Company, known to Company (other than
events or developments affecting market or economic conditions
generally), which may have a material adverse impact on the proposed
offering; and (y) within the period of effectiveness of such
registration statement, advise
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Trustee of any event or development requiring amendment or supplement
(which amendment or supplement shall be prepared with reasonable
promptness by Company) of the registration statement or prospectus used
in connection therewith or rendering it inadvisable to use the
prospectus until it is supplemented or amended; and
(2) furnish to Trustee such number of copies of any preliminary
and final prospectuses and any amendments and supplements thereto as
Trustee may reasonably request.
(e) With respect to such registration, Trustee and Company may
negotiate with an underwriter selected or approved by Company with regard to the
underwriting of such requested registration. Company shall enter into an
underwriting agreement in customary form with the underwriter(s) and Trustee in
which Company and Trustee (to the extent applicable based only on such
information as is provided in writing by Trustee) shall provide customary
indemnification to such underwriter(s) and each other.
(f) Trustee shall provide all such information and materials and take
all such actions, furnish all such information, execute all such documents and
cooperate with Company in good faith, all as may be reasonably required in order
to permit Company to comply with all applicable requirements of the Commission
and all other applicable laws or regulations and to obtain acceleration of the
effective date of any registration statement.
(g) All expenses incurred in connection with any registration,
qualification or compliance pursuant to this Trust Agreement, including without
limitation, all registration, filing and qualification fees, printing and
engraving expenses, fees and disbursements of counsel for Company, and expenses
of any special audits or comfort letters incidental to or required by such
registration, shall be borne by Company.
(h) Notwithstanding any contrary provision of this Agreement, if a
delay in filing or effectiveness of a registration statement under the
Securities Act would prevent the Trustee from selling Company Stock
expeditiously enough to meet the Trustee's good faith needs, or if a registered
sale would not permit Trustee to sell Company Stock expeditiously enough to meet
Trustee's good faith needs, and Company determines, upon written advice of
counsel, that a proposed sale of Company Stock could not reasonably be made
pursuant to an exemption from the Securities Act, then Trustee may demand that
Company purchase the Company Stock desired to be sold at fair market value,
which shall be the volume weighted average trading price (including only trades
which would meet the time of purchases conditions under Rule 10b-18 ("Rule
10b-18") under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), of a share of such security on the New York Stock Exchange on the day
that Company receives such demand. Company and Trustee shall use their
reasonable best efforts to agree as to the prompt execution, closing and
delivery of shares and proceeds therefor.
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(i) Until a Change in Control, Company may, on notice of a proposed
sale by Trustee, whether or not exempt, elect to purchase such Company Stock
from Trustee at fair market value, as defined in Section 5A(h), and with the
manner, conditions. and closing of such sale to be agreed upon by Company and
Trustee.
(j) Company shall be entitled to postpone the filing of any
registration statement and any amendment or supplement thereto, or to direct
that Trustee postpone any sale or put if (i) company determines, in its
reasonable business judgment, that such filing, registration and offering, or
sale or put, would materially interfere with the likely success of a proposed
purchase or sale of securities by Company; or (ii) counsel for Company opines in
writing that the filing of such registration statement, amendment or supplement,
or sale or put would have a material adverse impact on any material ongoing or
pending transaction or program of Company or any of its subsidiaries or any
other circumstances; provided, that should such delays adversely affect the
Trustee's ability to pay benefits as contemplated by this Trust Agreement, then
Company shall advance such funds as may be reasonably needed by Trustee for such
proposed pending sale.
(k) Company and Trustee shall each cooperate in good faith and employ
their reasonable best efforts in permitting and effecting any purchase or sale
of Company Stock as contemplated in this Section 5A and each shall comply with
all applicable laws and regulations relating to the foregoing including, without
limitation, federal and state securities laws, rules and regulations issued
thereunder, and any other governmental or stock exchange requirements or
regulations relating thereto.
SECTION 6. DISPOSITION OF INCOME. During the term of this Trust, all income
received by the Trust, net of expenses and taxes, shall be accumulated and
reinvested.
SECTION 7. ACCOUNTING BY TRUSTEE. Trustee shall keep accurate and
detailed records of all investments, receipts, disbursements, and all other
transactions required to be made, including such specific records as shall be
agreed upon in writing between Company and Trustee. Within forty-five (45) days
following the close of each calendar year and within forty-five (45) days after
the removal or resignation of Trustee, Trustee shall deliver to Company a
written account of its administration of the Trust during such year or during
the period from the close of the last preceding year to the date of such removal
or resignation, setting forth all investments, receipts, disbursements and other
transactions effected by it, including a description of all securities and
investments purchased and sold with the cost or net proceeds of such purchases
or sales (accrued interest paid or receivable being shown separately), and
showing all cash, securities and other property held in the Trust at the end of
such year or as of the date of such removal or resignation, as the case may be.
In addition, as of the end of each calendar month (referred to in this Trust as
a valuation date, within ten (10) days after each such month-end, Trustee shall
deliver to Company a written account
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setting forth the value of the Trust's assets, together with such other
information as shall be agreed upon between Company and Trustee.
SECTION 8. RESPONSIBILITY OF TRUSTEE.
(a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for (i) any action taken pursuant
to a direction, request or approval given by Company or a Trustee's Contractor
which is contemplated by, and in conformity with, the terms of the Plans or this
Trust and is given in writing by Company or a Trustee's Contractor (other than
Trustee when it acts as Trustee's Contractor), or (ii) the investment in, or
retention of, Company Stock pursuant to the terms of this Agreement, and no such
action shall be considered a breach of the fiduciary standard herein set forth.
In the event of a dispute between Company or a Trustee's Contractor and a party,
Trustee may apply to a court of competent jurisdiction to resolve the dispute.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust or the Plans (including without limitation any action
to compel Company to take any action under the Trust or the Plans, or to
determine Trustee's obligations hereunder), Trustee shall be indemnified by
Company against Trustee's costs, expenses and liabilities (including, without
limitation, reasonable attorneys, fees and expenses) relating thereto and
Company shall be primarily liable for such payments, other than those arising
from Trustee's negligence or willful misconduct. The Company will, upon notice,
pay monthly in arrears to or on behalf of the Trustee, all reasonable attorneys'
fees and expenses incurred by the Trustee. In the event that the Trustee is
determined to have incurred any liability as a result of the Trustee's
negligence or willful misconduct, the Trustee will promptly reimburse the
Company for all legal fees and expenses paid by the Company to or on behalf of
the Trustee.
(c) Trustee may consult with legal counsel (who may also be counsel
for Company generally) with respect to any of its duties or obligations
hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals (who may also serve the
same roles for the Company generally) to assist it in performing any of its
duties or obligations hereunder.
(e) Trustee shall have, without exclusion, all powers consistent with
the terms hereof conferred on trustees by applicable law, unless expressly
provided otherwise herein, provided, however, that if an insurance policy is
held as an asset of the Trust, Trustee shall have no power to name a beneficiary
of the policy other than the Trust, to assign the policy (as distinct from
conversion of the policy to a different form) other than to a successor Trustee,
or to loan to any person the proceeds of any borrowing against such policy.
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(f) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
(g) The Company has represented to the Trustee that each Plan
qualifies as either (i) an excess benefit plan within the meaning of Section
4(b) of ERISA or (ii) a "top-hat" plan maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees, which is exempt from the provisions of Part 4 of Title I
of ERISA. The Trustee is entering into this Agreement in reliance upon the
Company's representation. Accordingly, in the event that any Plan fails to
qualify as an excess benefit plan or a top-hat plan exempt from ERISA, then
notwithstanding any other provision of this Agreement to the contrary, the
Company will indemnify and hold the Trustee harmless from all liabilities,
damages, costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) that the Trustee incurs as a result of a breach of
fiduciary duty under ERISA arising from any action taken, or omitted to be
taken, by the Trustee in good faith in accordance with this Agreement. The
Company will, upon notice, pay monthly in arrears to or on behalf of the
Trustee, all reasonable attorneys' fees and expenses incurred by the Trustee. In
the event that the Trustee is determined to have incurred any liability as a
result of the Trustee's negligence or willful misconduct, the Trustee will
promptly reimburse the Company for all legal fees and expenses paid by the
Company to or on behalf of the Trustee.
SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE. All administrative and
Trustee's fees as agreed upon between Trustee and Company and reasonable
expenses actually incurred by the Trustee in performing its duties hereunder
shall be paid by Company. If not so paid, the fees and expenses shall be paid by
Trustee from the assets of the Trust and, until so paid, shall constitute a lien
on the assets of the Trust.
SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) Trustee may resign at any time by written notice to Company,
which shall be effective sixty (60) days after receipt of such notice unless
Company and Trustee agree otherwise; provided that in no event shall any such
resignation take effect prior to the appointment of a successor Trustee.
(b) Trustee may be removed by Company on sixty (60) days notice or upon
shorter notice accepted by Trustee.
(c) Upon a Change in Control, as defined herein, Trustee may not be removed
by Company for two (2) years.
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(d) If Trustee resigns or is removed within two (2) years of a Change
in Control, as defined herein, Trustee shall select a successor Trustee in
accordance with the provisions of Section 11(b) hereof prior to the effective
date of Trustee's resignation or removal. Upon the appointment and acceptance
by, and transfer of assets to, a successor Trustee, Trustee shall have no
further responsibilities under this Trust Agreement.
(e) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within sixty (60) days after receipt of
notice of resignation, removal or transfer, unless Company extends the time
limit.
(f) If Trustee resigns or is removed, a successor shall be appointed,
in accordance with Section 11 hereof, by the effective date of resignation or
removal under paragraphs (a) or (b) of this section. If no such appointment has
been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
SECTION 11. APPOINTMENT OF SUCCESSOR.
(a) If Trustee resigns or is removed in accordance with Section 10(a)
or (b) or (c) hereof, Company may, subject to Section 10(d), appoint any third
party, such as a bank trust department or other party that may be granted
corporate trustee powers under state or federal law, as a successor to replace
Trustee upon resignation or removal. The appointment shall be effective when
accepted in writing by the new Trustee, who shall have all the rights and powers
of the former Trustee, including ownership rights in the Trust assets. The
former Trustee shall execute any instrument necessary or reasonably requested by
Company or the successor Trustee to evidence the transfer.
(b) If Trustee resigns or is removed pursuant to the provisions of
Section 10(a), (b), (c) or (d) hereof and selects a successor Trustee pursuant
to Section 10(d) hereof, Trustee may appoint any third party such as a bank
trust department or other party that may be granted corporate trustee powers
under state or federal law. The appointment of a successor Trustee shall be
effective when accepted in writing by the new Trustee. The new Trustee shall
have all the rights and powers of the former Trustee, including ownership rights
in Trust assets. The former Trustee shall execute any instrument necessary or
reasonably requested by the successor Trustee to evidence the transfer.
(c) A former Trustee shall prepare and deliver to Company and to the
successor Trustee a final accounting unless Company waives Company's right to
such accounting, and such accounting shall be effective through the date of the
former Trustee's transfer of all assets to its successor. The successor Trustee
need not examine the records and acts of any prior
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Trustee unless requested to do so by Company (and, after a Change in Control,
unless the successor Trustee in addition concludes that there is a reasonable
basis for such request by Company) and may retain or dispose of existing Trust
assets, subject to Sections 5A, 7 and 8 hereof. Subject to the foregoing, the
successor Trustee shall not be responsible for and Company shall indemnify and
defend the successor Trustee from any claim or liability resulting from any
action or inaction of any prior Trustee or from any other past event, or any
condition existing at the time it becomes successor Trustee. The compensation
arrangement for the successor Trustee shall be reasonable in relation to the
services to be performed by the successor Trustee.
SECTION 12. AMENDMENT OR TERMINATION.
(a) This Trust Agreement (including Appendix A hereto) may be amended
by a written instrument executed by Trustee and Company. Notwithstanding the
foregoing, no such amendment shall conflict with the terms of the Plans as then
in effect or shall make the Trust revocable after it has become irrevocable in
accordance with Section 1(b) hereof.
(1) Furthermore, notwithstanding anything to the contrary in this
Trust Agreement (except as otherwise provided in this Section 12), (i)
prior to a Change in Control, no amendment shall be made to Section
1(d) and Section 1(e), Section 2, Section 4, Section 5(h), Section
10(c), Section 10(d), this Section 12(a), Section 13(d), Section 13(g),
Section 13(j), and Section 13(k), and no deletion shall be made in
Appendix A, unless such amendment would not, in the opinion of counsel,
have a material and adverse effect on the rights or interests of
adversely affected participants; and (ii) following a Change in Control,
no amendment shall be made to any provision of this Trust Agreement
(including Appendix A hereto) unless such amendment would not, in the
opinion of counsel, have a material and adverse effect on the rights or
interests of adversely affected participants.
(2) The limitations contained in Section 12 (a) (1) shall not
apply with respect to any amendment which is reasonably necessary, in
the opinion of counsel, to preserve the status of the Trust as a grantor
trust and the status of the Plans as unfunded for federal income tax
purposes and for purposes of the Employee Retirement Income Security Act
of 1974, as amended, or to guard against an adverse impact on Plan
participants or beneficiaries and which, in the opinion of counsel, is
drafted primarily to preserve such status or to reduce or eliminate such
adverse impact on such person or persons.
(3) In each instance in which an opinion of counsel is
contemplated in this Section 12(a) prior to a Change in Control, such
opinion shall be in writing and delivered to Trustee, rendered by a
nationally recognized law firm selected by Company, and in each instance
in which an opinion of counsel is contemplated in this
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Section 12(a) after a Change in Control, such opinion shall be in
writing and delivered to Trustee, rendered by a nationally recognized
law firm selected by the Trustee's Contractor. Trustee may rely on all
such opinions and determinations.
(b) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits from
Company pursuant to the terms of the Plans. Upon termination of the Trust any as
assets remaining in the Trust shall be returned to Company.
(c) Upon written approval of participants or beneficiaries entitled,
to payment of benefits pursuant to the terms of the Plans, Company may terminate
this Trust prior to the time all benefit payments under the Plans have been
made. All assets in the Trust at termination shall be returned to Company.
(d) Trustee may rely for purposes of this Section 12 on a certificate
furnished by Company prior to a Change in Control, and by the Trustee's
Contractor after a Change in Control, (i) with respect to subsection (b) of this
Section 12, that Plan participants and their beneficiaries are no longer
entitled to benefits pursuant to the terms of the Plans, and (ii) with respect
to subsection (c) of this Section 12, that the written approval of participants
or beneficiaries entitled to payment of benefits pursuant to the terms of the
Plans has been obtained.
SECTION 13. MISCELLANEOUS.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan participants and their beneficiaries
under this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subject to attachment, garnishment,
levy, execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in accordance
with the laws of California.
(d) For purposes of this Trust, a "Change in Control" shall be deemed
to have occurred if any one of the following conditions shall have been
satisfied:
(i) any person, as defined in Section 3(a)(9) of the Exchange
Act, as such term is modified in Sections 13(d) and 14(d) of the
Exchange Act (other than (A) Company or any of its affiliates (as
defined in Rule l2b-2 promulgated under the Exchange Act), or any
employee benefit plan established by any of the
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foregoing (collectively, an "Employee Benefit Plan"), (B) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (C) a corporation owned, directly or indirectly, by
stockholders of Company in substantially the same proportions as their
ownership of Company) (a "Person"), is or becomes the beneficial owner
(as defined in Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities of Company (not including in the securities
beneficially owned by such Person any securities acquired directly from
Company) representing twenty-five percent (25%) or more of the combined
voting power of Company's then outstanding voting securities;
(ii) during any period of up to two consecutive years (not
including any period prior to the Effective Date) individuals who, at
the beginning of such period, constitute the Board of Directors of
Company cease for any reason to constitute at least a majority thereof,
provided that any person who becomes a director subsequent to the
beginning of such period and whose nomination for election is approved
by at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination for election was previously so approved (other than a
director (A) whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the
directors of Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the Exchange Act, or (B) who was designated by a
Person who has entered into an agreement with Company to effect a
transaction described in paragraphs (i), (iii) or (iv) of this
Subsection (d)), will be deemed a director as of the beginning of such
period;
(iii) the stockholders of Company approve a merger or
consolidation of Company with any other corporation (other than (A) a
merger or consolidation that would result in the voting securities of
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary holding
securities under an Employee Benefit Plan, at least fifty-one percent
(51%) of the combined voting power of the voting securities of Company
or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of Company (or similar
transaction) in which no Person is or becomes the beneficial owner (as
defined in paragraph (i) of this Subsection (d)), directly or
indirectly, of securities of Company (not including in the securities
beneficially owned by such Person any securities acquired directly from
Company) representing twenty-five percent (25%) or more of the combined
voting power of Company's then outstanding voting securities); or
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(iv) the stockholders of Company approve a plan of complete
liquidation of Company or any agreement for the sale or disposition by
Company of all or substantially all of Company's assets, other than a
sale or disposition by Company of all or substantially all of Company's
assets to an entity, at least seventy-five percent (75%) of the combined
voting power of the voting securities of which are owned by persons in
substantially the same proportions as their ownership of Company
immediately prior to such sale.
All references to provisions of the federal securities laws are to such
provisions as in effect on the Effective Date without regard to any subsequent
amendments of, changes to or revocation of such provisions.
(e) For purposes of this Trust Agreement, a "Potential Change in
Control" shall be deemed to have occurred if any one of the following conditions
shall have been satisfied:
(i) the Company enters into a definitive written agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(ii) the Company or any Person publicly announces an intention to
take or to consider taking actions which, if consummated, would
constitute a Change in Control; or
(iii) any Person becomes the beneficial owner (as defined in Rule
13d-3 promulgated under the Exchange Act), directly or indirectly, of
securities of the Company representing 15% or more of the combined
voting power of the Company's then outstanding securities.
(f) Upon the occurrence of a Change in Control or a Potential Change
in Control, the Company shall promptly give notice thereof to the Trustee.
(g) (1) After the execution of this Trust Agreement, Company shall
promptly file with Trustee, and following the appointment of a Trustee's
Contractor, Company shall promptly file with the Trustee's Contractor, a
certified list of the names and specimen signatures of the officers of Company
and any delegate authorized to act for it. Unless Company notifies Trustee to
the contrary, Company shall act through its Treasurer or any person who such
Treasurer authorizes in writing to act on his behalf or any other person who is
authorized to act on Company's behalf by a resolution of Company's Board of
Directors. Company shall promptly notify Trustee and the Trustee's Contractor,
if applicable, of the addition or deletion of any person's name to or from such
list, respectively. Until receipt by Trustee and/or the Trustee's Contractor of
notice that any person is no longer authorized so to act, Trustee or the
Trustee's Contractor may continue to rely on the authority of the person. All
certifications, notices and directions by any such person or persons to Trustee
or the
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<PAGE>
Trustee's Contractor shall be in writing signed by such person or persons.
Trustee and the Trustee's Contractor may rely on any certification. notice or
direction of Company that the Trustee or the Trustee's Contractor reasonably
believes to have been signed by a duly authorized officer or agent of Company.
Trustee and the Trustee's Contractor shall have no responsibility for acting or
not acting in reliance upon any notification reasonably believed by Trustee or
the Trustee's Contractor to have been signed by a duly authorized officer or
agent of Company.
(g) (2) After the engagement of a Trustee's Contractor (other than
Trustee), the Trustee's Contractor shall promptly file with Trustee a certified
list of the names and specimen signatures of the officers of the Trustee's
Contractor and any delegate authorized to act for it. Trustee's Contractor shall
promptly notify Trustee of the addition or deletion of any person's name to or
from such list. Until receipt by Trustee of notice that any person is no longer
authorized so to act, Trustee may continue to rely on the authority of the
person. All certifications, notices and directions by any such person or persons
to Trustee shall be in writing signed by such person or persons. Trustee may
rely on any such certification, notice or direction of the Trustee's Contractor
that Trustee reasonably believes to have been signed by or on behalf of a duly
authorized officer or agent of the Trustee's Contractor. Trustee shall have no
responsibility for acting or not acting in reliance upon any notification
reasonably believed by the Trustee to have been signed by a duly authorized
officer or agent of the Trustee's Contractor.
(h) Neither the gender nor the number (singular or plural) of any
word shall be construed to exclude another gender or number when a different
gender or number would be appropriate.
(i) This Trust Agreement shall be binding upon and inure to the benefit of
any
successor(s) to Company and Trustee.
(j) This Trust Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
shall together constitute only one Agreement.
(k) Communications to Trustee shall be sent to Dennis Kunisaki, or
to such other address as Trustee may specify in writing. No communication shall
be binding upon Trustee until it is received by Trustee. Communications to
Company and the Trustee's Contractor shall be sent to the principal offices of
Company or the Trustee's Contractor, as the case may be, or to such other
address as Company or the Trustee's Contractor, as applicable, may specify in
writing.
