<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended June 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number: 1-7377
Exact name of registrant as specified in its charter:
BankAmerica Corporation
State or other jurisdiction of incorporation or organization:
Delaware
I.R.S. Employer Identification Number:
94-1681731
Address of principal executive offices:
Bank of America Center
San Francisco, California 94104
Registrant's telephone number, including area code:
415-622-3530
Former name, former address, and former fiscal year,
If changed since last report:
None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $1.5625 par value ----- 698,406,800 shares outstanding
on June 30, 1997.*
*In addition, 76,224,084 shares were held in treasury.
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This document serves both as an analytical review for analysts, shareholders,
and other interested persons, and as the quarterly report on Form 10-Q of
BankAmerica Corporation to the Securities and Exchange Commission, which has
taken no action to approve or disapprove the report or to pass upon its accuracy
or adequacy. Additionally, this document is to be read in conjunction with
BankAmerica Corporation's Annual Report on Form 10-K for the year ended December
31, 1996, including the consolidated financial statements and notes thereto.
<PAGE>
BANKAMERICA CORPORATION ANALYTICAL REVIEW AND FORM 10-Q
[BANKAMERICA CORPORATION LOGO APPEARS HERE]
1997
2ND Q U A R T E R
<PAGE>
CONTENTS
<TABLE>
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<S> <C> <C>
Part I Item 1.
Financial Financial Statements:
Information Consolidated Statement of Operations........................ 2
Consolidated Balance Sheet.................................. 3
Consolidated Statement of Cash Flows........................ 4
Consolidated Statement of Changes in Stockholders' Equity... 5
Notes to Consolidated Financial Statements.................. 6
Item 2.
Management's Discussion and Analysis:
Highlights.................................................. 19
Business Sectors............................................ 22
Operating Leverage and Capital Management................... 25
Results of Operations:
Net Interest Income....................................... 27
Noninterest Income........................................ 30
Noninterest Expense....................................... 32
Income Taxes.............................................. 33
Balance Sheet Review:....................................... 34
Credit Card Securitization................................ 35
Credit Risk Management:
Loan Portfolio Management................................. 37
Domestic Consumer Loans................................. 38
Domestic Commerical Loans............................... 39
Foreign Loans........................................... 40
Emerging Market Exposure.................................. 40
Allowance for Credit Losses............................... 41
Nonperforming Assets...................................... 43
Interest Rate, Foreign Exchange and Commodity Derivative
Financial Instruments...................................... 46
Interest Rate Risk Management............................... 47
Funding and Capital:
Liquidity Review.......................................... 49
Capital Management........................................ 49
Forward-Looking Statements.................................. 52
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Part II Item 4.
Other Information Submission of Matters to a Vote of Security Holders............ 53
Item 6.
Exhibits and Reports on Form 8-K............................... 55
Signatures..................................................... 57
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</TABLE>
1
<PAGE>
FINANCIAL STATEMENTS
BANKAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
===================================================================================================================================
1997 1996 Six Months Ended
----------------- --------------------------- June 30
SECOND FIRST FOURTH THIRD SECOND -----------------
(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA) QUARTER QUARTER QUARTER QUARTER QUARTER 1997 1996
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<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Loans, including fees $3,497 $3,423 $3,388 $3,371 $3,307 $6,920 $6,604