(l) In the event the participants and beneficiaries in the Plans are
determined generally to be subject to federal income tax on any amount in the
Trust prior to the time of payment
-21-
<PAGE>
hereunder, the entire amount determined to be so taxable shall be distributed by
Trustee to each affected participant or beneficiary. Company may, at its option,
make such payments directly to affected participants and beneficiaries. An
amount shall be determined to be subject to federal income tax upon the earliest
of: (a) a final determination by the United States Internal Revenue Service
addressed to a participant or beneficiary which is not appealed to the courts;
(b) a final determination by the United States Tax Court or any other federal
court affirming any such determination by the Internal Revenue Service; or (c)
an opinion by counsel for Company reasonably acceptable to Trustee addressed to
Company and Trustee, that, by reason of the Treasury Regulations, amendments to
the Internal Revenue Code, published Internal Revenue Service rulings, court
decision or other substantial precedent, amounts hereunder are generally subject
to federal income tax prior to payment; provided, that following a Change in
Control, only an opinion by counsel selected by the Trustee's Contractor may be
accepted by Trustee for purposes of (c). Company shall undertake at its sole
expense to defend any tax claims described herein which are asserted by the
Internal Revenue Service against any participant or beneficiary and which it
determines would affect participants or beneficiaries generally, including
attorneys' fees and costs of appeal, and shall have the sole authority to
determine whether or not to appeal any determination made by the Internal
Revenue Service or by a lower court. Company also agrees to reimburse any
participant or beneficiary, for any interest or penalties in respect of tax
claims hereunder which it determines would affect participants or beneficiaries
generally, upon receipt of documentation of same. Any distributions from the
Trust to a participant or beneficiary under this Section 13(j) (other than
reimbursements of interest or penalties referred to in the preceding sentence)
shall reduce the benefits payable to such participant and/or beneficiary under
the Plans.
(m) In the event that Company shall fail to satisfy any obligation of
Company to a Plan participant or beneficiary under this Trust Agreement, after
reasonable notice and demand with respect thereto, and one or more participants
or beneficiaries obtains a final determination by a court of competent
jurisdiction that Company has so failed, such participant(s) or beneficiary(ies)
shall be indemnified by the Company against reasonable and appropriate costs and
expenses (including without limitation reasonable attorneys' fees and expenses)
relating thereto and the Company shall be primarily liable for such payments.
Interest on any Plan benefit payments which such court determines have been
delayed to the extent interest or similar payments in an equal or greater amount
are not provided in the Plans or by the court or otherwise shall also be paid by
the Company. Such interest shall be calculated using a rate of interest equal to
the rate of interest on ten (10) year United States Treasury obligations, as
determined on the first day of each calendar quarter, compounded quarterly. If
such costs, expenses and interest are not paid by the Company in a reasonably
timely manner, such participant(s) or beneficiaries may obtain payment from the
Trust.
(n) In the event that Trustee or Company make payments of benefits to
Plan participants as described herein, the respective payor shall make provision
for the reporting and withholding of any federal, state or local taxes that may
be required to be withheld with respect to the
-22-
<PAGE>
payment of benefits pursuant to the terms of the Plans and shall pay amounts
withheld to the appropriate taxing authorities.
(o) Nothing herein shall be construed as restricting or limiting in
any way amendment of the Plans in accordance with the terms of the Plans.
SECTION 14. EFFECTIVE DATE. The effective date of this Trust Agreement
shall be the date of its execution set forth on page 1 of the Trust Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed and their respective corporate seals to be hereto affixed on
the date set forth on page 1 of this Trust Agreement.
BARNETT BANKS, INC.
By: /s/ Donna D. Lange
-------------------------------
(CORPORATE SEAL) Title: Secretary, Employee Benefits
Committee
ATTEST: /s/ Elizabeth Nana
-----------------------------
Title: Manager, Corporate Benefits
------------------------------
U.S. TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By: /s/ Robert S. Cummings
--------------------------------
(CORPORATE SEAL) Title: Senior Vice President
---------------------------
ATTEST: /s/ Terry J. Colberg
------------------------
Title: Vice President
-------------------------
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<PAGE>
APPENDIX A
Supplemental Executive Retirement Plan
Severance and Supplemental Tax Payments under the Company's Employment
Agreements
Supplemental Tax Payments Provided by Executive Option Agreements under
the Company's Long Term Incentive Plan
Management Security Plan
-24-
TRUST AGREEMENT
(as amended and restated effective December 31, 1998)
THIS TRUST AGREEMENT is made and entered into this 31st day of December,
1998, by and between BANKAMERICA CORPORATION ("Company"), and NationsBank, N.A.
("Trustee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, NB Holdings Corporation, as successor to Barnett Banks, Inc.
sponsors the Management Excess Savings Plan of Barnett Banks, Inc. and Its
Affiliates (a nonqualified deferred compensation plan) (the "MESP Plan"); and
WHEREAS, Trustee currently serves as Trustee of the grantor trust (the
"Trust") established and maintained for the MESP Plan pursuant to the Management
Excess Savings Plan of Barnett Banks, Inc. and Its Affiliates Trust Agreement
dated November 10, 1993 (the "Trust Agreement"); and
WHEREAS, the MESP Plan is being merged with and into the NationsBank
401(k) Restoration Plan (the "NationsBank Plan") effective as of December 31,
1998, and as a result thereof Company is succeeding to NB Holdings Corporation
as the obligor to the liabilities of the MESP Plan; and
WHEREAS, in the opinion of Company, the Trust Agreement should be
amended and restated in its entirety to provide for the administration of the
Trust following the merger of the MESP Plan with and into the NationsBank Plan;
and
WHEREAS, in Section 11.1 of the Trust Agreement, Company (as successor
to NB Holdings Corporation as to the liabilities of the MESP Plan) has reserved
the right to amend the Trust Agreement at any time for any reason, so long as
such amendment does not make the Trust revocable;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, Company and Trustee do mutually covenant and agree
that the Trust Agreement is hereby amended and restated in its entirety
effective as of December 31, 1998 as follows:
SECTION 1
Establishment of Trust
----------------------
(a) All of the assets held in the Trust immediately prior to this
amendment and restatement shall be held, invested and disposed of pursuant to
the terms and provisions of this amendment and restatement, as the same may be
amended from time to time. Company and Trustee acknowledge that at the effective
time of this amendment and restatement, the total
<PAGE>
assets of the Trust equal the total deferred compensation liabilities under the
MESP Plan immediately prior to its merger into the NationsBank Plan.
(b) The Trust shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which Company is the
grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended (the "Code"), and
this Trust Agreement shall be construed accordingly.
(d) The principal of the Trust and any earnings thereon shall be held
separate and apart from other funds of Company and shall be used exclusively for
the uses and purposes of (i) NationsBank Plan participants who had MESP Plan
account balances transferred to the NationsBank Plan on December 31, 1998 ("MESP
Participants") and (ii) general creditors, all as herein set forth. MESP
Participants and their beneficiaries shall have no preferred claim on, or any
beneficial ownership interest in, any assets of the Trust. Any rights created
under the NationsBank Plan and this Trust Agreement shall be mere unsecured
contractual rights of the MESP Participants and their beneficiaries against
Company. Any assets held in the Trust shall be subject to the claims of
Company's general creditors under federal and state law in the event Company
becomes Insolvent, as defined in Section 3(a) herein.
(e) Company, in its sole discretion, may at any time, or from time to
time, make additional deposits of cash or other property in trust with Trustee
to augment the principal to be held, administered and disposed of by Trustee as
provided in this Trust Agreement. Neither Trustee nor any MESP Participant or
their beneficiary shall have any right to compel such additional deposits.
SECTION 2
Payments to MESP Participants and Their Beneficiaries
-----------------------------------------------------
(a) Company shall deliver to Trustee a schedule (the "Payment Schedule")
that indicates known, as well as reasonably estimated, amounts payable in
respect of each MESP Participant, that provides a formula or other instructions
acceptable to Trustee for determining the amounts so payable, the form in which
such amount is to be paid (as provided by or available under the NationsBank
Plan), and the time of commencement for payment of such amounts, and Company
shall update and amend the Payment Schedule promptly after any change in the
information set forth therein. Except as otherwise provided herein, Trustee
shall make payments to MESP Participants and their beneficiaries in accordance
with such Payment Schedule. Trustee shall make provision for the reporting and
withholding of any federal, state or local taxes that may be required to be
withheld with respect to the payment of benefits pursuant to the terms of the
NationsBank Plan and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported, withheld and paid
by Company.
(b) The entitlement of a MESP Participant or their beneficiary to
benefits under the NationsBank Plan shall be determined by Company or such party
as it shall designate under the
2
<PAGE>
NationsBank Plan, and any claim for such benefits shall be considered and
reviewed under the procedures set forth in the NationsBank Plan.
(c) Company may make payment of benefits directly to MESP Participants
or their beneficiaries as they become due under the terms of the NationsBank
Plan. Company shall be entitled to be reimbursed from the Trust for any such
payment by providing Trustee with reasonable evidence of such payment having
been made. In addition, if the principal of the Trust, and any earnings thereon,
are not sufficient to make payments of benefits in accordance with the terms of
the NationsBank Plan, Company shall make the balance of each such payment as it
falls due. Trustee shall notify Company when principal and earnings are not
sufficient.
SECTION 3
Trustee Responsibility Regarding Payments to Trust
--------------------------------------------------
Beneficiary When Company is Insolvent
-------------------------------------
(a) Trustee shall cease payment of benefits to MESP Participants and
their beneficiaries if Company is Insolvent. Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) Company is unable to pay
its debts as they become due or (ii) Company is subject to a pending proceeding
as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, the principal and
income of the Trust shall be subject to claims of general creditors of Company
under federal and state law as set forth below.
(1) The Principal Corporate Personnel Officer of Company shall
have the duty to inform Trustee in writing if Company becomes Insolvent.
If a person claiming to be a creditor of Company alleges in writing to
Trustee that Company has become Insolvent, Trustee shall determine
whether Company is Insolvent and, pending such determination, Trustee
shall discontinue payment of benefits to MESP Participants and their
beneficiaries.
(2) Unless Trustee has actual knowledge of Company becoming
Insolvent, or has received notice from Company or a person claiming to
be a creditor alleging that Company is Insolvent, Trustee shall have no
duty to inquire whether Company is Insolvent. Trustee may in all events
rely on such evidence concerning Company's solvency as may be furnished
to Trustee and that provides Trustee with a reasonable basis for making
a determination concerning Company's solvency.
(3) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to MESP Participants and
their beneficiaries and shall hold the assets of the Trust for the
benefit of Company's general creditors. Nothing in this Trust Agreement
shall in any way diminish any rights of MESP Participants or their
beneficiaries to pursue their rights as general creditors of Company
with respect to benefits due under the NationsBank Plan or otherwise.
3
<PAGE>
(4) Trustee shall resume the payment of benefits to MESP
Participants and their beneficiaries in accordance with Section 2 of
this Trust Agreement only after Trustee has determined that Company is
not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to MESP
Participants or their beneficiaries under the terms of the NationsBank Plan for
the period of such discontinuance, less the aggregate amount of any payments
made to MESP Participants or their beneficiaries by Company in lieu of the
payments provided for hereunder during any such period of discontinuance.
SECTION 4
Payments to Company
-------------------
Except as provided in Section 3 hereof, Company shall have no right or
power to direct Trustee to return to Company or to divert to others any of the
Trust assets before all payment of benefits have been made to MESP Participants
and their beneficiaries pursuant to the terms of the NationsBank Plan.
SECTION 5
Investment Authority and Voting Rights
--------------------------------------
(a) Trustee shall have the discretion to invest the assets of the Trust
in such manner and in such investments as the Trustee shall determine, from time
to time, to be appropriate and consistent with the purposes of the Trust,
including without limitation shares of Company common stock ("Shares") or rights
to acquire Shares or other equity or debt obligations issued by Company.
(b) All rights associated with assets of the Trust shall be exercised by
Trustee or the person designated by Trustee, and shall in no event be
exercisable by or rest with the any MESP Participant; provided, however, that
voting rights with respect to all Shares held as Trust assets, and any decision
to accept or reject a tender offer made for such Shares, will be exercised by
Trustee in accordance with instructions received from the NationsBank Plan
administrator.
SECTION 6
Disposition of Income
---------------------
During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested and used for the
purposes set forth herein.
4
<PAGE>
SECTION 7
Accounting by Trustee
----------------------
Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
Company and Trustee. Within thirty (30) days following the close of each
calendar year and within thirty (30) days after the removal or resignation of
Trustee, Trustee shall deliver to Company a written account of its
administration of the Trust during such year or during the period from the close
of the last preceding year to the date of such removal or resignation, setting
forth all investments, receipts, disbursements and other transactions effected
by it, including a description of all securities and investments purchased and
sold with the cost or net proceeds of such purchases or sales (accrued interest
paid or receivable being shown separately), and showing all cash, securities and
other property held in the Trust at the end of such year or as of the date of
such removal or resignation, as the case may be.
SECTION 8
Responsibility of Trustee
-------------------------
(a) Trustee shall act with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent person acting in like capacity
and familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims, provided, however, that Trustee shall incur
no liability to any person for any action taken pursuant to a direction, request
or approval given by Company which is contemplated by, and in conformity with,
the terms of the NationsBank Plan or this Trust and is given in writing by
Company. In the event of a dispute between Company and a party, Trustee may
apply to a court of competent jurisdiction to resolve the dispute.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Company agrees to indemnify Trustee against
Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If Company does not pay such costs, expenses and liabilities in a
reasonably timely manner, Trustee may obtain payment from the Trust.
(c) Trustee may consult with legal counsel (who may also be counsel for
Company generally) with respect to any of its duties or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
(e) Trustee shall have, without exclusion, all powers conferred on
trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
Trustee shall have no power to name a
5
<PAGE>
beneficiary of the policy other than the Trust, to assign the policy (as
distinct from conversion of the policy to a different form) other than to a
successor Trustee, or to loan to any person the proceeds of any borrowing
against such policy.
(f) Notwithstanding any powers granted to Trustee pursuant to this Trust
Agreement or to applicable law, Trustee shall not have any power that could give
this Trust the objective of carrying on a business and dividing the gains
therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Code.
SECTION 9
Compensation and Expenses of Trustee
-------------------------------------
Company shall pay all reasonable administrative and Trustee's fees and
expenses. If not so paid, the fees and expenses shall be paid from the Trust.
SECTION 10
Resignation and Removal of Trustee
----------------------------------
(a) Trustee may resign at any time by written notice to Company, which
shall be effective sixty (60) days after receipt of such notice unless Company
and Trustee agree otherwise.
(b) Trustee may be removed by Company on sixty (60) days notice or upon
shorter notice accepted by Trustee.
(c) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within ninety (90) days after receipt
of notice of resignation, removal or transfer, unless Company extends the time
limit.
(d) If Trustee resigns or is removed, a successor shall be appointed, in
accordance with Section 11 hereof, by the effective date of the resignation or
removal under Section 10(a) or (b) hereof. If no such appointment has been made,
Trustee may apply to a court of competent jurisdiction for appointment of a
successor or for instructions. All expenses of Trustee in connection with the
proceeding shall be allowed as administrative expenses of the Trust.
6
<PAGE>
SECTION 11
Appointment of Successor
------------------------
(a) If Trustee resigns or is removed in accordance with Section 10(a) or
(b) hereof, Company may appoint any third party, such as a bank trust
department, that may be granted corporate trustee powers under state law, as a
successor to replace Trustee upon resignation or removal. The appointment shall
be effective when accepted in writing by the new Trustee, who shall have all of
the rights and powers of the former Trustee, including ownership rights in the
Trust assets. The former Trustee shall execute any instrument necessary or
reasonably requested by Company or the successor Trustee to evidence the
transfer.
(b) The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 7 and 8 hereof. The successor Trustee shall not be responsible for, and
Company shall indemnify and defend the successor Trustee from, any claim or
liability resulting from any action or inaction of any prior Trustee or from any
other past event, or any condition existing at the time it becomes successor
Trustee.
(c) Any successor Trustee hereunder shall succeed to all of the rights,
powers, authority, duties and responsibilities of the original Trustee.
Following the appointment and acceptance of a successor Trustee hereunder, the
former Trustee shall not be liable for any acts or omissions of such successor.
SECTION 12
Amendment or Termination
------------------------
(a) This Trust Agreement may be amended by a written instrument executed
by Trustee and Company. Notwithstanding the foregoing, no such amendment shall
conflict with the terms of the NationsBank Plan or shall make the Trust
revocable.
(b) The Trust shall not terminate until the date on which the MESP
Participants and their beneficiaries who may receive payments from the Trust are
no longer entitled to benefits pursuant to the terms of the NationsBank Plan.
Upon termination of the Trust any assets remaining in the Trust at such time
shall be returned to Company.
SECTION 13
Miscellaneous
--------------
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to MESP Participants and their beneficiaries under
this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged,
7
<PAGE>
encumbered or subjected to attachment, garnishment, levy, execution or other
legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.
SECTION 14
Effective Date
---------------
The effective date of this Trust Agreement shall be the date of the
execution hereof as set forth on page 1 of this Trust Agreement.
IN WITNESS WHEREOF, Company and Trustee have caused this instrument to
be executed all as of the day and year first above written.
BANKAMERICA CORPORATION
By: /s/ Ann P. West
--------------------------------
Name: Ann P. West
Title: Senior Vice President
"Company"
NationsBank, N.A.
By: /s/ Tom Hortenstine
--------------------------------
Name: Tom Hortenstine
Title: Senior Vice President
"Trustee"
8
SPLIT DOLLAR
LIFE INSURANCE AGREEMENT
THIS SPLIT DOLLAR LIFE INSURANCE AGREEMENT (the "Agreement") is made and
entered into as of the 15th day of October, 1998, by and between BANKAMERICA
CORPORATION, a Delaware corporation (the "Corporation"), and NATIONSBANK, N.A.
of Charlotte, North Carolina, as Trustee under that certain Irrevocable Trust
Agreement dated October 2, 1998, by and between Hugh L. McColl, Jr., as Grantor,
and NationsBank, N.A., as Trustee (the "Owner").
Statement of Purpose
Hugh L. McColl, Jr. (the "Executive") is employed by the Corporation as
its Chief Executive Officer. The Corporation, the Owner and Executive desire to
insure the lives of Executive and Executive's spouse, Jane S. McColl (the
"Executive's Spouse"), for the benefit and protection of both the Corporation
and the Executive's family under a Variable Survivorship Life Insurance Policy
(the "Policy") to be issued by John Hancock Variable Life Insurance Company (the
"Insurer"). The Corporation, as the employer of Executive, is willing to pay a
portion of the premiums due on the Policy as an additional employment benefit
for Executive on the terms and conditions hereinafter set forth. The Corporation
desires to have the Policy collaterally assigned to it by the Owner in order to
secure repayment of the portion of the premiums paid by the Corporation on the
Policy.
NOW, THEREFORE, in consideration of the Statement of Purpose aforesaid
and of the mutual promises contained herein, the parties hereto agree as
follows:
1. Definitions. Whenever used in this Agreement, the following terms shall
have the meanings set forth below:
(a) "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
ascribed to such term in Rule 13d-3 of the general rules and regulations under
the Exchange Act.
(b) "Board of Directors" means the Board of Directors of the
Corporation.
(c) "Change in Control" of the Corporation means, and shall be deemed to
have occurred upon, any of the following events:
(i) The acquisition by any Person of Beneficial Ownership of
twenty-five percent (25%) or more of either:
(A) The then-outstanding shares of common stock of the
Corporation (the "Outstanding Shares"); or
(B) The combined voting power of the then-outstanding
voting securities of the Corporation entitled to vote generally
in the election of Directors (the "Outstanding Voting
Securities");
<PAGE>
provided, however, that the following acquisitions shall not constitute
a Change in Control for purposes of this subparagraph (i): (1) any
acquisition directly from the Corporation, (2) any acquisition by the
Corporation or any of its Subsidiaries, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any of its Subsidiaries, or (4) any acquisition by any
corporation pursuant to a transaction which complies with clauses (A),
(B) and (C) of subparagraph (iii) below; or
(ii) Individuals who, as of the date of this Agreement,
constitute the Board of Directors (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board of Directors;
provided, however, that any individual who becomes a Director subsequent
to the date of this Agreement and whose election, or whose nomination
for election by the Corporation's shareholders, to the Board of
Directors was either (A) approved by a vote of at least a majority of
the Directors then comprising the Incumbent Board or (B) recommended by
a Nominating Committee comprised entirely of Directors who are then
Incumbent Board members shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act), other actual or threatened solicitation of proxies or consents or
an actual or threatened tender offer; or
(iii) Approval by the Corporation's shareholders of a
reorganization, merger, or consolidation or sale or other disposition of
all or substantially all of the assets of the Corporation (a "Business
Combination"), in each case, unless following such Business Combination,
(A) all or substantially all of the Persons who were the Beneficial
Owners, respectively, of the Outstanding Shares and Outstanding Voting
Securities immediately prior to such Business Combination own, directly
or indirectly, more than fifty percent (50%) of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from the Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Corporation
or all or substantially all of the Corporation's assets either directly
or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination, of the Outstanding Shares and Outstanding Voting
Securities, as the case may be (provided, however, that for purposes of
this clause (A), any shares of common stock or voting securities of such
resulting corporation received by such Beneficial Owners in such
Business Combination other than as the result of such Beneficial Owners'
ownership of Outstanding Shares or Outstanding Voting Securities
immediately prior to such Business Combination shall not be considered
to be owned by such Beneficial Owners for the purposes of calculating
their percentage of ownership of the outstanding common stock and voting
power
2
<PAGE>
of the resulting corporation), (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan
(or related trust) of the Corporation or such corporation resulting from
the Business Combination) beneficially owns, directly or indirectly,
twenty-five percent (25%) or more of, respectively, the then-outstanding
shares of common stock of the corporation resulting from the Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation unless such Person owned twenty-five
percent (25%) or more of the Outstanding Shares or Outstanding Voting
Securities immediately prior to the Business Combination and (C) at
least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement,
or the action of the Board, providing for such Business Combination; or
(iv) Approval by the Corporation's shareholders of a complete
liquidation or dissolution of the Corporation.
(d) "Director" means any individual who is a member of the Board of
Directors of the Corporation.
(e) "Disability" means "disability" as such term is defined from time to
time under any long-term disability plan of the Corporation covering the
Executive.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time or any successor act thereto.
(g) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including "group" as defined in Section 13(d) thereof.
(h) "Subsidiary" means any corporation, partnership, joint venture,
affiliate or other entity in which the Corporation owns more than fifty percent
(50%) of the voting stock or voting ownership interest, as applicable, or any
other business entity designated by the Corporation as a Subsidiary for purposes
of this Agreement.
2. Purchase of the Policy. The Owner has made application for and has
purchased a Variable Survivorship Life Insurance Policy issued by John Hancock
Variable Life Insurance Company in the initial face amount of Twenty-Six Million
Five Hundred Fifty Thousand Twenty-Eight Dollars ($26,550,028) insuring the
lives of Executive and Executive's Spouse, a copy of which shall be attached
hereto as Exhibit 1 as soon as practicable after issuance by the Insurer. A
complete hypothetical illustration of the Policy assuming a eight percent (8%)
gross rate of return on the premiums over the life of the contract based on a
level death benefit of Twenty-Five Million Dollars ($25,000,000) for the Owner
is attached hereto as Exhibit 2.
The parties hereto have taken all necessary action to cause Insurer to
issue the Policy and shall take any further action which may be necessary to
cause the Policy to conform to the
3
<PAGE>
provisions of this Agreement. The parties hereto further agree that the Policy
shall be subject to the terms and conditions of this Agreement and the
Collateral Assignment referred to in Paragraph 5 below.
3. Ownership of the Policy. Subject to the provisions of this Agreement
and the Collateral Assignment, the Owner shall be the sole and absolute owner of
the Policy and may and shall exercise all ownership rights granted to the owner
thereof by the terms of the Policy. It is the intention of the parties that the
Owner shall retain all rights which the Policy grants to the owner of the
Policy, except the right of the Corporation to recover the amount due to the
Corporation under this Agreement. Specifically, without limitation, the
Corporation shall neither have nor exercise any right as the collateral assignee
of the Policy which could in any way defeat or impair the Owner's right to
receive the cash surrender value or the death proceeds of the Policy in excess
of the Corporation's Interest (as hereinafter defined). All provisions of this
Agreement and the Collateral Assignment shall be construed so as to carry out
such intention.
4. Payment of Premiums. As a convenience to the parties, the Corporation
shall pay all premiums under the Policy to the Insurer as and when such premiums
become due. During the six (6) year period following the effective date of the
Policy, the Corporation shall pay the full amount of the premiums to the Insurer
as set forth on Exhibit 2 attached hereto. Within thirty (30) days of each such
premium payment by the Corporation during the six (6) year period following the
effective date of the Policy and within thirty (30) days of each anniversary of
the effective date of the Policy thereafter, the Owner shall pay to the
Corporation the economic value of the death benefit under the Policy as
determined by the Insurer from time to time while the Policy remains in effect.
A schedule of the premiums to be paid by the Owner based on the Insurer's
current rates is set forth on Exhibit 2.
Should actual investment returns vary from those assumed in Exhibit 2,
the Corporation's share of the premiums shall continue to be equal to the
amounts set forth on Exhibit 2 as if no such variation occurred. Any increase or
decrease in the premiums required to provide the total death benefits described
on Exhibit 2 resulting from a variation in investment returns shall affect only
the Owner's share of the premiums.
Upon request by the Owner, the Corporation shall promptly furnish
evidence of timely payment to the Owner. The Corporation shall annually furnish
to the Owner a statement of the amount of income reportable by the Executive for
federal and state income tax purposes, if any, as determined in accordance with
applicable Internal Revenue Service rules and regulations, as a result of the
Corporation's payment of a portion of the premiums hereunder.
5. Collateral Assignment. The total amount of the Corporation's share of
the Policy premium payments paid by the Corporation pursuant to this Agreement,
less any amounts previously paid to the Corporation by the Owner pursuant to
this Agreement, shall constitute the total indebtedness of the Owner to the
Corporation, which amount shall accrue no interest (the "Corporation's
Interest"). As security for and to secure the repayment of the Corporation's
Interest, as it may exist from time to time pursuant to the terms of this
Agreement, the Owner has, contemporaneously herewith, executed and delivered to
the Corporation a collateral assignment of the Policy substantially in the form
as set forth in Exhibit 3 attached hereto (the
4
<PAGE>
"Collateral Assignment"). Repayment of the Corporation's Interest shall be made
(i) from the cash surrender value of the Policy if this Agreement is terminated
or the Owner surrenders or cancels the Policy prior to the death of the survivor
of Executive or Executive's Spouse, or (ii) from the death proceeds of the
Policy if Executive and Executive's Spouse should die while the Policy and this
Agreement remain in effect. The Collateral Assignment shall not be terminated,
altered or amended by the Owner without the express written consent of the
Corporation. The parties hereto agree to take all action necessary to cause the
Collateral Assignment to conform to the provisions of this Agreement.
6. Exercise of Owner's Rights While Collateral Assignment is in Effect.
Under the terms of the Policy, the Owner has the right to make certain asset
allocation decisions among various investment funds. While the Collateral
Assignment is in effect, any such asset allocation decisions by the Owner shall
be subject to the approval of the Corporation. Notwithstanding the foregoing,
the Owner shall have the sole right to surrender or cancel the Policy for its
cash surrender value; provided, however, upon such surrender or cancellation of
the Policy the Corporation shall have the unqualified right to receive a portion
of the cash surrender value from the Insurer equal to the Corporation's
Interest.
7. Compliance with Internal Revenue Code. Notwithstanding anything in
this Agreement to the contrary, the parties intend for the Policy to be
classified as a "life insurance contract" as defined in Section 7702(a) of the
Internal Revenue Code (the "Code") and not as a "modified endowment contract" as
defined in Section 7702A(a) of the Code. If at any time during the term of this
Agreement either the Corporation or the Owner determines that, based on the
schedule of anticipated premium payments and withdrawals set forth in Exhibit 2,
the Policy would not constitute a "life insurance contract" under Section
7702(a) of the Code or would constitute a "modified endowment contract" under
Section 7702A(a) of the Code, the parties agree to restructure the premium
payments and withdrawals to cause the Policy at all times to constitute a "life
insurance contract" under Section 7702(a) of the Code and not a "modified
endowment contract" under Section 7702A(a) of the Code.
8. Death of Executive and Executive's Spouse. If this Agreement is still
in effect upon the death of the survivor of Executive and Executive's Spouse,
the Corporation and the Owner shall promptly take all action necessary to obtain
the death benefits provided under the Policy. The Owner agrees that the
Corporation shall have the unqualified right to receive a portion of such death
benefits from the Insurer equal to the Corporation's Interest and that no
beneficiary under the Policy shall have the right to receive any portion of the
Policy proceeds prior to the repayment of the full amount of the Corporation's
Interest. The balance of the death benefits provided under the Policy, if any,
shall be paid directly to the beneficiary or beneficiaries designated by the
Owner in the manner and in the amount or amounts provided in the beneficiary
designation provision of the Policy. In no event shall the amount payable to the
Corporation hereunder exceed the Policy death benefits. The parties hereto agree
that the beneficiary designation provision of the Policy shall conform to the
provisions hereof.
9. Termination of the Agreement. This Agreement shall terminate prior to
the death of the survivor of Executive and Executive's Spouse upon the
occurrence of any of the following:
5
<PAGE>
(a) either party may terminate this Agreement effective as of a Policy
anniversary date by providing thirty (30) days' advance written notice of such
election to terminate to the other party;
(b) the total cessation of the business of the Corporation;
(c) the bankruptcy, receivership or dissolution of the Corporation;
(d) the termination of Executive's employment with the Corporation other
than (i) by reason of Executive's death or "Disability," (ii) by reason of
Executive's retirement from employment with the Corporation with the consent of
the Corporation, or (iii) following a "Change in Control;"
(e) if either the Corporation or the Owner fails to comply with any of
the terms and conditions of this Agreement, the other party may elect to
terminate this Agreement by providing written notice of such election to the
other party; provided, however, that any such election must be made within sixty
(60) days after such failure to comply;
(f) payment in full by the Owner to the Corporation of the Corporation's
Interest in the Policy; or
(g) the mutual written agreement of the Owner and the Corporation.
10. Disposition of the Policy Upon Termination of the Agreement. If this
Agreement is terminated pursuant to the provisions of Paragraph 9, the Owner
shall be required, within sixty (60) days after such termination, to repay the
Corporation the entire amount of the Corporation's Interest in the Policy. Upon
receipt by the Corporation of the entire amount of the Corporation's Interest in
the Policy, the Corporation shall release the Collateral Assignment. If the
Owner does not repay the entire amount of the Corporation's Interest in the
Policy within such sixty (60) day time period, the Corporation may enforce its
rights under the Collateral Assignment; provided, however, the Owner shall not
be liable for any deficiency realized by the Corporation upon the exercise of
the Corporation's rights under the Collateral Assignment.
11. Discharge of the Insurer. The Insurer shall be fully discharged from
its obligations under the Policy by payment of the Policy death benefits to the
beneficiary or beneficiaries named in the Policy subject to the terms and
conditions of the Policy and the Collateral Assignment. In no event shall the
Insurer be considered a party to this Agreement or to any modification or
amendment hereof. No provision of this Agreement, nor any modification or
amendment hereof, shall in any way be construed as enlarging, changing, varying
or in any other way affecting the obligations of the Insurer as expressly
provided in the Policy except insofar as the provisions hereof are made a part
of the Policy by the Collateral Assignment.
12. ERISA Information. The following provisions are part of this
Agreement and are intended to meet the requirements of the Employee Retirement
Income Security Act of 1974:
6
<PAGE>
(a) The named fiduciary under this Agreement is the Corporation.
(b) The funding policy under this Agreement is that all premiums on the
Policy be remitted to the Insurer when due.
(c) Direct payment by the Insurer is the basis of payment of benefits
under this Agreement, with those benefits in turn being based on the payment of
premiums as provided in this Agreement.
(d) For claims procedure purposes, the "Claims Manager" shall be the
Corporate Personnel Group of the Corporation or its delegee.
(i) If for any reason a claim for benefits under this Agreement
is denied by the Corporation, the Claims Manager shall deliver to the
claimant a written explanation setting forth the specific reasons for
the denial, specific references to the pertinent Agreement provisions on
which the denial is based, such other data as may be pertinent and
information on the procedures to be followed by the claimant in
obtaining a review of his claim, all written in a manner calculated to
be understood by the claimant. For this purpose:
(A) The claimant's claim shall be deemed filed when
presented orally or in writing to the Claims Manager.
(B) The Claims Manager's explanation shall be in writing
delivered to the claimant within ninety (90) days of the date the
claim is filed.
(ii) The claimant shall have sixty (60) days following his
receipt of the denial of the claim to file with the Claims Manager a
written request for review of the denial. For such review, the claimant
or his representative may submit pertinent documents and written issues
and comments.
(iii) The Claims Manager shall decide the issue on review and
furnish the claimant with a copy within sixty (60) days of receipt of
the claimant's request for review of his claim. The decision on review
shall be in writing and shall include specific reasons for the decision,
written in a manner calculated to be understood by the claimant, as well
as specific references to the pertinent Agreement provisions on which
the decision is based. If a copy of the decision is not so furnished to
the claimant within such sixty (60) days, the claim shall be deemed
denied on review.
7
<PAGE>
13. Miscellaneous.
(a) This Agreement may not be amended, altered or modified except by a
written instrument signed by the parties hereto or their respective successors
or assigns and may not be otherwise terminated except as provided herein.
(b) This Agreement shall be binding upon the parties hereto, their
heirs, legal representatives, successors and assigns.
(c) This Agreement and the rights of the parties hereunder shall be
governed by and construed in accordance with the laws of the State of North
Carolina except to the extent (if any) superceded by the laws of the United
States.
(d) Headings in this Agreement are provided for purposes of convenience
only and shall not affect the interpretation of the terms hereof.
(e) All notices and other communications hereunder must be in writing
and shall be deemed to have been duly given when either personally delivered or
placed in the United States mails by Certified Mail, return receipt requested,
postage prepaid, addressed to the party to whom such notice is being given as
follows:
As to the Corporation: BankAmerica Corporation
NationsBank Corporate Center
100 N. Tryon Street
Charlotte, North Carolina 28255
Attention:Corporate Personnel
Group Executive
As to the Owner: Hugh L. McColl, Jr. Irrevocable Trust
dated October 2, 1998
c/o NationsBank, N.A.
NationsBank Plaza, NC1-002-07-13
101 South Tryon Street
Charlotte, North Carolina 28255
Attention:Karen M. Morris
Either party may change its address (or the name of the person to whose
attention communications hereunder shall be directed) from time to time by
serving notice thereof upon the other party as provided herein.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
NATIONSBANK, N.A., Trustee under the
Irrevocable Trust Agreement dated
October 2, 1998, by and between Hugh
L. McColl, Jr., as Grantor, and
NationsBank, N.A., as Trustee
By: /s/ Karen M. Morris
----------------------------
Name: Karen M. Morris
-----------------------
Title: Vice President
----------------------
"Owner"
BANKAMERICA CORPORATION
By: /s/ Ann P. West
------------------------------
Name: Ann P. West
-------------------------
Title: Senior Vice President
-------------------------
"Corporation"
9
SPLIT DOLLAR
LIFE INSURANCE AGREEMENT
THIS SPLIT DOLLAR LIFE INSURANCE AGREEMENT (the "Agreement") is made and
entered into as of the 16th day of October, 1998, by and between BANKAMERICA
CORPORATION, a Delaware corporation (the "Corporation"), and NATIONSBANK, N.A.,
as Trustee under that certain Irrevocable Trust Agreement No. 2 dated October 1,
1998, by and between James H. Hance, Jr., as Grantor, and NationsBank, N.A., as
Trustee (the "Owner").
Statement of Purpose
James H. Hance, Jr. (the "Executive") is employed by the Corporation as
its Chief Financial Officer. The Corporation, the Owner and Executive desire to
insure the lives of Executive and Executive's spouse, Beverly S. Hance (the
"Executive's Spouse"), for the benefit and protection of both the Corporation
and the Executive's family under a Last Survivor Flexible Premium Variable Life
Insurance Policy (the "Policy") to be issued by Pacific Life Insurance Co. (the
"Insurer"). The Corporation, as the employer of Executive, is willing to pay a
portion of the premiums due on the Policy as an additional employment benefit
for Executive on the terms and conditions hereinafter set forth. The Corporation
desires to have the Policy collaterally assigned to it by the Owner in order to
secure repayment of the portion of the premiums paid by the Corporation on the
Policy.
NOW, THEREFORE, in consideration of the Statement of Purpose aforesaid
and of the mutual promises contained herein, the parties hereto agree as
follows:
1. Definitions. Whenever used in this Agreement, the following terms shall
have the meanings set forth below:
(a) "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
ascribed to such term in Rule 13d-3 of the general rules and regulations under
the Exchange Act.
(b) "Board of Directors" means the Board of Directors of the
Corporation.
(c) "Change in Control" of the Corporation means, and shall be deemed to
have occurred upon, any of the following events:
(i) The acquisition by any Person of Beneficial Ownership of
twenty-five percent (25%) or more of either:
(A) The then-outstanding shares of common stock of the
Corporation (the "Outstanding Shares"); or
(B) The combined voting power of the then-outstanding
voting securities of the Corporation entitled to vote generally
in the election of Directors (the "Outstanding Voting
Securities");
<PAGE>
provided, however, that the following acquisitions shall not constitute
a Change in Control for purposes of this subparagraph (i): (1) any
acquisition directly from the Corporation, (2) any acquisition by the
Corporation or any of its Subsidiaries, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any of its Subsidiaries, or (4) any acquisition by any
corporation pursuant to a transaction which complies with clauses (A),
(B) and (C) of subparagraph (iii) below; or
(ii) Individuals who, as of the date of this Agreement,
constitute the Board of Directors (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board of Directors;
provided, however, that any individual who becomes a Director subsequent
to the date of this Agreement and whose election, or whose nomination
for election by the Corporation's shareholders, to the Board of
Directors was either (A) approved by a vote of at least a majority of
the Directors then comprising the Incumbent Board or (B) recommended by
a Nominating Committee comprised entirely of Directors who are then
Incumbent Board members shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act), other actual or threatened solicitation of proxies or consents or
an actual or threatened tender offer; or
(iii) Approval by the Corporation's shareholders of a
reorganization, merger, or consolidation or sale or other disposition of
all or substantially all of the assets of the Corporation (a "Business
Combination"), in each case, unless following such Business Combination,
(A) all or substantially all of the Persons who were the Beneficial
Owners, respectively, of the Outstanding Shares and Outstanding Voting
Securities immediately prior to such Business Combination own, directly
or indirectly, more than fifty percent (50%) of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from the Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Corporation
or all or substantially all of the Corporation's assets either directly
or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination, of the Outstanding Shares and Outstanding Voting
Securities, as the case may be (provided, however, that for purposes of
this clause (A), any shares of common stock or voting securities of such
resulting corporation received by such Beneficial Owners in such
Business Combination other than as the result of such Beneficial Owners'
ownership of Outstanding Shares or Outstanding Voting Securities
immediately prior to such Business Combination shall not be considered
to be owned by such Beneficial Owners for the purposes of calculating
their percentage of ownership of the outstanding common stock and voting
power of the resulting corporation), (B) no Person (excluding any
corporation resulting
2
<PAGE>
from such Business Combination or any employee benefit plan (or related
trust) of the Corporation or such corporation resulting from the
Business Combination) beneficially owns, directly or indirectly,
twenty-five percent (25%) or more of, respectively, the then-outstanding
shares of common stock of the corporation resulting from the Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation unless such Person owned twenty-five
percent (25%) or more of the Outstanding Shares or Outstanding Voting
Securities immediately prior to the Business Combination and (C) at
least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement,
or the action of the Board, providing for such Business Combination; or
(iv) Approval by the Corporation's shareholders of a complete
liquidation or dissolution of the Corporation.
(d) "Director" means any individual who is a member of the Board of
Directors of the Corporation.
(e) "Disability" means "disability" as such term is defined from time to
time under any long-term disability plan of the Corporation covering the
Executive.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time or any successor act thereto.
(g) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including "group" as defined in Section 13(d) thereof.
(h) "Subsidiary" means any corporation, partnership, joint venture,
affiliate or other entity in which the Corporation owns more than fifty percent
(50%) of the voting stock or voting ownership interest, as applicable, or any
other business entity designated by the Corporation as a Subsidiary for purposes
of this Agreement.
2. Purchase of the Policy. The Owner has made application for and has
purchased a Last Survivor Flexible Premium Variable Life Insurance Policy issued
by Pacific Life Insurance Co. in the initial face amount of Ten Million Four
Hundred Thirty-One Thousand Five Hundred Dollars ($10,431,500) insuring the
lives of Executive and Executive's Spouse, a copy of which shall be attached
hereto as Exhibit 1 as soon as practicable after issuance by the Insurer. A
complete hypothetical illustration of the Policy assuming a eight percent (8%)
gross rate of return on the premiums over the life of the contract based on a
level death benefit of Ten Million Dollars ($10,000,000) for the Owner is
attached hereto as Exhibit 2.
The parties hereto have taken all necessary action to cause Insurer to
issue the Policy and shall take any further action which may be necessary to
cause the Policy to conform to the provisions of this Agreement. The parties
hereto further agree that the Policy shall be subject to
3
<PAGE>
the terms and conditions of this Agreement and the Collateral Assignment
referred to in Paragraph 5 below.
3. Ownership of the Policy. Subject to the provisions of this Agreement
and the Collateral Assignment, the Owner shall be the sole and absolute owner of
the Policy and may and shall exercise all ownership rights granted to the owner
thereof by the terms of the Policy. It is the intention of the parties that the
Owner shall retain all rights which the Policy grants to the owner of the
Policy, except the right of the Corporation to recover the amount due to the
Corporation under this Agreement. Specifically, without limitation, the
Corporation shall neither have nor exercise any right as the collateral assignee
of the Policy which could in any way defeat or impair the Owner's right to
receive the cash surrender value or the death proceeds of the Policy in excess
of the Corporation's Interest (as hereinafter defined). All provisions of this
Agreement and the Collateral Assignment shall be construed so as to carry out
such intention.
4. Payment of Premiums. As a convenience to the parties, the Corporation
shall pay all premiums under the Policy to the Insurer as and when such premiums
become due. During the five (5) year period following the effective date of the
Policy, the Corporation shall pay the full amount of the premiums to the Insurer
as set forth on Exhibit 2 attached hereto. Within thirty (30) days of each such
premium payment by the Corporation during the five (5) year period following the
effective date of the Policy and within thirty (30) days of each anniversary of
the effective date of the Policy thereafter, the Owner shall pay to the
Corporation the economic value of the death benefit under the Policy as
determined by the Insurer from time to time while the Policy remains in effect.