Interest-bearing deposits in banks 105 99 145 95 96 204 213
Federal funds sold 9 8 7 9 7 17 13
Securities purchased under resale agreements 180 155 144 178 176 335 331
Trading account assets 298 269 270 268 247 567 463
Available-for-sale and held-to-maturity securities 270 286 284 285 293 556 591
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TOTAL INTEREST INCOME 4,359 4,240 4,238 4,206 4,126 8,599 8,215
INTEREST EXPENSE
Deposits 1,424 1,366 1,406 1,332 1,307 2,790 2,621
Federal funds purchased 19 13 20 17 20 32 42
Securities sold under repurchase agreements 178 149 155 201 176 327 339
Other short-term borrowings 287 275 254 243 208 562 386
Long-term debt 257 263 273 261 256 520 522
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TOTAL INTEREST EXPENSE 2,165 2,066 2,108 2,054 1,967 4,231 3,910
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NET INTEREST INCOME 2,194 2,174 2,130 2,152 2,159 4,368 4,305
PROVISION FOR CREDIT LOSSES 250 220 220 235 250 470 430
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NET INTEREST INCOME AFTER PROVISION FOR
CREDIT LOSSES 1,944 1,954 1,910 1,917 1,909 3,898 3,875
NONINTEREST INCOME
Deposit account fees 361 360 364 345 346 721 690
Credit card fees 93 87 94 92 90 180 169
Trust fees 61 57 57 53 56 118 119
Other fees and commissions 417 375 370 360 333 792 653
Trading income 218 188 134 153 178 406 343
Private equity investment activities 83 99 108 97 112 182 222
Net gain on sales of loans 44 59 20 25 17 103 44
Net gain on sales of subsidiaries and operations 27 13 5 41 83 40 134
Net gain on available-for-sale securities 14 20 20 7 4 34 34
Gain on issuance of subsidiary's stock - - 147 - - - -
Other income 124 127 180 146 101 251 186
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TOTAL NONINTEREST INCOME 1,442 1,385 1,499 1,319 1,320 2,827 2,594
NONINTEREST EXPENSE
Salaries 873 839 834 822 814 1,712 1,635
Employee benefits 189 189 167 191 213 378 415
Occupancy 183 186 193 188 186 369 376
Equipment 173 182 184 180 175 355 338
Communications 96 93 92 89 90 189 182
Amortization of intangibles 89 91 92 93 93 180 188
Professional services 82 75 95 87 80 157 161
Regulatory fees and related expenses 10 10 2 95 13 20 26
Restructuring charges - - 280 - - - -
Other expense 352 368 311 336 333 720 689
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TOTAL NONINTEREST EXPENSE 2,047 2,033 2,250 2,081 1,997 4,080 4,010
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INCOME BEFORE INCOME TAXES 1,339 1,306 1,159 1,155 1,232 2,645 2,459
PROVISION FOR INCOME TAXES 540 526 412 472 509 1,066 1,016
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NET INCOME $ 799 $ 780 $ 747 $ 683 $ 723 $1,579 $1,443
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EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE $ 1.07 $ 1.03 $ 0.96 $ 0.87 $ 0.92 $ 2.10 $ 1.82
EARNINGS PER COMMON SHARE -- ASSUMING FULL DILUTION 1.07 1.03 0.96 0.87 0.92 2.09 1.81
DIVIDENDS DECLARED PER COMMON SHARE 0.31 0.31 0.27 0.27 0.27 0.62 0.54
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</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
====================================================================================================================================
1997 1996
----------------------- -------------------------------------
(IN MILLIONS) JUNE 30 MARCH 31 DEC. 31 SEPT. 30 JUNE 30
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<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 14,884 $ 13,561 $ 16,223 $ 13,619 $ 12,478
Interest-bearing deposits in banks 7,037 6,390 5,708 5,829 5,194
Federal funds sold 270 153 134 306 276
Securities purchased under resale agreements 7,272 7,730 7,275 6,287 7,001
Trading account assets 16,765 12,931 12,205 14,000 12,633
Available-for-sale securities 11,959 11,532 12,113 11,717 10,964
Held-to-maturity securities 3,858 3,972 4,138 4,200 4,280
Loans 168,806 167,338 165,415 161,833 160,640
Less: Allowance for credit losses 3,563 3,538 3,523 3,511 3,495
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Net loans 165,243 163,800 161,892 158,322 157,145
Customers' acceptance liability 3,230 3,229 2,861 3,165 2,837
Accrued interest receivable 1,567 1,441 1,441 1,435 1,451
Goodwill, net 3,842 3,888 3,938 4,017 4,066
Identifiable intangibles, net 1,499 1,554 1,616 1,664 1,708
Unrealized gains on off-balance-sheet instruments 7,319 7,813 7,682 6,598 7,297