A schedule of the premiums to be paid by the Owner based on the Insurer's
current rates is set forth on Exhibit 2.
Should actual investment returns vary from those assumed in Exhibit 2,
the Corporation's share of the premiums shall continue to be equal to the
amounts set forth on Exhibit 2 as if no such variation occurred. Any increase or
decrease in the premiums required to provide the total death benefits described
on Exhibit 2 resulting from a variation in investment returns shall affect only
the Owner's share of the premiums.
Upon request by the Owner, the Corporation shall promptly furnish
evidence of timely payment to the Owner. The Corporation shall annually furnish
to the Owner a statement of the amount of income reportable by the Executive for
federal and state income tax purposes, if any, as determined in accordance with
applicable Internal Revenue Service rules and regulations, as a result of the
Corporation's payment of a portion of the premiums hereunder.
5. Collateral Assignment. The total amount of the Corporation's share of
the Policy premium payments paid by the Corporation pursuant to this Agreement,
less any amounts previously paid to the Corporation by the Owner pursuant to
this Agreement, shall constitute the total indebtedness of the Owner to the
Corporation, which amount shall accrue no interest (the "Corporation's
Interest"). As security for and to secure the repayment of the Corporation's
Interest, as it may exist from time to time pursuant to the terms of this
Agreement, the Owner has, contemporaneously herewith, executed and delivered to
the Corporation a collateral assignment of the Policy substantially in the form
as set forth in Exhibit 3 attached hereto (the "Collateral Assignment").
Repayment of the Corporation's Interest shall be made (i) from the
4
<PAGE>
cash surrender value of the Policy if this Agreement is terminated or the Owner
surrenders or cancels the Policy prior to the death of the survivor of Executive
or Executive's Spouse, or (ii) from the death proceeds of the Policy if
Executive and Executive's Spouse should die while the Policy and this Agreement
remain in effect. The Collateral Assignment shall not be terminated, altered or
amended by the Owner without the express written consent of the Corporation. The
parties hereto agree to take all action necessary to cause the Collateral
Assignment to conform to the provisions of this Agreement.
6. Exercise of Owner's Rights While Collateral Assignment is in Effect.
Under the terms of the Policy, the Owner has the right to make certain asset
allocation decisions among various investment funds. While the Collateral
Assignment is in effect, any such asset allocation decisions by the Owner shall
be subject to the approval of the Corporation. Notwithstanding the foregoing,
the Owner shall have the sole right to surrender or cancel the Policy for its
cash surrender value; provided, however, upon such surrender or cancellation of
the Policy the Corporation shall have the unqualified right to receive a portion
of the cash surrender value from the Insurer equal to the Corporation's
Interest.
7. Compliance with Internal Revenue Code. Notwithstanding anything in
this Agreement to the contrary, the parties intend for the Policy to be
classified as a "life insurance contract" as defined in Section 7702(a) of the
Internal Revenue Code (the "Code") and not as a "modified endowment contract" as
defined in Section 7702A(a) of the Code. If at any time during the term of this
Agreement either the Corporation or the Owner determines that, based on the
schedule of anticipated premium payments and withdrawals set forth in Exhibit 2,
the Policy would not constitute a "life insurance contract" under Section
7702(a) of the Code or would constitute a "modified endowment contract" under
Section 7702A(a) of the Code, the parties agree to restructure the premium
payments and withdrawals to cause the Policy at all times to constitute a "life
insurance contract" under Section 7702(a) of the Code and not a "modified
endowment contract" under Section 7702A(a) of the Code.
8. Death of Executive and Executive's Spouse. If this Agreement is still
in effect upon the death of the survivor of Executive and Executive's Spouse,
the Corporation and the Owner shall promptly take all action necessary to obtain
the death benefits provided under the Policy. The Owner agrees that the
Corporation shall have the unqualified right to receive a portion of such death
benefits from the Insurer equal to the Corporation's Interest and that no
beneficiary under the Policy shall have the right to receive any portion of the
Policy proceeds prior to the repayment of the full amount of the Corporation's
Interest. The balance of the death benefits provided under the Policy, if any,
shall be paid directly to the beneficiary or beneficiaries designated by the
Owner in the manner and in the amount or amounts provided in the beneficiary
designation provision of the Policy. In no event shall the amount payable to the
Corporation hereunder exceed the Policy death benefits. The parties hereto agree
that the beneficiary designation provision of the Policy shall conform to the
provisions hereof.
9. Termination of the Agreement. This Agreement shall terminate prior to
the death of the survivor of Executive and Executive's Spouse upon the
occurrence of any of the following:
5
<PAGE>
(a) either party may terminate this Agreement effective as of a Policy
anniversary date by providing thirty (30) days' advance written notice of such
election to terminate to the other party;
(b) the total cessation of the business of the Corporation;
(c) the bankruptcy, receivership or dissolution of the Corporation;
(d) the termination of Executive's employment with the Corporation other
than (i) by reason of Executive's death or "Disability," (ii) by reason of
Executive's retirement from employment with the Corporation with the consent of
the Corporation, or (iii) following a "Change in Control;"
(e) if either the Corporation or the Owner fails to comply with any of
the terms and conditions of this Agreement, the other party may elect to
terminate this Agreement by providing written notice of such election to the
other party; provided, however, that any such election must be made within sixty
(60) days after such failure to comply;
(f) payment in full by the Owner to the Corporation of the Corporation's
Interest in the Policy; or
(g) the mutual written agreement of the Owner and the Corporation.
10. Disposition of the Policy Upon Termination of the Agreement. If this
Agreement is terminated pursuant to the provisions of Paragraph 9, the Owner
shall be required, within sixty (60) days after such termination, to repay the
Corporation the entire amount of the Corporation's Interest in the Policy. Upon
receipt by the Corporation of the entire amount of the Corporation's Interest in
the Policy, the Corporation shall release the Collateral Assignment. If the
Owner does not repay the entire amount of the Corporation's Interest in the
Policy within such sixty (60) day time period, the Corporation may enforce its
rights under the Collateral Assignment; provided, however, the Owner shall not
be liable for any deficiency realized by the Corporation upon the exercise of
the Corporation's rights under the Collateral Assignment.
11. Discharge of the Insurer. The Insurer shall be fully discharged from
its obligations under the Policy by payment of the Policy death benefits to the
beneficiary or beneficiaries named in the Policy subject to the terms and
conditions of the Policy and the Collateral Assignment. In no event shall the
Insurer be considered a party to this Agreement or to any modification or
amendment hereof. No provision of this Agreement, nor any modification or
amendment hereof, shall in any way be construed as enlarging, changing, varying
or in any other way affecting the obligations of the Insurer as expressly
provided in the Policy except insofar as the provisions hereof are made a part
of the Policy by the Collateral Assignment.
12. ERISA Information. The following provisions are part of this
Agreement and are intended to meet the requirements of the Employee Retirement
Income Security Act of 1974:
(a) The named fiduciary under this Agreement is the Corporation.
6
<PAGE>
(b) The funding policy under this Agreement is that all premiums on the
Policy be remitted to the Insurer when due.
(c) Direct payment by the Insurer is the basis of payment of benefits
under this Agreement, with those benefits in turn being based on the payment of
premiums as provided in this Agreement.
(d) For claims procedure purposes, the "Claims Manager" shall be the
Corporate Personnel Group of the Corporation or its delegee.
(i) If for any reason a claim for benefits under this Agreement
is denied by the Corporation, the Claims Manager shall deliver to the
claimant a written explanation setting forth the specific reasons for
the denial, specific references to the pertinent Agreement provisions on
which the denial is based, such other data as may be pertinent and
information on the procedures to be followed by the claimant in
obtaining a review of his claim, all written in a manner calculated to
be understood by the claimant. For this purpose:
(A) The claimant's claim shall be deemed filed when
presented orally or in writing to the Claims Manager.
(B) The Claims Manager's explanation shall be in writing
delivered to the claimant within ninety (90) days of the date the
claim is filed.
(ii) The claimant shall have sixty (60) days following his
receipt of the denial of the claim to file with the Claims Manager a
written request for review of the denial. For such review, the claimant
or his representative may submit pertinent documents and written issues
and comments.
(iii) The Claims Manager shall decide the issue on review and
furnish the claimant with a copy within sixty (60) days of receipt of
the claimant's request for review of his claim. The decision on review
shall be in writing and shall include specific reasons for the decision,
written in a manner calculated to be understood by the claimant, as well
as specific references to the pertinent Agreement provisions on which
the decision is based. If a copy of the decision is not so furnished to
the claimant within such sixty (60) days, the claim shall be deemed
denied on review.
13. Miscellaneous.
(a) This Agreement may not be amended, altered or modified except by a
written instrument signed by the parties hereto or their respective successors
or assigns and may not be otherwise terminated except as provided herein.
7
<PAGE>
(b) This Agreement shall be binding upon the parties hereto, their
heirs, legal representatives, successors and assigns.
(c) This Agreement and the rights of the parties hereunder shall be
governed by and construed in accordance with the laws of the State of North
Carolina except to the extent (if any) superceded by the laws of the United
States.
(d) Headings in this Agreement are provided for purposes of convenience
only and shall not affect the interpretation of the terms hereof.
(e) All notices and other communications hereunder must be in writing
and shall be deemed to have been duly given when either personally delivered or
placed in the United States mails by Certified Mail, return receipt requested,
postage prepaid, addressed to the party to whom such notice is being given as
follows:
As to the Corporation: BankAmerica Corporation
NationsBank Corporate Center
100 N. Tryon Street
Charlotte, North Carolina 28255
Attention: Corporate Personnel
Group Executive
As to the Owner: James H. Hance, Jr.
Irrevocable Trust No. 2 dated October 1, 1998
c/o NationsBank, N.A.
NationsBank Plaza, NC1-002-07-13
101 South Tryon Street
Charlotte, North Carolina 28255
Attention: Sara McDonnell
Either party may change its address (or the name of the person to whose
attention communications hereunder shall be directed) from time to time by
serving notice thereof upon the other party as provided herein.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
NATIONSBANK, N.A., Trustee under the Irrevocable
Trust Agreement No. 2 dated October 1, 1998, by
and between James H. Hance, Jr., as Grantor, and
NationsBank, N.A., as Trustee
By: /s/ Sara McDonnell
--------------------------------
Name: Sara McDonnell
------------------------------
Title: Senior Vice President
-----------------------------
"Owner"
BANKAMERICA CORPORATION
By: /s/ Ann P. West
--------------------------------
Name: Ann P. West
------------------------------
Title: Senior Vice President
-----------------------------
"Corporation"
9
SPLIT DOLLAR
LIFE INSURANCE AGREEMENT
THIS SPLIT DOLLAR LIFE INSURANCE AGREEMENT (the "Agreement") is made and
entered into as of the 28th day of September, 1998, by and between NATIONSBANK
CORPORATION, a North Carolina corporation (the "Corporation"), and J. STEELE
ALPHIN, as Trustee under that certain Irrevocable Trust Agreement dated June 23,
1998, by and between Kenneth D. Lewis, as Grantor, and J. Steele Alphin, as
Trustee (the "Owner").
Statement of Purpose
Kenneth D. Lewis (the "Executive") is employed by the Corporation as its
President. The Corporation, the Owner and Executive desire to insure the lives
of Executive and Executive's spouse, Donna C. Lewis (the "Executive's Spouse"),
for the benefit and protection of both the Corporation and the Executive's
family under a Variable Survivorship Life Insurance Policy (the "Policy") to be
issued by John Hancock Variable Life Insurance Company (the "Insurer"). The
Corporation, as the employer of Executive, is willing to pay a portion of the
premiums due on the Policy as an additional employment benefit for Executive on
the terms and conditions hereinafter set forth. The Corporation desires to have
the Policy collaterally assigned to it by the Owner in order to secure repayment
of the portion of the premiums paid by the Corporation on the Policy.
NOW, THEREFORE, in consideration of the Statement of Purpose aforesaid
and of the mutual promises contained herein, the parties hereto agree as
follows:
1. Definitions. Whenever used in this Agreement, the following terms shall
have the meanings set forth below:
(a) "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
ascribed to such term in Rule 13d-3 of the general rules and regulations under
the Exchange Act.
(b) "Board of Directors" means the Board of Directors of the
Corporation.
(c) "Change in Control" of the Corporation means, and shall be deemed to
have occurred upon, any of the following events:
(i) The acquisition by any Person of Beneficial Ownership of
twenty-five percent (25%) or more of either:
(A) The then-outstanding shares of common stock of the
Corporation (the "Outstanding Shares"); or
(B) The combined voting power of the then-outstanding
voting securities of the Corporation entitled to vote generally
in the election of Directors (the "Outstanding Voting
Securities");
<PAGE>
provided, however, that the following acquisitions shall not constitute
a Change in Control for purposes of this subparagraph (i): (1) any
acquisition directly from the Corporation, (2) any acquisition by the
Corporation or any of its Subsidiaries, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any of its Subsidiaries, or (4) any acquisition by any
corporation pursuant to a transaction which complies with clauses (A),
(B) and (C) of subparagraph (iii) below; or
(ii) Individuals who, as of the date of this Agreement,
constitute the Board of Directors (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board of Directors;
provided, however, that any individual who becomes a Director subsequent
to the date of this Agreement and whose election, or whose nomination
for election by the Corporation's shareholders, to the Board of
Directors was either (A) approved by a vote of at least a majority of
the Directors then comprising the Incumbent Board or (B) recommended by
a Nominating Committee comprised entirely of Directors who are then
Incumbent Board members shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act), other actual or threatened solicitation of proxies or consents or
an actual or threatened tender offer; or
(iii) Approval by the Corporation's shareholders of a
reorganization, merger, or consolidation or sale or other disposition of
all or substantially all of the assets of the Corporation (a "Business
Combination"), in each case, unless following such Business Combination,
(A) all or substantially all of the Persons who were the Beneficial
Owners, respectively, of the Outstanding Shares and Outstanding Voting
Securities immediately prior to such Business Combination own, directly
or indirectly, more than fifty percent (50%) of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from the Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Corporation
or all or substantially all of the Corporation's assets either directly
or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination, of the Outstanding Shares and Outstanding Voting
Securities, as the case may be (provided, however, that for purposes of
this clause (A), any shares of common stock or voting securities of such
resulting corporation received by such Beneficial Owners in such
Business Combination other than as the result of such Beneficial Owners'
ownership of Outstanding Shares or Outstanding Voting Securities
immediately prior to such Business Combination shall not be considered
to be owned by such Beneficial Owners for the purposes of calculating
their percentage of ownership of the outstanding common stock and voting
power of the resulting corporation), (B) no Person (excluding any
corporation resulting
2
<PAGE>
from such Business Combination or any employee benefit plan (or related
trust) of the Corporation or such corporation resulting from the
Business Combination) beneficially owns, directly or indirectly,
twenty-five percent (25%) or more of, respectively, the then-outstanding
shares of common stock of the corporation resulting from the Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation unless such Person owned twenty-five
percent (25%) or more of the Outstanding Shares or Outstanding Voting
Securities immediately prior to the Business Combination and (C) at
least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement,
or the action of the Board, providing for such Business Combination; or
(iv) Approval by the Corporation's shareholders of a complete
liquidation or dissolution of the Corporation.
Notwithstanding the foregoing, a Change in Control shall not be deemed to have
occurred for purposes of this Agreement as a result of the transactions
contemplated by the Reorganization Agreement.
(d) "Director" means any individual who is a member of the Board of
Directors of the Corporation.
(e) "Disability" means "disability" as such term is defined from time to
time under any long-term disability plan of the Corporation covering the
Executive.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time or any successor act thereto.
(g) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including "group" as defined in Section 13(d) thereof.
(h) "Reorganization Agreement" means the Agreement and Plan of
Reorganization dated April 10, 1998 between NationsBank Corporation and
BankAmerica Corporation.
(i) "Subsidiary" means any corporation, partnership, joint venture,
affiliate or other entity in which the Corporation owns more than fifty percent
(50%) of the voting stock or voting ownership interest, as applicable, or any
other business entity designated by the Corporation as a Subsidiary for purposes
of this Agreement.
2. Purchase of the Policy. The Owner has made application for and has
purchased a Variable Survivorship Life Insurance Policy issued by John Hancock
Variable Life Insurance Company in the initial face amount of Ten Million Three
Hundred Sixteen Thousand Nine Hundred Twenty-Two Dollars ($10,316,922) insuring
the lives of Executive and Executive's Spouse, a copy of which shall be attached
hereto as Exhibit 1 as soon as practicable after
3
<PAGE>
issuance by the Insurer. A complete hypothetical illustration of the Policy
assuming a eight percent (8%) gross rate of return on the premiums over the life
of the contract based on a level death benefit of Ten Million Dollars
($10,000,000) for the Owner is attached hereto as Exhibit 2.
The parties hereto have taken all necessary action to cause Insurer to
issue the Policy and shall take any further action which may be necessary to
cause the Policy to conform to the provisions of this Agreement. The parties
hereto further agree that the Policy shall be subject to the terms and
conditions of this Agreement and the Collateral Assignment referred to in
Paragraph 5 below.
3. Ownership of the Policy. Subject to the provisions of this Agreement
and the Collateral Assignment, the Owner shall be the sole and absolute owner of
the Policy and may and shall exercise all ownership rights granted to the owner
thereof by the terms of the Policy. It is the intention of the parties that the
Owner shall retain all rights which the Policy grants to the owner of the
Policy, except the right of the Corporation to recover the amount due to the
Corporation under this Agreement. Specifically, without limitation, the
Corporation shall neither have nor exercise any right as the collateral assignee
of the Policy which could in any way defeat or impair the Owner's right to
receive the cash surrender value or the death proceeds of the Policy in excess
of the Corporation's Interest (as hereinafter defined). All provisions of this
Agreement and the Collateral Assignment shall be construed so as to carry out
such intention.
4. Payment of Premiums. As a convenience to the parties, the Corporation
shall pay all premiums under the Policy to the Insurer as and when such premiums
become due. During the five (5) year period following the effective date of the
Policy, the Corporation shall pay the full amount of the premiums to the Insurer
as set forth on Exhibit 2 attached hereto. Within thirty (30) days of each such
premium payment by the Corporation during the five (5) year period following the
effective date of the Policy and within thirty (30) days of each anniversary of
the effective date of the Policy thereafter, the Owner shall pay to the
Corporation the economic value of the death benefit under the Policy as
determined by the Insurer from time to time while the Policy remains in effect.
A schedule of the premiums to be paid by the Owner based on the Insurer's
current rates is set forth on Exhibit 2.
Should actual investment returns vary from those assumed in Exhibit 2,
the Corporation's share of the premiums shall continue to be equal to the
amounts set forth on Exhibit 2 as if no such variation occurred. Any increase or
decrease in the premiums required to provide the total death benefits described
on Exhibit 2 resulting from a variation in investment returns shall affect only
the Owner's share of the premiums.
Upon request by the Owner, the Corporation shall promptly furnish
evidence of timely payment to the Owner. The Corporation shall annually furnish
to the Owner a statement of the amount of income reportable by the Executive for
federal and state income tax purposes, if any, as determined in accordance with
applicable Internal Revenue Service rules and regulations, as a result of the
Corporation's payment of a portion of the premiums hereunder.
5. Collateral Assignment. The total amount of the Corporation's share of
the Policy premium payments paid by the Corporation pursuant to this Agreement,
less any amounts
4
<PAGE>
previously paid to the Corporation by the Owner pursuant to this Agreement,
shall constitute the total indebtedness of the Owner to the Corporation, which
amount shall accrue no interest (the "Corporation's Interest"). As security for
and to secure the repayment of the Corporation's Interest, as it may exist from
time to time pursuant to the terms of this Agreement, the Owner has,
contemporaneously herewith, executed and delivered to the Corporation a
collateral assignment of the Policy substantially in the form as set forth in
Exhibit 3 attached hereto (the "Collateral Assignment"). Repayment of the
Corporation's Interest shall be made (i) from the cash surrender value of the
Policy if this Agreement is terminated or the Owner surrenders or cancels the
Policy prior to the death of the survivor of Executive or Executive's Spouse, or
(ii) from the death proceeds of the Policy if Executive and Executive's Spouse
should die while the Policy and this Agreement remain in effect. The Collateral
Assignment shall not be terminated, altered or amended by the Owner without the
express written consent of the Corporation. The parties hereto agree to take all
action necessary to cause the Collateral Assignment to conform to the provisions
of this Agreement.
6. Exercise of Owner's Rights While Collateral Assignment is in Effect.
Under the terms of the Policy, the Owner has the right to make certain asset
allocation decisions among various investment funds. While the Collateral
Assignment is in effect, any such asset allocation decisions by the Owner shall
be subject to the approval of the Corporation. Notwithstanding the foregoing,
the Owner shall have the sole right to surrender or cancel the Policy for its
cash surrender value; provided, however, upon such surrender or cancellation of
the Policy the Corporation shall have the unqualified right to receive a portion
of the cash surrender value from the Insurer equal to the Corporation's
Interest.
7. Compliance with Internal Revenue Code. Notwithstanding anything in
this Agreement to the contrary, the parties intend for the Policy to be
classified as a "life insurance contract" as defined in Section 7702(a) of the
Internal Revenue Code (the "Code") and not as a "modified endowment contract" as
defined in Section 7702A(a) of the Code. If at any time during the term of this
Agreement either the Corporation or the Owner determines that, based on the
schedule of anticipated premium payments and withdrawals set forth in Exhibit 2,
the Policy would not constitute a "life insurance contract" under Section
7702(a) of the Code or would constitute a "modified endowment contract" under
Section 7702A(a) of the Code, the parties agree to restructure the premium
payments and withdrawals to cause the Policy at all times to constitute a "life
insurance contract" under Section 7702(a) of the Code and not a "modified
endowment contract" under Section 7702A(a) of the Code.
8. Death of Executive and Executive's Spouse. If this Agreement is still
in effect upon the death of the survivor of Executive and Executive's Spouse,
the Corporation and the Owner shall promptly take all action necessary to obtain
the death benefits provided under the Policy. The Owner agrees that the
Corporation shall have the unqualified right to receive a portion of such death
benefits from the Insurer equal to the Corporation's Interest and that no
beneficiary under the Policy shall have the right to receive any portion of the
Policy proceeds prior to the repayment of the full amount of the Corporation's
Interest. The balance of the death benefits provided under the Policy, if any,
shall be paid directly to the beneficiary or beneficiaries designated by the
Owner in the manner and in the amount or amounts provided in the beneficiary
designation provision of the Policy. In no event shall the amount payable to the
5
<PAGE>
Corporation hereunder exceed the Policy death benefits. The parties hereto agree
that the beneficiary designation provision of the Policy shall conform to the
provisions hereof.
9. Termination of the Agreement. This Agreement shall terminate prior to
the death of the survivor of Executive and Executive's Spouse upon the
occurrence of any of the following:
(a) either party may terminate this Agreement effective as of a Policy
anniversary date by providing thirty (30) days' advance written notice of such
election to terminate to the other party;
(b) the total cessation of the business of the Corporation;
(c) the bankruptcy, receivership or dissolution of the Corporation;
(d) the termination of Executive's employment with the Corporation other
than (i) by reason of Executive's death or "Disability," (ii) by reason of
Executive's retirement from employment with the Corporation with the consent of
the Corporation, or (iii) following a "Change in Control;"
(e) if either the Corporation or the Owner fails to comply with any of
the terms and conditions of this Agreement, the other party may elect to
terminate this Agreement by providing written notice of such election to the
other party; provided, however, that any such election must be made within sixty
(60) days after such failure to comply;
(f) payment in full by the Owner to the Corporation of the Corporation's
Interest in the Policy; or
(g) the mutual written agreement of the Owner and the Corporation.
10. Disposition of the Policy Upon Termination of the Agreement. If this
Agreement is terminated pursuant to the provisions of Paragraph 9, the Owner
shall be required, within sixty (60) days after such termination, to repay the
Corporation the entire amount of the Corporation's Interest in the Policy. Upon
receipt by the Corporation of the entire amount of the Corporation's Interest in
the Policy, the Corporation shall release the Collateral Assignment. If the
Owner does not repay the entire amount of the Corporation's Interest in the
Policy within such sixty (60) day time period, the Corporation may enforce its
rights under the Collateral Assignment; provided, however, the Owner shall not
be liable for any deficiency realized by the Corporation upon the exercise of
the Corporation's rights under the Collateral Assignment.
11. Discharge of the Insurer. The Insurer shall be fully discharged from
its obligations under the Policy by payment of the Policy death benefits to the
beneficiary or beneficiaries named in the Policy subject to the terms and
conditions of the Policy and the Collateral Assignment. In no event shall the
Insurer be considered a party to this Agreement or to any modification or
amendment hereof. No provision of this Agreement, nor any modification or
amendment hereof, shall in any way be construed as enlarging, changing, varying
or in any
6
<PAGE>
other way affecting the obligations of the Insurer as expressly provided in the
Policy except insofar as the provisions hereof are made a part of the Policy by
the Collateral Assignment.
12. ERISA Information. The following provisions are part of this
Agreement and are intended to meet the requirements of the Employee Retirement
Income Security Act of 1974:
(a) The named fiduciary under this Agreement is the Corporation.
(b) The funding policy under this Agreement is that all premiums on the
Policy be remitted to the Insurer when due.
(c) Direct payment by the Insurer is the basis of payment of benefits
under this Agreement, with those benefits in turn being based on the payment of
premiums as provided in this Agreement.
(d) For claims procedure purposes, the "Claims Manager" shall be the
Corporate Personnel Group of the Corporation or its delegee.
(i) If for any reason a claim for benefits under this Agreement
is denied by the Corporation, the Claims Manager shall deliver to the
claimant a written explanation setting forth the specific reasons for
the denial, specific references to the pertinent Agreement provisions on
which the denial is based, such other data as may be pertinent and
information on the procedures to be followed by the claimant in
obtaining a review of his claim, all written in a manner calculated to
be understood by the claimant. For this purpose:
(A) The claimant's claim shall be deemed filed when
presented orally or in writing to the Claims Manager.
(B) The Claims Manager's explanation shall be in writing
delivered to the claimant within ninety (90) days of the date the
claim is filed.
(ii) The claimant shall have sixty (60) days following his
receipt of the denial of the claim to file with the Claims Manager a
written request for review of the denial. For such review, the claimant
or his representative may submit pertinent documents and written issues
and comments.
(iii) The Claims Manager shall decide the issue on review and
furnish the claimant with a copy within sixty (60) days of receipt of
the claimant's request for review of his claim. The decision on review
shall be in writing and shall include specific reasons for the decision,
written in a manner calculated to be understood by the claimant, as well
as specific references to the pertinent Agreement provisions on which
the decision is based. If a copy of the decision is not so furnished to
the claimant within such sixty (60) days, the claim shall be deemed
denied on review.
7
<PAGE>
13. Miscellaneous.
(a) This Agreement may not be amended, altered or modified except by a
written instrument signed by the parties hereto or their respective successors
or assigns and may not be otherwise terminated except as provided herein.
(b) This Agreement shall be binding upon the parties hereto, their
heirs, legal representatives, successors and assigns.
(c) This Agreement and the rights of the parties hereunder shall be
governed by and construed in accordance with the laws of the State of North
Carolina except to the extent (if any) superceded by the laws of the United
States.
(d) Headings in this Agreement are provided for purposes of convenience
only and shall not affect the interpretation of the terms hereof.
(e) All notices and other communications hereunder must be in writing
and shall be deemed to have been duly given when either personally delivered or
placed in the United States mails by Certified Mail, return receipt requested,
postage prepaid, addressed to the party to whom such notice is being given as
follows:
As to the Corporation: NationsBank Corporation
NationsBank Corporate Center
100 N. Tryon Street
Charlotte, North Carolina 28255
Attention: Corporate Personnel
Group Executive
As to the Owner: Kenneth D. Lewis Irrevocable Trust of 1998
c/o J. Steele Alphin
3700 Foxcroft Road
Charlotte, North Carolina 28211
Either party may change its address (or the name of the person to whose
attention communications hereunder shall be directed) from time to time by
serving notice thereof upon the other party as provided herein.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
/s/ J. Steele Alphin [SEAL]
--------------------------------------
J. Steele Alphin
Trustee under the Irrevocable Trust Agreement
dated June 23, 1998, by and between Kenneth D.
Lewis, as Grantor, and J. Steele Alphin, as
Trustee
"Owner"
NATIONSBANK CORPORATION
By: /s/ Ann P. West
--------------------------------
Name: Ann P. West
---------------------------
Title: Senior Vice President
--------------------------
"Corporation"
9
<PAGE>
Exhibit 11
Diluted Earnings Per Common Share and
Diluted Average Common Shares Outstanding
For 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 is dilutive, net income
available to common shareholders is adjusted by the associated preferred
dividends. 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
diluted earnings per common share in periods in which the effect would be
antidilutive.
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
--------------------------------------------
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Average common shares outstanding ................... 1,732,057 1,733,194 1,638,382
Dilutive effect of
Convertible preferred stock ........................ 3,290 3,736 6,158
Stock options ...................................... 40,413 45,242 26,086
--------- --------- ---------
Total dilutive shares ............................... 1,775,760 1,782,172 1,670,626
========= ========= =========
Income available to common shareholders ............. $ 5,140 $ 6,431 $ 5,611
Preferred dividends paid on dilutive convertible
preferred stock .................................. 6 7 9
----------- ----------- -----------
Total net income available to common shareholders
adjusted for dilution ............................ $ 5,146 $ 6,438 $ 5,620
=========== =========== ===========
Diluted earnings per common share ................... $ 2.90 $ 3.61 $ 3.36
=========== =========== ===========
</TABLE>
<PAGE>
BankAmerica Corporation and Subsidiaries
Ratio of Earnings to Fixed Charges Exhibit 12(a)
(Dollars in Millions)
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Excluding Interest on Deposits
Income before taxes .................................... $ 8,048 $10,556 $9,311 $ 8,377 $ 7,010
Less: Equity in undistributed losses (earnings)
of unconsolidated subsidiaries ........................ 162 (49) (7) (19) (55)
Fixed charges:
Interest expense (including capitalized interest) ..... 9,479 8,219 7,082 6,354 4,572
1/3 of net rent expense ............................... 335 302 282 275 250
-------- ------- ------- ------- -------
Total fixed charges ................................. 9,814 8,521 7,364 6,629 4,822
-------- ------- ------- ------- -------
Earnings (excluding capitalized interest) .............. $ 18,024 $19,026 $16,668 $14,987 $11,774
======== ======= ======= ======= =======
Fixed charges .......................................... $ 9,814 $ 8,521 $7,364 $ 6,629 $ 4,822
======== ======= ======= ======= =======
Ratio of earnings to fixed charges ..................... 1.84 2.23 2.26 2.26 2.44
========= ======== ======= ======== ========
Including Interest on Deposits
Income before taxes .................................... $ 8,048 $10,556 $9,311 $ 8,377 $ 7,010
Less: Equity in undistributed losses (earnings)
of unconsolidated subsidiaries ........................ 162 (49) (7) (19) (55)
Fixed charges:
Interest expense (including capitalized interest) ..... 20,290 18,903 16,682 16,369 11,083
1/3 of net rent expense ............................... 335 302 282 275 250
--------- -------- ------- -------- --------
Total fixed charges ................................. 20,625 19,205 16,964 16,644 11,333
Earnings (excluding capitalized interest) .............. $ 28,835 $29,710 $26,268 $25,002 $18,285
========= ======== ======= ======== ========
Fixed charges .......................................... $ 20,625 $19,205 $16,964 $16,644 $11,333
========= ======== ======= ======== ========
Ratio of earnings to fixed charges ..................... 1.40 1.55 1.55 1.50 1.61
========= ======== ======= ======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BankAmerica Corporation and Subsidiaries
Ratio of Earnings to Fixed Charges and Preferred Dividends Exhibit 12(b)
(Dollars in Millions)
<S> <C> <C> <C> <C> <C>
Year Ended December 31
----------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---- ----- ---- ----
Excluding Interest on Deposits
Income before taxes .................................... $ 8,048 $10,556 $9,311 $ 8,377 $ 7,010
Less: Equity in undistributed losses (earnings)
of unconsolidated subsidiaries ........................ 162 (49) (7) (19) (55)
Fixed charges:
Interest expense (including capitalized interest) ..... 9,479 8,219 7,082 6,354 4,572
1/3 of net rent expense ............................... 335 302 282 275 250
---------- ------- ------- ------- -------
Total fixed charges .................................. 9,814 8,521 7,364 6,629 4,822
Preferred dividend requirements ........................ 40 183 332 426 467
---------- ------- ------- ------- -------
Earnings (excluding capitalized interest) .............. $ 18,024 $19,026 $16,668 $14,987 $11,774
========== ======= ======= ======= =======
Fixed charges and preferred dividends .................. $ 9,854 $ 8,704 $ 7,696 $ 7,055 $ 5,289
========== ======= ======= ======= =======
Ratio of earnings to fixed charges and preferred
dividends ............................................. 1.83 2.19 2.17 2.12 2.23
========== ======== ======== ======== ========
Including Interest on Deposits
Income before taxes .................................... $ 8,048 $10,556 $9,311 $ 8,377 $ 7,010
Less: Equity in undistributed losses (earnings)
of unconsolidated subsidiaries ........................ 162 (49) (7) (19) (55)
Fixed charges:
Interest expense (including capitalized interest) ..... 20,290 18,903 16,682 16,369 11,083
1/3 of net rent expense ............................... 335 302 282 275 250
---------- ------- ------- ------- -------
Total fixed charges .................................. 20,625 19,205 16,964 16,644 11,333
Preferred dividend requirements ........................ 40 183 332 426 467
---------- ------- ------- ------- -------
Earnings (excluding capitalized interest) .............. $ 28,835 $29,710 $26,268 $25,002 $18,285
========== ======= ======= ======= =======
Fixed charges and preferred dividends .................. $ 20,665 $19,388 $17,296 $17,070 $11,800
========== ======= ======= ======= =======
Ratio of earnings to fixed charges and preferred
dividends ............................................. 1.40 1.53 1.52 1.46 1.55
========== ======= ======= ======= =======
</TABLE>
EXHIBIT 21
DIRECT AND INDIRECT SUBSIDIARIES OF BANKAMERICA CORPORATION AS OF 2/28/1999
<TABLE>
<CAPTION>
<S> <C>
NAME PRINCIPAL PLACE OF BUSINESS
- ---------------------------------------------------------------------------------------------------
A
Abilene Park, Inc. Dallas, TX
Aegina FSC, Inc. Charlotte Amalie, St. Thomas, U.S. V.I.
Aegina, Inc. San Francisco, CA
Aerocrane Leasing Ltd. Charlotte Amalie, St. Thomas, U.S. V.I.
AF Funding (1993), Inc. Delaware
AF Funding II (1993), Inc. Delaware
Air France/KDHF II (NGHGI) (Grantor Trust) Delaware
Air France/NationsBank (Grantor Trust) Delaware
Airlease Ltd., A California Limited Partnership San Francisco, CA
Airlease Management Services, Inc. San Francisco, CA
Alamo Funding, Inc. Dallas, TX
Alamo Funding II, Inc. Dallas, TX
Alpargatas S.A.I.C. Buenos Aires, Argentina
Alpha Dearborn Limited Partnership Lake Forest, IL
ALS II, Inc. Wilton, CT
A/M Properties, Inc. Baltimore, MD
Amarillo Lane, Inc. Dallas, TX
American Financial Service Group, Inc.(LEASEFIRST) Greensboro, NC
American Security (Louisiana) Ltd. Washington, DC
ANA II (Grantor Trust) Delaware
APL, Inc. Dallas, TX
Appold Holdings Limited London, U.K.
Appold Leasing, Inc. San Francisco, CA
Appold Limited London, U.K.
Arbor National Mortgage, Inc. Uniondale, NY
The Arbors, Limited Partnership Raleigh, NC
Arch Reinsurance Company, Ltd. George Town, Grand Cayman, Cayman Is.
Ariens Credit Corporation Alpharetta, GA
Ark Direct Capital Fund, L.P. Chicago, IL
Aroya Limited Partnership St. Louis, MO
Arrendadora BankAmerica, S.A. Mexico City, Mexico
Arrow Ridge Partners, Ltd. Maitland, FL
Artloft Associates, L.P. St. Louis, MO
Asset Holding Co. Inc. San Francisco, CA
Asian American Merchant Bank Ltd. Singapore, Singapore
Ashburn A Corp. Baltimore, MD
Atico Financial Corporation dba Cavalier Properties Miami, FL
Atlanta Affordable Housing Fund Limited Partnership Charlotte, NC
Atlantic Equity Corporation Charlotte, NC
Austin Community Development Corporation Austin, TX
Austin National Realty Corporation Austin, TX
B
BA Asia Limited Hong Kong, PRC
BA Assets Company George Town, Grand Cayman, Cayman Is.
BA Australia Limited Sydney, New South Wales, Australia
BA Card Services, Inc. Makati, Philippines
BA Credit Corporation San Diego, CA
1
<PAGE>
BA Equity Advisors Sp.zo.o Warsaw, Poland
BA Finance (Hong Kong) Limited Hong Kong, PRC
BA Finance Ireland Limited Dublin, Ireland
BA Forex (Philippines), Inc. Makati, Philippines
BA FSC Holdings, Inc. San Francisco, CA
BA Futures, Incorporated Chicago, IL
BA Futures, S.A. Paris, France
BA Holding Company, S.A. Luxembourg, Luxembourg
BA Interactive Services Holding Company, Inc. San Francisco, CA
BA Insurance Agency, Inc. San Diego, CA
BA Insurance Brokerage Inc. Taipei, Taiwan
BA Investment Services, Inc. Oakland, CA
BA Leasing & Capital Corporation San Francisco, CA
BA LocProc Pty. Limited Sydney, New South Wales, Australia
BA Merchant Services, Inc. San Francisco, CA
BA Netting Limited London, U.K.
BA Northwest Community Service Corporation Seattle, WA
BA Properties, Inc. Los Angeles, CA
BA Rescarven Holding Company George Town, Grand Cayman, Cayman Is.
BA Securities Investment Advisory Limited Taipei, Taiwan
BA Service Corp. Charlotte, NC
BA Staff Limited Sydney, New South Wales, Australia
BA Staff Superannuation Limited Sydney, New South Wales, Australia
BA Swallow Business Systems Limited London, U.K.
BA Swiss FSC Holdings, Inc. San Francisco, CA
B.A. Insurance (Cayman) Ltd. George Town, Grand Cayman, Cayman Is.
BAC Realty LLC Dallas, TX
BAEC Investments, L.L.C. Chicago, IL
BAEP Telecommunications Investments, L.L.C. Chicago, IL
Balmoral Leasing Ltd. Charlotte Amalie, St. Thomas, U.S. VI
Baltic M Corp. Baltimore, MD
Bamerilease, Inc. Phoenix, AZ
Bamerinvest C.A. Caracas, Chacao, Venezuela
BancAmerica Commercial Corporation San Francisco, CA
BancAmerica Auto Finance Corp. Las Vegas, NV
Banco Liberal S.A. Rio de Janeiro, Brazil
Bancshares Properties, Inc. Tampa, FL
Bank IV Affordable Housing Corporation Wichita, KS
Bank IV Community Development Corporation Wichita, KS
Bank IV Securities, Inc. Charlotte, NC
BankAmerica Acceptance Corp. San Diego, CA
BankAmerica Business Credit, Inc. San Diego, CA
BankAmerica Capital Advisors LLC Chicago, IL
BankAmerica Capital Corporation Chicago, IL
BankAmerica Capital I San Francisco, CA
BankAmerica Capital II San Francisco, CA
BankAmerica Capital III San Francisco, CA
BankAmerica Capital IV San Francisco, CA
BankAmerica Community Development Corporation Walnut Creek, CA
BankAmerica Financial, Inc. San Francisco, CA
BankAmerica Financial Services Ltd. St. Helier, Jersey, Channel Islands
BankAmerica Foundation San Francisco, CA
2
<PAGE>
BankAmerica Fund Management Limited George Town, Grand Cayman, Cayman Is.
BankAmerica Gestion SGIIC, S.A. Madrid, Spain
BankAmerica Insurance Group, Inc. San Diego, CA
BankAmerica International San Francisco, CA
BankAmerica International Financial Corporation San Francisco, CA
BankAmerica International Investment Corporation Chicago, IL
BankAmerica International Trustees (B.V.I.) Limited St. Helier, Jersey, Channel Islands
BankAmerica Institutional Capital A San Francisco, CA
BankAmerica Institutional Capital B San Francisco, CA
BankAmerica Investment Corporation Chicago, IL
BankAmerica Nominees (1993) Pte Ltd. Singapore, Singapore
BankAmerica Nominees (Hong Kong) Ltd. Hong Kong, PRC
BankAmerica Nominees Limited (London) London, U.K.
BankAmerica Nominees (Singapore) Pte Ltd. Singapore, Singapore
BankAmerica Properties (Jersey) Limited St. Helier, Jersey, Channel Islands
BankAmerica Realty Finance, Inc. Los Angeles, CA
BankAmerica Realty Services, Inc. San Francisco, CA
BankAmerica Representacao e Servicos Limitada Sao Paulo, Brazil
BankAmerica Singapore Limited Singapore, Singapore
BankAmerica Special Assets Corporation San Francisco, CA
BankAmerica Trust and Banking Corporation(Bahamas)
Limited Nassau, Bahamas
BankAmerica Trust and Banking Corporation(Cayman)
Limited George Town, Grand Cayman, Cayman Is.