Premises and equipment, net 3,944 3,985 3,987 3,968 3,980
Other assets 9,674 7,925 9,540 7,826 7,531
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TOTAL ASSETS $258,363 $249,904 $250,753 $242,953 $238,841
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LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits in domestic offices:
Interest-bearing $ 83,308 $ 84,071 $ 84,133 $ 83,779 $ 83,954
Noninterest-bearing 41,434 39,561 39,694 37,589 34,737
Deposits in foreign offices:
Interest-bearing 46,667 43,854 42,732 42,035 41,444
Noninterest-bearing 1,759 1,513 1,456 1,498 1,710
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Total deposits 173,168 168,999 168,015 164,901 161,845
Federal funds purchased 1,730 730 2,176 1,093 2,740
Securities sold under repurchase agreements 9,699 7,124 7,644 8,489 8,861
Other short-term borrowings 18,327 18,883 17,566 16,263 14,530
Acceptances outstanding 3,230 3,229 2,861 3,165 2,837
Accrued interest payable 958 921 879 868 833
Unrealized losses on off-balance-sheet instruments 7,157 7,473 7,633 6,458 7,310
Other liabilities 7,117 5,850 6,004 5,750 4,824
Long-term debt 14,736 14,725 15,785 15,454 14,953
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TOTAL LIABILITIES 236,122 227,934 228,563 222,441 218,733
Corporation obligated mandatorily redeemable preferred
securities of subsidiary trusts holding solely junior
subordinated deferrable interest debentures of the
corporation (trust preferred securities) 1,873 1,873 1,477 - -
STOCKHOLDERS' EQUITY
Preferred stock 1,596 1,596 2,242 2,242 2,242
Common stock 1,210 605 605 605 605
Additional paid-in capital 7,872 8,473 8,467 8,458 8,439
Retained earnings 12,598 12,029 11,500 10,989 10,544
Net unrealized gain (loss) on available-for-sale securities 13 (90) 32 (27) (79)
Common stock in treasury, at cost (2,921) (2,516) (2,133) (1,755) (1,643)
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TOTAL STOCKHOLDERS' EQUITY 20,368 20,097 20,713 20,512 20,108
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $258,363 $249,904 $250,753 $242,953 $238,841
- -------------------------------------------------------------------=================================================================
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
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SIX MONTHS ENDED JUNE 30
------------------------
(IN MILLIONS) 1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,579 $ 1,443
Adjustments to net income to arrive at net cash used by operating activities:
Provision for credit losses 470 430
Net gain on sales of loans and subsidiaries and operations (143) (204)
Net amortization of loan fees and discounts (38) (38)
Depreciation and amortization of premises and equipment 293 290
Amortization of intangibles 180 188
Provision for deferred income taxes 55 168
Change in assets and liabilities net of effects from acquisitions
and pending dispositions:
(Increase) decrease in accrued interest receivable (126) 6
Increase (decrease) in accrued interest payable 79 (13)
Increase in trading account assets (4,560) (3,117)
Increase (decrease) in current income taxes payable 383 (36)
Deferred fees received from lending activities 83 76
Net cash provided (used) by loans held for sale (744) 354
Other, net 920 (1,381)
- --------------------------------------------------------------------------------------------------------------------------
Net cash used by operating activities (1,569) (1,834)
CASH FLOWS FROM INVESTING ACTIVITIES
Activity in available-for-sale securities:
Sales proceeds 1,350 541
Maturities, prepayments, and calls 2,720 3,091
Purchases (4,108) (2,602)
Activity in held-to-maturity securities:
Maturities, prepayments, and calls 465 661
Purchases (181) (320)
Proceeds from loan sales and securitizations 3,606 914
Purchases of loans (158) (968)
Purchases of premises and equipment (284) (328)
Proceeds from sales of other real estate owned 254 265
Net cash provided (used) by:
Loan originations and principal collections (7,155) (7,266)
Interest-bearing deposits in banks (1,143) 566
Federal funds sold (136) 445
Securities purchased under resale agreements 3 (2,039)
Other, net 118 237
- --------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (4,649) (6,803)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 847 1,660
Principal payments and retirements of long-term debt (1,902) (1,742)