BankAmerica Trust Company (Hong Kong) Limited Hong Kong, PRC
BankAmerica Trust Company (Jersey) Limited St. Helier, Jersey, Channel Islands
BankAmerica Ventures Foster City, CA
Bank of America (Asia) Limited Hong Kong, PRC
Bank of America Canada Toronto, Ontario, Canada
Bank of America Canada Leasing Corporation Calgary, Alberta, Canada
Bank of America Canada Leasing III, Inc. Calgary, Alberta, Canada
Bank of America Canada Leasing IV, Inc. Calgary, Alberta, Canada
Bank of America Canada Leasing VI, Inc. Calgary, Alberta, Canada
Bank of America Canada Securities Corporation Toronto, Ontario, Canada
Bank of America Colombia Bogota, Colombia
Bank of America Community Development Bank Walnut Creek, CA
Bank of America, FSB Portland, OR
Bank of America-Giannini Foundation San Francisco, CA
Bank of America (Jersey) Limited St. Helier, Jersey, Channel Islands
Bank of America (Hawaii) Insurance Agency, Inc. Honolulu, HI
Bank of America Housing Fund Limited Partnership Columbia, MD
Bank of America Illinois Community Development
Corporation Chicago, IL
Bank of America International Limited London, U.K.
Bank of America Leasing Corp. Charlotte, NC
Bank of America (Macau) Limited Macau
Bank of America Malaysia Berhad Kuala Lumpur, Malaysia
Bank of America Mexico, S.A., Institucionde Banca
Multiple Mexico City, Mexico
Bank of America Mortgage Securities, Inc. San Francisco, CA
Bank of America (Polska) S.A. Warsaw, Poland
Bank of America, S.A. Madrid, Spain
Bank of America National Association Phoenix, AZ
Bank of America National Trust and Savings Association San Francisco, CA
Bank of American Reinsurance Corporation Burlington, VT
Bank of America Technology and Operations, Inc. Dallas, TX
3
<PAGE>
Bank of America Texas, National Association Dallas TX
The Bank of Canton (Nominees) Limited Hong Kong, PRC
Bank Marketing Systems, Inc. Oklahoma City, OK
Bank South Home Equity, Inc. Atlanta, GA
Barnesbury, Ltd. Bermuda
Barnett Auto Receivables Corp. Reno, NV
Barnett Bank Premises Company - Brickell Jacksonville, FL
Barnett Capital I Jacksonville, FL
Barnett Capital II Jacksonville, FL
Barnett Capital III Jacksonville, FL
Barnett Community Development Corporation Jacksonville, FL
Barnett Dealer Financial Services Corporation-Alabama Jacksonville, FL
Barnett-First Data Alliance Jacksonville, FL
Barnett Leasing Company Jacksonville, FL
Barnett Merchant Services Corporation Jacksonville, FL
Barnett Mortgage Company Charlotte, NC
Barnett Office Park Condominium Association, Inc. Jacksonville, FL
Barnett Southside Land, Inc. Jacksonville, FL
Bartlett Park Neighborhood Redevelopment, L.C. Tampa, FL
BATCO Nominees Limited Hong Kong, PRC
Bay 2 Bay Leasing LLC San Francisco, CA
Bay Street Limited George Town, Grand Cayman, Cayman Is.
B & B Community Housing Development, L.P. Springfield, MO
BBNA Technology Holdings, Inc. Reno, NV
BBI Merchant Processing Company, LLC St. Louis, MO
Beechnut Holdings, Inc. Houston, TX
Bellevieu Manchester Limited Partnership Baltimore, MD
Belmont Heights Development Company, L.C. Tampa, FL
Beta Dearborn Limited Partnership Lake Forest, IL
BFS Participacoes Ltda. Sao Paulo, Brazil
BHP/Johnston Square Limited Partnership Baltimore, MD
Binfield Ltd. Bermuda
BIRMSON, L.L.C. Wilton, CT
Biscayne Apartments, Inc. Atlanta, GA
BJ Services Trust 1997-1 Houston, TX
BJCC, Inc. Wilton, CT
Blue Ridge Finance Ltd. Bermuda
Blue Ridge Investments, L.L.C. Charlotte, NC
BNB Auto, Inc. St. Louis, MO
Boatmen's Capital Management, Inc. St. Louis, MO
Boatmen's Community Development Corporation Charlotte, NC
Boatmen's Financial Services, Inc. St. Louis, MO
Boatmen's Foreign Investment Corporation Charlotte, NC
Boatmen's Insurance Agency, Inc. St. Louis, MO
BofA Capital Management, Inc. Los Angeles, CA
BofA Investment Company S.A. Buenos Aires, Argentina
Brandon Crossing Partners, Ltd. Maitland, FL
Brazilian Financial Services, Inc. San Francisco, CA
Brazilian Tourism Holdings, Inc. San Francisco, CA
Bridgewood Square Limited Partnership Belhaven, NC
Broad Housing Fund XXIII, A California Limited
Partnership Los Angeles, CA
Broadway Apartments Limited Partnership Frederick, MD
4
<PAGE>
Broadway Court Limited Partnership Baltimore, MD
Broadway Pointe Venture, LLC Campbell, CA
Bunga Jambu Ltd. Hamilton, Bermuda
Bunga Orkid, Ltd. Hamilton, Bermuda
Bushton BCP Investment Partnership I, L.P. Wilmington, DE
Bushton TRG Investment Partnership I, L.P. Wilmington, DE
Bushton TRG Investment Partnership IV, L.P. Wilmington, DE
C
Cabot Investments London, U.K.
California/EquiCredit Corporation West Covina, CA
California Equity Fund 1988 Limited Partnership Chicago, IL
California Equity Fund 1989 Limited Partnership Chicago, IL
California Equity Fund 1990 Limited Partnership Chicago, IL
California Equity Fund 1991 Limited Partnership Chicago, IL
California Equity Fund 1992 Limited Partnership Chicago, IL
California Equity Fund 1993 Limited Partnership Chicago, IL
California Equity Fund 1994 Limited Partnership Chicago, IL
California Equity Fund 1995 Limited Partnership Chicago, IL
California Equity Fund 1996 Limited Partnership Chicago, IL
California Street Limited George Town, Grand Cayman, Cayman Is.
CalKearn, LLC Reno, NV
The Can Company, LLC Baltimore, MD
Canea FSC Inc. Charlotte Amalie, St. Thomas, U.S. VI
Canterbury Indiana Holdings Inc. Irving, TX
Cape Canterbury, Ltd. Bermuda
Capital Courts Corporation Washington, DC
Capital Crossing Development Corporation Suitland, MD
Capitol Information Networks, Inc. Austin, TX
Carlton Court CCD, Inc. Dallas, TX
Carlton Court Limited Partnership Dallas, TX
Carmel Ridge Limited Partnership Henderson, NC
Carolina Investments Limited London
Carolina Leasing Ltd. London
Carolina Mountain Holding Company Charlotte, NC
Carolina Pacific, Inc. Baltimore, MD
Carver State Bank Savannah, GA
Cash Flow, Inc. Charlotte, NC
Cathay Pacific/ NationsBank Trust I (Grantor Trust) Delaware
CCC Capital Corp. of N.H. Melville, NY
CCFL Subordinated Debt Fund and Company, Limited
Partnership Toronto, Ontario, Canada
CC Plaza M Corp. Baltimore, MD
Cedar Mill, LLC Raleigh, NC
Cedel International S.A. Luxembourg, Luxembourg
Centrex Capital Automobile Assets, Inc. Melville, NY
Centrex Capital Automobile Assets (Number Two), Inc. Melville, NY
Centrex Capital Automobile Assets (Number Three), Inc. Melville, NY
Centrex Capital Automobile Assets (Number Four), Inc. Melville, NY
Centrex Capital Corp. Melville, NY
Centrex Capital Corp. of California Melville, NY
Centrex Capital Corp. of Connecticut Melville, NY
Centrex Capital Corp. of Delaware Melville, NY
5
<PAGE>
Centrex Capital Corp. of Florida Melville, NY
Centrex Capital Corp. of Georgia Melville, NY
Centrex Capital Corp. of Illinois Melville, NY
Centrex Capital Corp. of Indiana Melville, NY
Centrex Capital Corp. of MA Melville, NY
Centrex Capital Corp. of Maryland Melville, NY
Centrex Capital Corporation of MO Melville, NY
Centrex Capital Corp. of N. Carolina Melville, NY
Centrex Capital Corp. of New Jersey Melville, NY
Centrex Capital Corp. of New York Melville, NY
Centrex Capital Corp. of PA Melville, NY
Centrex Capital Corp. of Rhode Island Melville, NY
Centrex Capital Corp. of S. Carolina Melville, NY
Centrex Capital Corp. of Tennessee Melville, NY
Centrex Capital Corp. of Texas Melville, NY
Centrex Capital Corp. of Virginia Melville, NY
Centrex Capital Corp. of Wisconsin Melville, NY
Centrex Resources Corp. Melville, NY
CFB Holding Corporation Baltimore, MD
Charlotte Gateway Village, LLC Charlotte, NC
The Charlotte Affordable Housing LLC Charlotte, NC
Charlotte Transit Center, Inc. Charlotte, NC
Charter-Colonial Securities, Inc. Houston, TX
Charter-Houston Securities, Inc. Houston, TX
Chase Federal Housing Corporation Baltimore, MD
ChaseFed Insurance Co. Miami, FL
Chase I, Inc. Miami, FL
Chase/Scarborough Group, Inc. Baltimore, MD
Chepstow Holding Corporation Charlotte, NC
Chepstow Real Estate Investment Trust Charlotte, NC
Cherry Affordable Housing Corp. Charlotte, NC
Chesapeake M Corp. Baltimore, MD
Cheshire Chase Limited Partnership Charlotte, NC
Chicago Equity Partners Corp. Chicago, IL
Church Street Crossing Associates, L.P. Washington, DC
CIC Trading, S.A. Buenos Aires, Argentina
C.I.N.B. Nominees (London) Limited London, U.K.
Citizens Advisory Group, Inc. Jonesboro, AR
Citizens Financial Securities Corporation Fort Lauderdale, FL
Citizens Financial Services, Inc. Miami, FL
Citizens Real Estate, Inc. Jonesboro, AR
Citizens Savings Bank & Trust Co. Nashville, TN
Citizens Travel, Inc. Miami, FL
Clenston Ltd. Bermuda
C.N. Investments, Inc. George Town, Grand Cayman, Cayman Is.
Colby Crest Partners, L.P. Seattle, WA
Colonial Village Partnership, L.P. St. Louis, MO
Columbia Community Investment Limited Partnership Charlotte, NC
Columbia Hill Partners, L.P. Atlanta, GA
Columbia Mill, I, L.P. Atlanta, GA
Columbia Plaza I, L.P. Atlanta, GA
Commerce Place Company Nashville, TN
6
<PAGE>
Commonwealth National Bank Mobile, AL
Community Reinvestment Fund 1997 Limited Partnership Chicago, IL
Community Reinvestment Group, L.C. Fort Lauderdale, FL
Companhia Internacional de Participacoes
Empreendimentos S.A. Sao Paulo, Brazil
Concorde Solutions, Inc. Concord, CA
Consolidated Asset Management Company Oklahoma City, OK
Continental Finanziaria S.P.A. Milan, Italy
Continental Illinois Energy Development Corporation Houston, TX
Continental Illinois Property Corporation No. 3 Chicago, IL
Continental Illinois Venture Corporation Chicago, IL
Continental Information & Technology Services Co. S.A. Buenos Aires, Argentina
Continental Investment Company S.A. Buenos Aires, Argentina
Continental Servicios Corporativos, S.A. De C.V. Mexico City, Mexico
Continental Partners Group, Inc. Chicago, IL
Courtcom M Corp. Baltimore, MD
Courtyards Apartments, Inc. Atlanta, GA
Covation LLC Atlanta, GA
Coventry Village Apartments, Inc. Atlanta, GA
Cranberry Equities Limited Partnership Reiserstown, MD
Credit Guarantee Corporation Malaysia Berhad Petaling Taya, Malaysia
CreditQuick, Inc. Charlotte, NC
CreditQuick, Finance Company Charlotte, NC
Crockett Funding, Inc. Dallas, TX
Crockett Funding II, Inc. Dallas, TX
CSC Associates, L.P. Marietta, GA
C&S Premises, Inc. Atlanta, GA
C&S Premises-SPE, Inc. Atlanta, GA
CSF Holdings, Inc. Tampa, FL
CSI Holdings, Inc. Charlotte, NC
D
The Dana Partnership Johannesburg, South Africa
Danville Community Development Corporation Danville, VA
Dartford River Crossing Limited Dartford, Kent, U.K.
Davis Street Limited George Town, Grand Cayman, Cayman Is.
DCRS Corporation Atlanta, GA
Delowe Place, L.P. Atlanta, GA
Delta FSC Eight, Inc. Havensight, St. Thomas, U.S. VI
Delta FSC Nine, Inc. Havensight, St. Thomas, U.S. VI
Delta FSC Ten, Inc. Havensight, St. Thomas, U.S. VI
Deportes Sports Holdings Limited Georgetown, Cayman Islands
Devon A Corp. Baltimore, MD
DFO Partnership San Francisco, CA
Diamond Shoals Finance Ltd. Bermuda
Dominion Pines Partners L.P. Virginia Beach, VA
DPC, Inc. Dallas, TX
Dulaney Valley Corporation Baltimore, MD
E
Eban Incorporated Dallas, TX
Eban Village I, Ltd. Dallas, TX
Eban Village II, Ltd. Dallas, TX
7
<PAGE>
The EBS Partnership London, U.K.
Education Financing Services, LLC Winston-Salem, NC
Eighth Street, LLC Charlotte, NC
Electronic Broking Services Limited London, U.K.
The Electronic Payments Exchange, Inc. San Francisco, CA
Electronic Vehicle Remarketing, Inc. Melville, NY
Elko Park, Inc. Dallas, TX
Elkridge Apartments Limited Partnership Baltimore, MD
Elmsleigh Funding, Inc. George Town, Grand Cayman, Cayman Is.
Eloundra FSC, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Eloundra, Inc. San Francisco, CA
Elwin Company, Inc. Baltimore, MD
Employee Relocation Consultants, Inc. Jacksonville, FL
Empresa Brasiliera de Aeronautica S.A. Sao Paulo, Brazil
Epidaurus FSC, Inc. Charlotte Amalie, St. Thomas, U.S. VI
EQCC Asset Backed Corporation Jacksonville, FL
EQCC of TN, Inc. Memphis, TN
EQCC Receivables Corporation Jacksonville, FL
EQCC Trans Receivable Corporation Jacksonville, FL
EquiCredit Corporation Jacksonville, FL
EquiCredit Corporation/ALA & MISS Huntsville, AL
EquiCredit Corporation of America Jacksonville, FL
EquiCredit Corporation of AR Little Rock, AR
EquiCredit Corporation of AZ Phoenix, AZ
EquiCredit Corporation of CO Denver, CO
EquiCredit Corporation of CT Farmington, CT
EquiCredit Corporation of DC Greenbelt, MD
EquiCredit Corporation of DE Newark, DE
EquiCredit Corporation of FL Jacksonville, FL
EquiCredit Corporation of GA Atlanta, GA
EquiCredit Corporation of IA West Des Moines, IA
EquiCredit Corporation of ID Boise, Idaho
EquiCredit Corporation of Illinois Lombard, IL
EquiCredit Corporation of IN Indianapolis, IN
EquiCredit Corporation of KY Louisville, KY
EquiCredit Corporation of LA Baton Rouge, LA
EquiCredit Corporation of MA Westborough, MA
EquiCredit Corporation of ME Portland, ME
EquiCredit Corporation of MD Greenbelt, MD
EquiCredit Corporation of MI Southfield, MI
EquiCredit Corporation of MN Bloomington, MN
EquiCredit Corporation of MO Creve-Coeur, MO
EquiCredit Corporation of NC Raleigh, NC
EquiCredit Corporation of NE Omaha, NE
EquiCredit Corporation of NJ South Plainfield, NJ
EquiCredit Corporation of New York Rochester, NY
EquiCredit Corporation of NM Albuquerque, NM
EquiCredit Corporation of NV Las Vegas, NV
EquiCredit Corporation of Ohio Columbus, OH
EquiCredit Corporation of OK Tulsa, OK
EquiCredit Corporation of OR Portland, OR
EquiCredit Corporation of PA Trevose, PA
8
<PAGE>
EquiCredit Corporation of SC Columbia, SC
EquiCredit Corporation of TN Memphis, TN
EquiCredit Corporation of TX Houston, TX
EquiCredit Corporation of UT Salt Lake City, UT
EquiCredit Corporation of VA Norfolk, VA
EquiCredit Corporation of VT Burlington, VT
EquiCredit Corporation of WA Seattle, WA
EquiCredit Corporation of WI Brookfield, WI
EquiCredit Corporation of WV Charleston, WV
EquiCredit Mortgage Loan Company Seattle, WA
Equitable Deed Company Los Angeles, CA
Equitable Service Corporation Miami, FL
Equity Fund of Nebraska VI, L.P. Omaha, NE
ESP Financial Services LLC San Diego, CA
Equity/Protect Reinsurance Company Jacksonville, FL
Etowah, L.P. Atlanta, GA
Etzel Place II, L.P. St. Ann, MO
The Exchange Bellevue, WA
EXHO Properties, Inc. Baltimore, MD
Export Funding Corporation Charlotte, NC
F
Fallon Lane, Inc. Dallas, TX
Family Housing Limited Partnership Seattle, WA
FBA Bancorp. Chicago, IL
Federal Properties I, Inc. Baltimore, MD
Fenborough Services Limited St. Helier, Jersey, Channel Islands
Fenchurch Steamship Corporation London, UK
Fiduciary Services Limited Hong Kong, PRC
Finance Investment Company Springfield, MO
Financial Automation, Inc. Miami, FL
First Development Corporation Baltimore, MD
First Executive Leasing FSC Ltd. Charlotte Amalie, St. Thomas, U.S. VI
First Executive Sands Leasing Corp. San Francisco, CA
First Financial Real Estate Development, Inc. Baltimore, MD
First Florida Bank OREO Holding Company Charlotte, NC
First Housing Development Corporation of Florida Tampa, FL
First in Flight Finance Ltd. Bermuda
First Land Sales, Inc. Baltimore, MD
First Midland Limited Partnership Lake Forest, IL
First Mortgage Corporation Dallas, TX
First Revitalization Corp. Charlotte, NC
First Shelter Service Corporation Brunswick, GA
First Ward Place, LLC Charlotte, NC
FKF, Inc. Des Moines, IA
Florida Affordable Housing 1998, L.L.C. Charlotte, NC
Florida City Apartments, Ltd. Coral Gables, FL
Florida Housing Tax Credit Fund II, Ltd. Columbia, MD
Florita Finance Ltd. Bermuda
Fontana Finance Ltd. Bermuda
Foppingadreef Investments (No. 2) N.V. Amsterdam, Netherlands
Foremost Factors Limited New Delhi, India
9
<PAGE>
Forty-Six Twenty-Five Lindell Corp. Charlotte, NC
Founders Bancorporation, Inc. Oklahoma City, OK
Fountain Square Corporation of Maryland Baltimore, MD
Fundo 2000 de Conversao-Capital Estangeiro Sao Paulo, Brazil
Fundo 2001 de Conversao-Capital Estrangeiro Sao Paulo, Brazil
G
Galveston Funding, Inc. Dallas, TX
Galveston Funding, Inc. II Dallas, TX
Gartmore Global Partners Charlotte, NC
Gatwick, Inc. Dallas, TX
Gatwick, Inc. II Dallas, TX
General Fidelity Insurance Company San Diego, CA
General Fidelity Life Insurance Company San Diego, CA
GlobalNet Communicaciones Financieras, S.A. Santiago, Chile
GLM Investments, Inc. Charlotte, NC
Golden Gate Participacoes Ltda. Sao Paulo, Brazil
Golden West/Henry Building Limited Partnership Portland, OR
Gournia, Inc. San Francisco, CA
Gournia FSC Inc. Charlotte Amalie, St. Thomas, U.S. VI
Gravely Credit Corporation Alpharetta, GA
Greater Brownsville Community Development Corporation Brownsville, TX
Greenburgh Marco, Inc. Baltimore, MD
Green Park, Inc. Dallas, TX
Greensboro Elderly Affordable Housing I Limited
Partnership Charlotte, NC
Greenside Elderly Limited Partnership Reiserstown, MD
H
Harbilan Corporation Charlotte, NC
Harbour Directors I Limited George Town, Grand Cayman, Cayman Is.
Harbour Directors II Limited George Town, Grand Cayman, Cayman Is.
Harbour Nominees Ltd. George Town, Grand Cayman, Cayman Is.
Harbour Secretaries I Limited George Town, Grand Cayman, Cayman Is.
Harper Farm M Corp. Baltimore, MD
Hatteras Finance Ltd. Bermuda
Hays Plaza Apartments, L.P. Hays, KS
Heathrow, Inc. Dallas, TX
Heathrow, Inc. II Dallas, TX
Hedges S.A. Buenos, Aires, Argentina
Het Loo REIT, Co. Reno, NV
HICO Park M Corp. Baltimore, MD
Highlandtown Cooperative Limited Partnership Baltimore, MD
High Street, Inc. Dallas, TX
Hillcrest House Partnership, Ltd. Dallas, TX
Historic District Redevelopment Partnership Atlanta, GA
Historic East Side Neighborhood Housing L.P. Charleston, SC
Honfed Financial Services Corp. Honolulu, HI
HONOR Technologies, Inc. Maitland, FL
House Investments-Midwest Corporate Tax Credit
Fund II, L.P. Indianapolis, IN
Housing Missouri Equity Fund 1994, L.L.C. St. Louis, MO
Housing Missouri Equity Fund 1996, L.L.C. St. Louis, MO
Housing Missouri Equity Fund 1997, L.L.C. St. Louis, MO
10
<PAGE>
Housing Missouri Equity Fund 1998, L.L.C. St. Louis, MO
Hycienda Heights Limited Partnership Belhaven, NC
I
Illinois Equity Fund 1994 Limited Partnership Springfield, IL
Illinois Equity Fund 1996 Limited Partnership Springfield, IL
Inchroy Credit Corporation Limited Hong Kong, PRC
Independence Plaza General Partner, Inc. St. Louis, MO
Indpendence Plaza, L.P. St. Louis, MO
Indupa S.A.I.C. Buenos Aires, Argentina
Integrion Financial Network, LLC Herndon, VA
Interbanking Systems S.A. Athens, Greece
InterFirst Leasing Ltd. (London) London, U.K.
InverAmerica S.A. Santafe de Bogota, Colombia
Inversiones of America Corredores de Bolsa Limitada Santiago, Chile
Inversiones y Negocios Fiduciarios S.A. Buenos Aires, Argentina
InvestAmerica S.A. Santiago, Chile
Irapetra FSC, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Irving Park, Inc. Dallas, TX
Island Funding, Ltd. Dallas, TX
Island Funding, Ltd. II Georgetown, Grand Cayman, Cayman Is.
Ismael I, Inc George Town, Grand Cayman, Cayman Is.
ITG Secretaries Limited Hong Kong, PRC
J
Jambu Holdings, Inc. San Francisco, CA
Jamestown Commons Associates, L.P. Virginia Beach, VA
Japan Airlines/NCNB 1993-1 (Grantor Trust) Delaware
JCCA, Inc. Wilton, CT
Jewel Limited Partnership Des Moines, IA
Joey Trust San Francisco, CA
Joint Electronic Teller Services Limited Hong Kong, PRC
Juliana, Inc. George Town, Grand Cayman, Cayman Is.
Justin, Inc. George Town, Grand Cayman, Cayman Is.
K
Kauai Hotel, L.P. Los Angeles, CA
Kavala FSC, Inc. Bridgetown, Barbados
Kavala, Inc. San Francisco, CA
Kenilworth-Burroughs Limited Partnership Washington, DC
Kenilworth Industrial Park Limited Liability Company Washington, DC
Kennerly-Maffitt Apartments Associates, L.P. St. Louis, MO
Kill Devil Hills Finance Limited Partnership Delaware
Kill Devil Hills II Limited Partnership Delaware
King Street Apartments, II, L.P. Columbia, SC
Kitty Hawk Finance Ltd. Bermuda
Knossus FSC, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Korg Acceptance Corporation Alpharetta, GA
L
Labco I, Inc. George Town, Grand Cayman, Cayman Is.
Labco II, Inc. George Town, Grand Cayman, Cayman Is.
11
<PAGE>
Laconia FSC, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Laconia, Inc. San Francisco, CA
Ladera Associates, Limited Partnership Albuquerque, NM
Laredo Partners Dallas, TX
LaSalle Street Natural Resources Corporation Chicago, IL
Latin America Funding, Inc. Dallas, TX
Lease Holding Company Pte Ltd Singapore, Singapore
Lee County Holdings Company Tampa, FL
Lee First, Inc. Tampa, FL
Leon Avenue Redevelopment Company Sarasota, FL
Liberal Asset Management Administracao Financeirae
Consultoria Ltda. Rio de Janeiro, Brazil
Liberal Banking Corporation Ltd. Nassau, Bahamas
Liberal S.A. Corretora de Cambio e Valores Mobiliarios Rio de Janeiro, Brazil
Linden Tree Development Corp. Melville, NY
Lindos FSC, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Lindos, Inc. San Francisco, CA
Lubbock Funding, Inc. Dallas, TX
Lubbock Funding, Inc. II Dallas, TX
Lyndhurst Properties Corp. Melville, NY
M
Madison Park A Corp. Baltimore, MD
Maguire Partners-Glendale Center, LLC Los Angeles, CA
Main Place Holdings LLC Charlotte, NC
Main Place Real Estate Investment Trust Charlotte, NC
Malia FSC, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Malia, Inc. San Francisco, CA
Mar A Lowe Corp. Baltimore, MD
MAR, Inc. Charlotte, NC
Marco Polo Leasing Ltd. Charlotte Amalie, St. Thomas, U.S. VI
Marco Properties, Inc. Baltimore, MD
Marnat Creek Limited Partnership Tucker, GA
Marsico Capital Management, LLC Denver, CO
Marsico Management Holdings, L.L.C. Charlotte, NC
Maryland Housing Equity Fund Limited Partnership Columbia, MD
Maryland National Community Development Corporation Baltimore, MD
The Maryland National/Enterprise Equity Fund Limited
Partnership Columbia, MD
Maryland National Leasing Services Corporation Washington, DC
Maryland National Realty Investors, Inc. Washington, DC
Massuh S.A. Buenos Aires, Argentina
Mayfair Partners Dallas, TX
Maywell Mark Corp. Oklahoma City, OK
MB Deal 97, S.L. Madrid, Spain
MBHD, LLC Nashville, TN
McCormick Realty Limited Partnership Tucker, GA
McDonald Ohio Tax Credit Fund-1996 Limited Partnership Cleveland, OH
MCOG Leasing Corp. San Francisco, CA
MECA Software L.L.C. Fairfield, CT
Mecklenburg Park, Inc. Dallas, TX
Melwood M Corp. Baltimore, MD
Mercury Marine Acceptance Corporation Alpharetta, GA
12
<PAGE>
Merritt Community Capital Fund V, Limited Partnership Oakland, CA
Merritt Community Capital Fund VI, L.P. Oakland, CA
MESBIC Ventures Holding Company Dallas, TX
Metropo M Corp. Baltimore, MD
Metropolitan Commercial Properties Corporation I Baltimore, MD
Metropolitan Commercial Properties Corporation VIII Baltimore, MD
Metropolitan Commercial Properties Corporation X Baltimore, MD
Michigan Capital Fund for Housing Limited
Partnership II Lansing, MI
Michigan Capital Fund for Housing Limited
Partnership III Lansing, MI
Michigan Capital Fund for Housing Limited
Partnership IV Lansing, MI
Middletown Finance, Inc. Dallas, TX
Midwest Affordable Housing 1997-1, LLC Charlotte, NC
Midwest Realty & Management, Inc. Buffalo, NY
Millcreek Development Partnership, L.P. Memphis, TN
Minbanc Capital Corp. Washington, D.C.
Missouri Affordable Housing Fund III, L.P. Columbia, MO
Misty Waters Apartments, Inc. Atlanta, GA
M & M Realty, Inc. St. Louis, MO
MN World Trade Corporation Baltimore, MD
MNC Affiliates Group, Inc. Washington, DC
MNC American Corporation Birmingham, AL
MNC Capital Corporation Washington, DC
MNC Consumer Discount Company Washington, DC
MNC Credit Corp. Washington, DC
MNC Investment Bank, Ltd. Baltimore, MD
Mohave Partners Dallas, TX
MOIL Corporation Wilton, CT
Montana Fundo de Renda Fixa-Capital Estrangeiro Sao Paulo, Brazil
Montgomery Homes Limited Partnership II Kensington, MD
Montgomery Homes Limited Partnership III Kensington, MD
Montgomery Homes Limited Partnership IV Kensington, MD
Montgomery Sports, Inc. San Francisco, CA
Moorpark Holding, Inc. Chicago, IL
Moraine Ltd. George Town, Grand Cayman, Cayman Is.
Motift, Inc. Atlanta, GA
MS Spitfire LLC San Francisco, CA
Mt. Pleasant Ventures Limited Partnership Raleigh, NC
M.T.S., S.p.A. Rome, Italy
Multi Banco S.A. Sao Paulo, Brazil
Multi-Family Housing Investment Fund I, LLC Charlotte, NC
Multi-State Properties, Inc. Baltimore, MD
Mycenae FSC, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Mycenae, Inc. San Francisco, CA
MYM Holdings Corporation Charlotte, NC
N
NAPICO/USAA Tax Credit Fund I Beverly Hills, CA
National Credit Corporation, an Industrial Loan
Institution Pine Bluff, AR
National Equity Fund 1992 Limited Partnership Chicago, IL
National Equity Fund 1993 Limited Partnership Chicago, IL
National Equity Fund 1994 Limited Partnership Chicago, IL
National Equity Fund 1995 Limited Partnership Chicago, IL
13
<PAGE>
National Equity Fund 1995 Series II Limited
Partnership Chicago, IL
National Equity Fund 1996 Limited Partnership Chicago, IL
National Equity Fund 1996 Series II Limited
Partnership Chicago, IL
Nations Argentina, S.A. Buenos Aires, Argentina
Nations de Colombia Ltda Santa Fe de Bogota, Colombia
Nations Finance (Cayman) Limited Georgetown, Cayman Islands
Nations Finance Company Dublin, Ireland
Nations Housing Fund Limited Partnership Columbia, MD
Nations Housing Fund II Limited Partnership Columbia, MD
Nations Investment Management Limited London
NationsBanc Advisors, Inc. Charlotte, NC
NationsBanc Asset Securities, Inc. Charlotte, NC
NationsBanc Auto Funding Corporation Charlotte, NC
NationsBanc Auto Leasing, Inc. Melville, NY
NationsBanc Business Credit, Inc. Tucker, GA
NationsBanc Business Finance Corporation Atlanta, GA
NationsBanc Capital Corporation Charlotte, NC
NationsBanc Capital Investors, L.P. Charlotte, NC
NationsBanc Capital Investors SBIC, L.P. Charlotte, NC
NationsBanc Charlotte Center, Inc. Charlotte, NC
NationsBanc Commercial Corporation Tucker, GA
NationsBanc-CRT Services, Inc. Chicago, IL
NationsBanc Dealer Leasing, Inc Greensboro, NC
NationsBanc Energy Group Denver, Inc. Denver, CO
NationsBanc Equity Mortgage Corporation Richmond, VA
NationsBanc Financial Products, Inc. Chicago, IL
NationsBanc Health Services, Inc. Charlotte, NC
NationsBanc Insurance Agency, Inc. Norfolk, VA
NationsBanc Insurance Company, Inc. Charlotte, NC
NationsBanc Insurance Inc. Mount Airy, MD
NationsBanc Insurance Services, Inc. Mount Airy, MD
NationsBanc Investment Corporation Charlotte, NC
NationsBanc Investments, Inc. Charlotte, NC
NationsBanc Lease Finance VI Delaware
NationsBanc Leasing Corporation Tucker, GA
NationsBanc Leasing & R.E. Corporation Charlotte, NC
NationsBanc Montgomery Funding Corp. Charlotte, NC
NationsBanc Montgomery Holdings Corporation Charlotte, NC
NationsBanc Montgomery Securities Limited London, U.K.
NationsBanc Montgomery Securities LLC Charlotte, NC
NationsBanc Mortgage Capital Corporation Charlotte, NC
NationsBanc Mortgage Corporation Charlotte, NC
NationsBanc Mortgage Corporation of Georgia Tucker, GA
NationsBanc Pacific Corporation Charlotte, NC
NationsBanc Retirement Management, Inc. Atlanta, GA
NationsBanc SBIC Corporation Charlotte, NC
NationsBank Brasil Holdings Ltda Rio de Janeiro, Brazil
NationsBank Carolinas Merchant Services, Inc. Charlotte, NC
NationsBank CDC Special Holding Company, Inc. Charlotte, NC
NationsBank CLO Corporation Dallas, TX
NationsBank CLO Funding Corp. Dallas, TX
NationsBank Community Development Corporation Charlotte, NC
14
<PAGE>
NationsBank do Brasil Ltda. Sao Paulo, Brazil
NationsBank Europe Limited London
NationsBank (Export Finance) Ltd. London
NationsBank Florida Merchant Services, Inc. Charlotte, NC
NationsBank Housing Fund Investment Corporation Charlotte, NC
NationsBank International New York, NY
NationsBank International Trust (Jersey) Limited Saint Helier, Jersey, Channel Islands
NationsBank Merchant Services Charlotte, NC
NationsBank, N.A. Charlotte, NC
NationsBank of Delaware, N.A. Dover, DE
NationsBank Overseas Corporation Charlotte, NC
NationsBank Trust Company of New York New York, NY
NationsBridge, L.L.C. Charlotte, NC
NationsCommercial Corp. Dallas, TX
NationsCredit Acceptance Corporation Irving, TX
NationsCredit Commercial Corporation Wilton, CT
NationsCredit Commercial Corporation Ltd. Mississauga, Canada
NationsCredit Consumer Corporation Irving, TX
NationsCredit Consumer Discount Company Irving, TX
NationsCredit Consumer Services, Inc. Irving, TX
NationsCredit Distribution Finance, Inc. Alpharetta, GA
NationsCredit Finance Group Inc. Irving, TX
NationsCredit Financial Acceptance Corporation Irving, TX
NationsCredit Financial Services Corporation Irving, TX
NationsCredit Financial Services Corporation of Alabama Irving, TX
NationsCredit Financial Services Corporation of America Irving, TX
NationsCredit Financial Services Corporation of Florida Irving, TX
NationsCredit Financial Services Corporation of Nevada Irving, TX
NationsCredit Financial Services Corporation of Virginia Irving, TX
NationsCredit Home Equity ABS Corporation Irving, TX
NationsCredit Home Equity Corporation of Kentucky Irving, TX
NationsCredit Home Equity Corporation of Virginia Irving, TX
NationsCredit Home Equity Services Corporation Irving, TX
NationsCredit Insurance Agency, Inc. Irving, TX
NationsCredit Insurance Corporation Irving, TX
NationsCredit Management Corporation Wilton, CT
NationsCredit Manufactured Housing Corporation Jacksonville, FL
NationsCredit Marine Funding Corporation Irving, TX
NationsCredit Mortgage Corporation of Florida Irving, TX
NationsCredit Securitization Corporation Irving, TX
Nations-CRT Asia, Inc. Singapore
Nations-CRT Hong Kong, Limited Hong Kong
Nations-CRT Japan, Inc. Tokyo and Osaka, Japan
Nations-CRT Options, Inc Chicago, IL
Nations-CRT U.K. & Co. London, U.K.
NationsLink Funding Corporation Charlotte, NC
Nauplia FSC, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Nauplia, Inc. San Francisco, CA
N.B. (Bahamas) Ltd. Nassau, Bahamas
NB Capital Trust I Charlotte, NC
NB Capital Trust II Charlotte, NC
NB Capital Trust III Charlotte, NC
15
<PAGE>
NB Capital Trust IV Charlotte, NC
NB Equity Holdings, Inc. Charlotte, NC
NB Holdings Corporation Charlotte, NC
NB International Finance B.V. Amsterdam, The Netherlands
NBII Agency, Inc. Albuquerque, NM
NBII Agency, LLC Towson, MD
NBII Agency of Texas, Inc. Dallas, TX
NB Financial Trading (Ireland) Limited Dublin, Ireland
NB Insurance Services, Inc. Tucker, GA
NB Partner Corp. Charlotte, NC
NB Technology Partner, Inc. Charlotte, NC
NBCDC Osborne, Inc. Tampa, FL
NBRE Realty LLC Dallas, TX
NCNB Community Development Corporation Charlotte, NC
NCNB Corporate Services, Inc. Charlotte, NC
NCNB Lease Atlantic, Inc. Delaware
NCNB Lease Finance Delaware
NCNB Lease Finance II Delaware
NCNB Lease Finance III Delaware
NCNB Lease Finance IV Delaware
NCNB Lease Finance V Delaware
NCNB Lease International, Inc. Delaware
NCNB Lease Offshore, Inc. Delaware
NCNB Properties, Inc. Charlotte, NC
Near Northside Development Group, L.L.C. Charlotte, NC
Neighborhood Rental Limited Partnership II Baltimore, MD
New Broad Street, Inc. Dallas, TX
New Homes for North Kenwood-Oakland Limited Partnership Chicago, IL
The Newington Limited Partnership Baltimore, MD
NIMAC Finance Corp. Alpharetta, GA
NMS Capital, L.P. New York, NY
NMS Services (Cayman), Inc. Grand Cayman, Cayman Is.
NMS Services, Inc. New York, NY
North Carolina Equity Fund Columbia, MD
North Park Place Limited Partnership Des Moines, IA
NS Secretaries Limited St. Helier, Jersey, Channel Is.
Nubia Redevelopment Partnership Dallas, TX
O
OA Management, Inc. Tampa, FL
Oak Park at Nations Ford LLC Charlotte, NC
The Ocmulgee Corporation Atlanta, GA
ODC Crossing, Limited Partnership Ellicott City, MD
Odessa Park, Inc. Dallas, TX
Ohio Equity Fund for Housing Limited Partnership VII Columbus, OH
Ohio Equity Fund for Housing Limited Partnership VIII Columbus, OH
Olefinas Del Zulia, S.A. Caracas, Chacao, Venezuela
Oliver Plaza Limited Partnership Baltimore, MD
Orange Co. Falcon Trace Partners, Ltd. Maitland, FL
Oregon Equity Fund Limited Partnership Portland, OR
Orion Eight, Inc. San Francisco, CA
Orion Nine, Inc. San Francisco, CA
16
<PAGE>
Orion Ten, Inc. San Francisco, CA
Osborne Landing, L.P. Tampa, FL
Oshkosh/McNeilus Financial Services Partnership Dodge Center, MN
OS Securities Corp. Jacksonville, FL
Outerbanks Finance Ltd. Bermuda
Overseas Lending Corporation San Francisco, CA
Owen Brown II Limited Partnership Baltimore, MD
Oxford Management Services Corp. Melville, NY
P
Pacific Southwest Realty Company San Francisco, CA
Padovano Investments George Town, Grand Cayman, Cayman Is.
Pakistan Industrial Credit & Investment Corporation Karachi, Pakistan
Palisades A Corp. Baltimore, MD
Pan American Mortgage Corp. Miami, FL
Paradise Funding Limited Dallas, TX
The Park at Hillside, LLC Nashville, TN
The Park at Lakewood L.L.C.
dba Campbellton Glen Apartments, LLC Charlotte, NC
Park City, Ltd. Miami, FL
Parkview Gardens Rehabilitation I, L.P. St. Louis, MO
Parkview Gardens Rehabilitation II, L.P. St. Louis, MO
Parkville Seniors, L.P. Shawnee Mission, KS
Pasir Mas Ltd. Charlotte Amalie, St. Thomas, U.S. VI
Patras FSC, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Patras, Inc. San Francisco, CA
PDE, Inc. George Town, Grand Cayman, Cayman Is.
PDK Hangar, L.L.C. Charlotte, NC
Pennway Plaza Associates, L.P. St. Louis, MO
Perissa LLC San Francisco, CA
Petroquimica Uniao S.A. Sao Paulo, Brazil
Phaestos FSC, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Piccadilly, Inc. Dallas, TX
Piedmont Finance Ltd. Bermuda
Pine Knoll Limited Partnership Raleigh, NC
Pine Oaks/Mesquite, Inc. Dallas, TX
Pinehurst Trading, Inc. Charlotte, NC
PJM Office Building, LLC Baltimore, MD
PJM Retail Center, LLC Baltimore, MD
Plano Partners Dallas, TX
PNB Securities Corporation Los Angeles, CA
Poros VII, Inc. San Francisco, CA
Poros FSC, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Poros FSC I, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Poros FSC II, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Poros FSC III, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Poros FSC IV, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Poros FSC V, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Poros FSC VI, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Poros FSC VII, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Poros FSC VIII, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Poros FSC IX, Inc. Charlotte Amalie, St. Thomas, U.S. VI
17
<PAGE>
Poros FSC X, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Poros FSC XI, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Poros FSC XII, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Pratt Management Company Baltimore, MD
Price Auto Outlet of California, Inc. Melville, NY
Private Export Funding Corporation New York, NY
Pydna Corporation San Francisco, CA
Pylos FSC, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Pylos, Inc. San Francisco, CA
Pyrgos FSC, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Pyrgos, Inc. San Francisco, CA
Q
Quality A Corp. Baltimore, MD
Quatro I, Inc. Tulsa, OK
Queen City Partnership Dallas, TX
R
Raffles Leasing Ltd. Charlotte Amalie, St. Thomas, U.S. VI
Rainier Credit Company Seattle, WA
Rainier Mortgage Company Seattle, WA
Real Estate Collateral Management Company Los Angeles, CA
Regent Street, Inc. Dallas, TX
Regent Street II, Inc. Dallas, TX
Related Corporate Partners VI Limited Partnership New York, NY
Related Insured Tax Credit Partners III, L.P. New York, NY
Renfrew Services Limited Hong Kong, PRC
Reprise, Inc. Baltimore, MD
Republic Dallas Ltd. (U.K.) London, U.K.
RepublicBank Insurance Agency, Inc. Dallas, TX
Rhode Island/EquiCredit Corporation Warwick, RI
Ridgemount Services Limited St. Helier, Jersey, Channel Islands
Ripley Station Limited Partnership Raleigh, NC
Ritchie Court M Corporation Baltimore, MD
Rive Gauche A Corp. Baltimore, MD
River City Capital Management, Inc. St. Louis, MO
Riverview Townes Limited Partnership Kinston, NC
Roanoke at HOME Limited Partnership Roanoke, VA
Roanoke Community Development Corporation Roanoke, VA
Rockwell Resources, Inc. Charlotte, NC
Rooms-Springfield, Inc. Baltimore, MD
Rosedale Terrace Limited Partnership Baltimore, MD
Ruby Aircraft Leasing and Trading Limited London, U.K.