Net proceeds from issuance of trust preferred securities 396 --
Proceeds from issuance of common stock -- 83
Proceeds from issuance of treasury stock 106 --
Preferred stock redeemed (646) (391)
Treasury stock purchased (936) (693)
Common stock dividends (430) (393)
Preferred stock dividends (64) (98)
Net cash provided (used) by:
Deposits 5,153 1,410
Federal funds purchased (446) (2,420)
Securities sold under repurchase agreements 2,055 2,478
Other short-term borrowings 761 6,903
Other, net (37) --
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Net cash provided by financing activities 4,857 6,797
Effect of exchange rate changes on cash and due from banks 22 6
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Net decrease in cash and due from banks (1,339) (1,834)
Cash and due from banks at beginning of period 16,223 14,312
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CASH AND DUE FROM BANKS AT END OF PERIOD $14,884 $12,478
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</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
====================================================================================================================================
1997 1996
-------------------- ------------------------------------
SECOND FIRST FOURTH THIRD SECOND
(IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PREFERRED STOCK
Balance, beginning of quarter $ 1,596 $ 2,242 $ 2,242 $ 2,242 $ 2,423
Preferred stock redeemed - (646) - - (181)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, end of quarter 1,596 1,596 2,242 2,242 2,242
COMMON STOCK
Balance, beginning of quarter 605 605 605 605 604
Common stock issued - - - - 1
Issuance of 387,314,462 shares of common stock to effect
a two-for-one common stock split 605 - - - -
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Balance, end of quarter 1,210 605 605 605 605
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of quarter 8,473 8,467 8,458 8,439 8,384
Common stock issued 1 - 5 8 55
Issuance of 387,314,462 shares of common stock to effect
a two-for-one common stock split (605) - - - -
Treasury stock issued 3 6 4 11 -
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Balance, end of quarter 7,872 8,473 8,467 8,458 8,439
RETAINED EARNINGS
Balance, beginning of quarter 12,029 11,500 10,989 10,544 10,067
Net income 799 780 747 683 723
Common stock dividends (214) (216) (193) (194) (195)
Preferred stock dividends (30) (34) (44) (43) (45)
Foreign currency translation adjustments,
net of related income taxes 14 (1) 1 (1) (6)
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Balance, end of quarter 12,598 12,029 11,500 10,989 10,544
NET UNREALIZED GAIN (LOSS) ON AVAILABLE-FOR-SALE SECURITIES
Balance, beginning of quarter (90) 32 (27) (79) (56)
Valuation adjustments, net of related income taxes 103 (122) 59 52 (23)
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Balance, end of quarter 13 (90) 32 (27) (79)
COMMON STOCK IN TREASURY, AT COST
Balance, beginning of quarter (2,516) (2,133) (1,755) (1,643) (1,255)
Treasury stock purchased (475) (475) (450) (200) (385)
Treasury stock issued 71 94 74 98 1
Other (1) (2) (2) (10) (4)
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Balance, end of quarter (2,921) (2,516) (2,133) (1,755) (1,643)
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TOTAL STOCKHOLDERS' EQUITY $20,368 $20,097 $20,713 $20,512 $20,108
- ----------------------------------------------------------------------==============================================================
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 1. The unaudited consolidated financial statements of BankAmerica
FINANCIAL Corporation and subsidiaries (BAC) are prepared in conformity
STATEMENT with generally accepted accounting principles for interim
PRESENTATION financial information, the instructions to Form 10-Q, and
Rule 10-01 of Regulation S-X. In the opinion of management,
all adjustments necessary for a fair presentation of the
financial position and results of operations for the periods
presented have been included. All such adjustments are of a
normal recurring nature. These unaudited consolidated
financial statements should be read in conjunction with the
audited consolidated financial statements included in
BankAmerica Corporation's (the Parent) Annual Report on Form
10-K for the year ended December 31, 1996.
The unaudited consolidated financial statements of BAC include
the accounts of the Parent and companies in which more than 50
percent of the voting stock is owned directly or indirectly by
the Parent, including Bank of America NT&SA (the Bank), Bank
of America Illinois, and other banking and nonbanking
subsidiaries. The revenues, expenses, assets, and liabilities
of the subsidiaries are included in the respective line items
in the unaudited consolidated financial statements after
elimination of intercompany accounts and transactions.
In June 1996, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 125,
"Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities" (SFAS No. 125). The FASB
subsequently amended SFAS No. 125 in December 1996. As
amended, SFAS No. 125 applies to securities lending, repurchase
agreements, dollar rolls, and other similar secured financing
transactions occurring after December 31, 1997 and to all other
transfers and servicing of financial assets occurring after
December 31, 1996. The adoption of SFAS No. 125 did not and is
not expected to have a material effect on BAC's financial
position or results of operations.
On May 22, 1997, the stockholders of BAC approved a two-for-one
stock split, along with a proposal to increase the authorized
number of shares of common stock from 700 million to 1.4
billion shares. The stock split was effective for
stockholders of record at the close of business on June 2,
1997. The stock split did not cause any changes in the stated
par value per share of $1.5625 or total stockholders' equity. A
total of 387,314,462 shares of common stock were issued in
connection with the split, including 37,364,985 shares held in
treasury. As a result of the stock split, $605 million was
reclassified from additional paid-in capital to common stock.
All references to the number of common shares and per common
share amounts have been restated to reflect the effects of the
stock split.
Certain amounts in prior periods have been reclassified to
conform to the current presentation.
DERIVATIVE FINANCIAL INSTRUMENTS
BAC uses foreign exchange and interest rate derivative
financial instruments in both its trading and asset and
liability management activities. BAC uses derivative commodity
instruments solely in its trading activities.
6
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TRADING ACTIVITIES
Interest rate derivative financial instruments used in BAC's
trading activities are primarily swaps and options. Foreign
exchange financial instruments include spot, futures, forward,
swap, and option positions. Derivative commodity instruments
include commodity futures, forwards, swaps, and options. All of
these derivative instruments are carried at market value.
Market value for these instruments is determined based on
readily available market prices or by using pricing models
where no market price is available. Any realized and unrealized
gains and losses resulting from marking these instruments to
market are recognized immediately in trading income.
Interest rate, foreign exchange and commodity derivative
financial instruments, and their related gains and losses, used
for trading activities are reported in the consolidated balance
sheet in unrealized gains (losses) on off-balance-sheet
instruments, in the consolidated statement of operations in
trading income, and in the consolidated statement of cash
flows in cash flows from operating activities.
ASSET AND LIABILITY MANAGEMENT ACTIVITIES
BAC uses various types of derivative financial instruments to
manage its interest rate and foreign currency exposures. When
these instruments meet certain criteria, they qualify for hedge
accounting treatment and are accounted for on either a
deferral, accrual, or mark-to-market basis, depending on the
nature of BAC's hedge strategy and on the method used to
account for the hedged item. Hedge criteria include
demonstrating how the hedge will reduce risk, identifying the
specific asset, liability, firm commitment, or anticipated
transaction being hedged, and citing the time horizon being
hedged. For hedge accounting to continue, hedge effectiveness
tests are performed on an ongoing basis to determine if an
instrument continues to meet the objectives of the hedge
strategy.
Derivative financial instruments used for asset and liability
management activities are reported in the consolidated balance
sheet and consolidated statement of operations as described
below. For the consolidated statement of cash flows, the cash
flows from hedging transactions are classified in the same
category as the cash flows from the items being hedged.
Deferral Accounting -- BAC accounts for derivative financial
instruments on a deferral basis when the market value of the
hedging instrument fulfills the objectives of the hedge
strategy, and the carrying value of the hedged item is other
than fair value.
7
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BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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Interest Rate Contracts -- BAC accounts for futures and forward
rate agreements used as hedges on a deferral basis. Under deferral
accounting, risk reduction is assessed at the enterprise level.