S
Safari (QSPE) Limited George Town, Grand Cayman, Cayman Is.
Sagebrush Holdings, Inc. Las Vegas, NV
Samedan Leasing Ltd. Charlotte Amalie, St. Thomas, U.S. VI
San Antonio Business Development Fund, Inc. San Antonio, TX
San Antonio Master Limited Partnership Columbia, MD
Sandhills Finance Ltd. Bermuda
Santa Isabela Limitada Sao Paulo, Brazil
18
<PAGE>
Sardonyx Shipping Pte Ltd Singapore, Singapore
Savannah Bank of Nigeria Lagos, Nigeria
Savannah Community Development Corporation
dba Savannah Regional Small Business Capital Fund Savannah, GA
Savannah International Sales, Inc. Saint Thomas, VI
SBMB Corporation Wilton, CT
S.C. Model I Limited Partnership Charleston, SC
SCI Holdings Corporation Baltimore, MD
SCIC LMN Springfield, LLC Baltimore, MD
SCRC Carrolltowne, Inc. Baltimore, MD
SCRC Process Service Corp. Baltimore, MD
Sea Ray Credit Corporation Alpharetta, GA
Seabrook Operations, Inc. Atlanta, GA
Seafirst America Corporation Seattle, WA
Seafirst Auto Leasing, Inc. Seattle, WA
Seafirst Insurance Corporation Bellevue, WA
Seafirst Leasing Company Seattle, WA
Seafirst Services Corporation Seattle, WA
Seaview of Seabrook, Inc. Atlanta, GA
Second Land Sales, Inc. Atlanta, GA
Securilease BV Amsterdam, Netherlands
Securitization Funding Corporation Dallas, TX
Security-First Company San Francisco, CA
Security-First CMO-I Corporation San Francisco, CA
Security Pacific Acceptance Corp. II San Diego, CA
Security Pacific Australian Assets Limited Sydney, New South Wales, Australia
Security Pacific Capital Investors, L.P. Foster City, CA
Security Pacific Capital Leasing Corporation San Francisco, CA
Security Pacific Equipment Finance (Europe) Inc. San Francisco, CA
Security Pacific EuroFinance Holdings, Inc. San Francisco, CA
Security Pacific EuroFinance, Inc. San Francisco, CA
Security Pacific Financing Services Ltd. London, U.K.
Security Pacific Hong Kong Holdings Limited Hong Kong, PRC
Security Pacific Housing Services, Inc. San Diego, CA
Security Pacific International Leasfinance, Inc. San Francisco, CA
Security Pacific Investors, Inc. Foster City, CA
Security Pacific Lease Finance (Europe) Inc. San Francisco, CA
Security Pacific Leasing Corporation San Francisco, CA
Security Pacific Overseas Investment Corporation San Francisco, CA
Sedgebrook Limited Partnership Raleigh, NC
Service-Wright Corporation Washington, DC
Seventeenth Commerce Properties Corporation Baltimore, MD
Shamrock Leasing Limited London, U.K.
Shanghai Enterprise Ltd. Hong Kong, PRC
The Shannon Company, A California Limited Partnership Modesto, CA
Sherwood Park Limited Partnership Raleigh, NC
Sherwood Terrace Apartments, Inc. Atlanta, GA
Sierra Nevada Realty General Partner Dallas, TX
Siesta Holdings, Inc. Las Vegas, NV
Silver REIT Co. Reno, NV
Skyros, Ltd. Hamilton, Bermuda
Societa Intermediari Negoziatori in Titoli S.p.A. Rome, Italy
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Societe Anonyme Immobiliere du 28 Place Vendome Paris, France
Societe Nouvelle Les Domomites Francaises, SARL Gresse en Vercors, France
Society for Worldwide Interbank Financial
Telecommunication (S.W.I.F.T.) La Hulpe, Belgium
SOP M Corp. Baltimore, MD
Sounion FSC, Inc. Charlotte Amalie, St. Thomas, U.S. VI
South Charles Investment Corporation Baltimore, MD
South Charles Realty Corp Baltimore, MD
South Point Shopping Center, Inc. Baltimore, MD
Southern California Business Development Corporation Los Angeles, CA
Southern Dallas Development Fund, Inc. Dallas, TX
Southern Oaks Condominium Partners, Ltd. Dallas, TX
Sovran Capital Management Corporation Richmond, VA
SPAA Leasing Corporation San Francisco, CA
SPAR S.H.A.R.E. II, Ltd. Jacksonville, FL
Spitfire Capital Partners LP San Francisco, CA
Spotted Horse Holdings, Inc. Cheyenne, WY
Springfield Equity Fund Partnership Springfield, MO
SFR Trading, Inc Miami, FL
Stanton Road LLC Washington, DC
St. Andrew's Homes Limited Partnership Charlotte, NC
St. Louis Equity Fund 1988 Partnership St. Louis, MO
St. Louis Equity Fund 1991 Partnership St. Louis, MO
St. Louis Equity Fund 1992 Partnership St. Louis, MO
St. Louis Equity Fund 1993 Partnership St. Louis, MO
St. Louis Equity Fund 1994 Partnership St. Louis, MO
St. Louis Equity Fund 1995, L.L.C. St. Louis, MO
St. Louis Equity Fund 1996, L.L.C. St. Louis, MO
St. Louis Equity Fund 1997, L.L.C. St. Louis, MO
St. Louis Equity Fund 1998, L.L.C. St. Louis, MO
St. Louis Investment Properties, Inc. Tampa, FL
St. Wenceslaus Limited Partnership Baltimore, MD
Statewide Administrative Services, Inc. Tucker, GA
Steppington/Dallas, Inc. Dallas, TX
Suburban Service Corporation Charlotte, NC
Sully A Corp. Baltimore, MD
SunAmerica Affordable Housing Partners XXXII,
a Nevada Limited Partnership Los Angeles, CA
SunAmerica Affordable Housing Partners XXXIII,
a Nevada Limited Partnership Los Angeles, CA
SunAmerica Affordable Housing Partners XL,
a Nevada Limited Partnership Los Angeles, CA
Sun America Missouri Partners I, A Nevada Ltd.
Partnership Los Angeles, CA
Suncoast Advertising Company, Inc Jacksonville, FL
Sunset Hill Corporation Baltimore, MD
SunStar Acceptance Corporation Atlanta, GA
SunStar Acceptance Corporation (Hawaii) Atlanta, GA
Swallowtail Limited St. Helier, Jersey, Channel Islands
Sweet River Investments, L.L.C. Georgetown, Cayman Islands
Sweitzer M Corp. Baltimore, MD
Sykesville M Corp. Baltimore, MD
20
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T
T-Oaks Apartments, Inc. Atlanta, GA
Tabono Joint Venture Dallas, TX
Tabono Partnership II, Ltd. Dallas, TX
Tanah Merah Leasing Ltd. Charlotte Amalie, St. Thomas, U.S. VI
Tennessee Nationalease Corporation Charlotte, NC
Terry Street Redevelopment Limited Liability Company Atlanta, GA
Texas Housing Opportunity Fund, Ltd. Dallas, TX
Texas Housing Opportunity Fund II, LTD. Austin, TX
Thasos FSC, Inc. Bridgetown, Barbados
Third Coast Community Development Corporation Houston, TX
Three Commercial Place Associates Norfolk, VA
Third Ward Committee, LLC Charlotte, NC
Third Ward Neighborhood Development Association Charlotte, NC
THOF III, Ltd. Austin, TX
Tidewater Partners Limited Partnership Virginia Beach, VA
TIM, Inc. Charlotte, NC
Timber Ridge of Immokalee, Limited Partnership Immokalee, FL
Tiryns FSC, Inc. Charlotte Amalie, St. Thomas, U.S. VI
Titulos Rioplatenses S.A. Montevideo, Uruguay
TJN Corporation Wilton, CT
Tower Commercial Realty, Inc. St. Louis, MO
Tower Holdings, L.P. St. Louis, MO
Townsite Plaza Development, Inc. St. Louis, MO
TradeStreet Investment Associates, Inc. Charlotte, NC
TransAlliance LP Bellevue, WA
Transit Holding, Inc. San Francisco, CA
TransPacific Finance Limited Partnership Delaware
TransPacific Funding (1993), Inc. Delaware
Transtex Management Company Miami, FL
Trexar Financial Corp. Melville, NY
TriStar Communications, Inc. San Francisco, CA
Tri-Tech, L.P. Baltimore, MD
Troy Street Limited Liability Company Alexandria, VA
Trunoms, Limited Nassau, Bahamas
Tryon Assurance Company, Ltd. Bermuda
Tryon Investments, LLC Charlotte, NC
Tyler International Sales, Inc. Saint Thomas, VI
Tyler Trading, Inc. Dallas, TX
U
Ulysses Beta, Inc. San Francisco, CA
Ulysses Leasing Limited St. Helier, Jersey, Channel Islands
Ulysses Queensland Corporation San Francisco, CA
U.N. Service Corporation Little Rock, AR
Unihouse Nominees Limited St. Helier, Jersey, Channel Islands
The Union Modern Mortgage Corporation Little Rock, AR
Union Realty and Securities Company St. Louis, MO
United Mortgage Corporation Bloomington, MN
United Mortgage Holding Company Bloomington, MN
21
<PAGE>
United States Airlease Holding, Inc. San Francisco, CA
UniTrusco Corporation West Covina, CA
Unity National Bank Houston, TX
University Fletcher Woods, Inc. Tampa, FL
University Fletcher Woods, Ltd. Tampa, FL
University Heights Associates, L.P. St. Louis, MO
University Park Shopping Center, LLC Charlotte, NC
USA Auto Mall, Inc. Melville, NY
USA Auto Mall of Florida, Inc. Melville, NY
USA Auto Mall of New Jersey, Inc. Melville, NY
USA Auto Mall of New York, Inc. Melville, NY
Uwharrie Finance Ltd. Bermuda
V
Vasco da Gama Licenciamentos S.A. Rio de Janeiro, Brazil
Venco, B.V. George Town, Grand Cayman, Cayman Is.
Vera Cruz Redevelopment Partnership, Ltd. San Antonio, TX
Vernon M Corp. Baltimore, MD
Vernon Park, Inc. Dallas, TX
Verrington Limited George Town, Grand Cayman, Cayman Is.
Villages of La Costa Southwest, L.L.C. San Diego, CA
Ville Properties, L.P. St. Louis, MO
Vision Achievement Limited Hong Kong, PRC
VOA Eastern Avenue Limited Partnership Lanham, MD
W
WAC One, Inc. Baltimore, MD
Walnut Woods Limited Partnership Raleigh, NC
Wallace Terrace Apartments, L.P. Charlotte, NC
Wanda Finance Ltd. Bermuda
Washington View (H) Corporation Baltimore, MD
Washington View (NH) Corporation Baltimore, MD
Washington View, Inc. Baltimore, MD
Wayne Plaza L.P. St. Louis, MO
Wellington Land Co., Inc. Baltimore, MD
Wellington Park/Lewisville, Inc. Dallas, TX
Wendover Lane, Inc. Dallas, TX
West Trade, LLC Charlotte, NC
Westminster Place Phase IV, L.P. St. Louis, MO
Westwood Manor Development, L.P. Memphis, TN
White Sands Leasing Corporation San Francisco, CA
Wickliffe A Corp. Baltimore, MD
William Mann Jr. Community Development Corporation Fort Worth, TX
Willow Pond Limited Partnership Wilmington, NC
Windmill Leasing Ltd. Charlotte Amalie, St. Thomas, U.S. VI
Windmill Sands Leasing Corporation San Francisco, CA
Winnebago Acceptance Corporation Apharetta, GA
Wingtip Finance Limited Bermuda
Wolnoms, Limited Nassau, Bahamas
Woods M Corp. Baltimore, MD
Worthen Community Development Corporation Little Rock, AR
Worthen Development Corporation, Inc. Maumelle, AR
22
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Worthen Mortgage Company Buffalo, NY
Wrightbrothers Ltd. Bermuda
Z
Zentac Productions, Inc. San Francisco, CA
Zuari Agro Chemicals Ltd. Zuarinagar, Goa, India
IV CB&T Tulsa Holdings, Inc. Tulsa, OK
200 Madison Ave. Realty Corp. Memphis, TN
200 Service Corp. Miami, FL
555 California Street Partners San Francisco, CA
1989 Oakland Housing Partnership Associates Oakland, CA
1991 Oakland Housing Partnership Associates Oakland, CA
2600 Kingman Partnership, L.P. Des Moines, IA
2707 Rauschenbach Associates, L.P. St. Louis, MO
3716 Limited Partnership Des Moines, IA
693327 Ontario Limited Toronto, Ontario, Canada
23
</TABLE>
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. 333-07229;
333-15375; 333-18273; 333-43137; 333-13811; 333-51367; 33-54784; 33-49881;
33-57533; 33-63097 and 33-45498); the Registration Statements on Form S-8 (Nos.
33-45279; 33-60695; 333-02875; 333-07105; 333-20913; 333-24331; 333-58657;
333-65209; 333-69849 and 2-80406); and the Post-Effective Amendments on Form S-8
to Registration Statements on Form S-4 (Nos. 33-43125; 33-55145; 33-63351;
33-62069; 33-62208; 333-16189; 333-60553; and 333-40515) of BankAmerica
Corporation of our report dated January 15, 1999 appearing on page 51 of this
Form 10-K.
/s/PricewaterhouseCoopers LLP
Charlotte, North Carolina
March 22, 1999
EXHIBIT 24(a)
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that each of BankAmerica Corporation
and the several undersigned officers and directors whose signatures appear
below, hereby makes, constitutes and appoints Charles M. Berger, James W. Kiser
and Paul J. Polking, 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 prepare, 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, 1998, 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, BankAmerica 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.
BANKAMERICA CORPORATION
By: /s/ Hugh L. McColl, Jr.
-------------------------
(Hugh L. McColl, Jr.)
Chairman and Chief Executive Officer
Dated: January 27, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
- --------- ----- ----
/s/ Hugh L. McColl, Jr. Chairman of the Board, Chief January 27, 1999
- --------------------------- Executive Officer and Director
(Hugh L. McColl, Jr.) (Principal Executive Officer)
/s/ James H. Hance, Jr. Vice Chairman and January 27, 1999
- ----------------------------- Chief Financial Officer
(James H. Hance, Jr.) (Principal Financial Officer)
/s/ Marc D. Oken Executive Vice President and January 27, 1999
- ----------------------------- Principal Financial Executive
(Marc D. Oken) (Principal Accounting Officer)
/s/ Charles W. Coker Director January 27, 1999
- -----------------------------
(Charles W. Coker)
<PAGE>
/s/ Timm F. Crull Director January 27, 1999
- -----------------------------
(Timm F. Crull)
/s/ Alan T. Dickson Director January 27, 1999
- -----------------------------
(Alan T. Dickson)
/s/ Kathleen Feldstein Director January 27, 1999
- -----------------------------
(Kathleen Feldstein)
/s/ Paul Fulton Director January 27, 1999
- -----------------------------
(Paul Fulton)
/s/ Donald E. Guinn Director January 27, 1999
- -----------------------------
(Donald E. Guinn)
/s/ C. Ray Holman Director January 27, 1999
- -----------------------------
(C. Ray Holman)
/s/ W. W. Johnson Director January 27, 1999
- -----------------------------
(W. W. Johnson)
/s/ Walter E. Massey Director January 27, 1999
- -----------------------------
(Walter E. Massey)
/s/ Richard M. Rosenberg Director January 27, 1999
- -----------------------------
(Richard M. Rosenberg)
/s/ O. Temple Sloan, Jr. Director January 27, 1999
- -----------------------------
(O. Temple Sloan, Jr.)
/s/ Meredith R. Spangler Director January 27, 1999
- -----------------------------
(Meredith R. Spangler)
/s/ A. Michael Spence Director January 27, 1999
- -----------------------------
(A. Michael Spence)
-2-
<PAGE>
/s/ Ronald Townsend Director January 27, 1999
- ----------------------
(Ronald Townsend)
/s/ Solomon D. Trujillo Director January 27, 1999
- -----------------------------
(Solomon D. Trujillo)
/s/ Jackie M. Ward Director January 27, 1999
- -----------------------------
(Jackie M. Ward)
/s/ Virgil R. Williams Director January 27, 1999
- -----------------------------
(Virgil R. Williams)
/s/ Shirley Young Director January 27, 1999
- -----------------------------
(Shirley Young)
-3-
</TABLE>
EXHIBIT 24(b)
BANKAMERICA CORPORATION
RESOLUTIONS OF THE BOARD OF DIRECTORS
JANUARY 27, 1999
-------------------
ANNUAL REPORT ON FORM 10-K
------------------------------
WHEREAS, officers of BankAmerica Corporation (the "Corporation") have
made presentations to the Board of Directors regarding the Corporation's
financial results for the year ended December 31, 1998; and
WHEREAS, the Board has had adequate opportunity to review and comment on
such results;
NOW, THEREFORE, BE IT:
RESOLVED, that the proper officers of the Corporation be, and they
hereby are, authorized and empowered on behalf of the Corporation to prepare,
execute, deliver and file the Corporation's Annual Report on Form 10-K for the
year ended December 31, 1998 (the "Form 10-K"), based upon the information
presented to and considered at this meeting, in such form and with such content
and attachment of exhibits as the signing officers shall approve, their approval
to be conclusively evidenced by their signature thereof; and be it
FURTHER RESOLVED, that the proper officers of the Corporation be, and
they hereby are, authorized and empowered on behalf of the Corporation to
execute the Form 10-K 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 prepare, execute, deliver and file any amendment or amendments
to the Form 10-K, as they may deem necessary or appropriate; and be it
FURTHER RESOLVED, that Charles M. Berger, James W. Kiser and Paul J.
Polking be, and each of them with full power to act without the other hereby is,
authorized and empowered to prepare, execute, deliver and file the Form 10-K and
any amendment or amendments thereto on behalf of and as attorneys for the
Corporation and on behalf of and as attorneys for any of the following: the
principle executive officer, the principal financial officer, the principal
accounting officer, and any other officer of the Corporation; and be it
<PAGE>
FURTHER RESOLVED, that, for the purposes of these resolutions, the
"proper officers" of the Corporation are the members of the Policy Committee,
the Secretary, any Executive Vice President, and any Senior Vice President, and
that each of these officers is authorized, empowered and directed, in the name
and on behalf of the Corporation to execute and deliver or cause to be executed
and delivered any and all agreements, amendments, certificates, applications,
notices, letters, or other documents and to do or cause to be done any and all
such other acts and things as, in the opinion of any such officer, may be
necessary, appropriate or desirable in order to enable the Corporation fully and
promptly to carry out the intent of the foregoing resolutions, and any such
action taken by such officers shall be conclusive evidence of their authority.
CERTIFICATE OF SECRETARY
I, ALLISON L. GILLIAM, Assistant Secretary of BankAmerica Corporation, a
corporation duly organized and existing under the laws of the State of Delaware,
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 the corporation
at a meeting of the Board of Directors held January 27, 1999, at which meeting a
quorum was present and acted throughout and that the 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
the corporation this 22nd day of March 1999.
(CORPORATE SEAL)
/s/ Allison L. Gilliam
------------------------------
(Allison L. Gilliam)
Assistant Secretary
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
The schedule contains summary information extracted from the December 31, 1998
Form 10-K for BankAmerica Corporation and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000070858
<NAME> BankAmerica Corporation and Subsidiaries
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 28,277
<INT-BEARING-DEPOSITS> 6,750
<FED-FUNDS-SOLD> 27,146
<TRADING-ASSETS> 39,602
<INVESTMENTS-HELD-FOR-SALE> 78,590
<INVESTMENTS-CARRYING> 1,997
<INVESTMENTS-MARKET> 1,853
<LOANS> 357,328
<ALLOWANCE> (7,122)
<TOTAL-ASSETS> 617,679
<DEPOSITS> 357,260
<SHORT-TERM> 113,204
<LIABILITIES-OTHER> 55,389
<LONG-TERM> 45,888
0
83
<COMMON> 14,837
<OTHER-SE> 31,018
<TOTAL-LIABILITIES-AND-EQUITY> 617,679
<INTEREST-LOAN> 28,331
<INTEREST-INVEST> 4,502
<INTEREST-OTHER> 5,755
<INTEREST-TOTAL> 38,588
<INTEREST-DEPOSIT> 10,811
<INTEREST-EXPENSE> 20,290
<INTEREST-INCOME-NET> 18,298
<LOAN-LOSSES> 2,920
<SECURITIES-GAINS> 1,017
<EXPENSE-OTHER> 18,741
<INCOME-PRETAX> 8,048
<INCOME-PRE-EXTRAORDINARY> 8,048
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,165
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<LOANS-NON> 2,482
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<ALLOWANCE-OPEN> 6,778
<CHARGE-OFFS> 3,050
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<ALLOWANCE-CLOSE> 7,122
<ALLOWANCE-DOMESTIC> 4,334
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<ALLOWANCE-UNALLOCATED> 1,435
</TABLE>