Hedge effectiveness must be expected at the inception of the hedge
and on an ongoing basis. For interest rate futures, hedge
effectiveness at the inception of the hedge is assessed through
the probability that changes in the fair value of the futures
contract will offset the changes in the fair value of the hedged
item. There must be a clear economic relationship between the
price of the hedged item and the futures contract and a high level
of correlation between these prices during the relevant prior
periods. On an ongoing basis, the ratio of the cumulative changes
in the fair value of the futures contract and the cumulative
changes in the fair value of the hedged item is monitored. If a
high level of correlation is not being achieved, hedge accounting
will be terminated. For forward rate agreements, hedge
effectiveness at the inception of the hedge and on an ongoing
basis is assessed by matching the basis and terms of the hedging
instruments with those of the underlying exposure. For hedges of
existing assets or liabilities, realized gains and losses on the
hedging instrument are recorded as an adjustment to the carrying
value of the hedged item and amortized to the interest income or
expense account related to the hedged item.
BAC hedges anticipated transactions involving the replacement of
deposits with interest-bearing deposits. Realized and unrealized
gains and losses on these transactions are deferred and included
in the measurement of the subsequent transaction. For hedges of an
anticipated transaction to qualify for hedge accounting, it must
be probable that the transaction will occur and the significant
characteristics and expected terms of the transaction must be
identified
Deferred gains and losses on interest rate contracts used for
hedging are reported as adjustments to the carrying values of the
hedged loans, deposits, and long-term debt. The amortization of
deferred gains and losses is reported in the corresponding
interest income and interest expense accounts. Initial margin
deposits related to exchange-traded instruments are reported in
other assets. Fees and commissions received or paid are deferred
and recognized as an adjustment to the carrying value of the
hedged item, consistent with the recognition of gains and losses
on the hedging instruments.
Foreign Exchange Contracts -- To qualify for hedge accounting, the
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. Fees and commissions received or paid related to firm
commitments are included in the measurement of the transaction
when it occurs. Realized and unrealized gains and losses on
instruments that hedge net capital exposure are recorded in
stockholders' equity as foreign currency translation adjustments.
Accrual Accounting -- BAC accounts for derivative financial
instruments on an accrual basis when the cash flows generated from
the hedging instruments fulfill the objective of the hedge
strategy.
Under accrual accounting, interest income or expense on the
hedging instrument is accrued and recorded as an adjustment to the
interest income or expense related to the hedged item. BAC
accounts for certain interest rate swaps and purchased interest
rate option contracts (caps and floors) used as hedges on an
accrual basis. Both interest rate
8
<PAGE>
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swaps and purchased interest rate option contracts must reduce
risk at the level of the specific transaction with
effectiveness expected at the inception of the hedge and on an
ongoing basis. Hedge effectiveness at the inception of the
hedge and on an ongoing basis for interest rate swaps is
assessed by matching the basis and terms of the hedging
instruments with those of the underlying exposure. Hedge
effectiveness at the inception of the hedge for purchased
interest rate option contracts is assessed through the
probability that changes in the fair value of the purchased
interest rate contract will offset the changes in the fair
value of the hedged item. There must be a clear economic
relationship between the reference index of the purchased
interest rate option contract and the reference index of the
hedge item as well as a high level of correlation between these
indexes during the relevant prior periods. On an ongoing basis,
the ratio of the cumulative change in the price or interest
rate movements on the index of the hedged item and the
cumulative change in the price or interest rate movements on
the index of the purchased interest rate contract is monitored.
If a high level of correlation is not being achieved, hedge
accounting will be terminated.
Interest income or expense on derivative financial instruments
accounted for using accrual accounting is reported in interest
income-loans, interest expense-deposits, and interest expense-
long-term debt. Initial margin deposits for exchange-traded
instruments are reported in other assets. Fees and commissions
received or paid on interest rate swaps are deferred and
amortized as an adjustment to the interest income or expense
related to the hedged item over the term of the swap. Premiums
paid for interest rate options are deferred as a prepaid
expense and are amortized to interest income or expense over
the term of the option.
Mark-to-Market Accounting -- BAC accounts for derivative
financial instruments on a mark-to-market basis when the market
value of the hedging instrument fulfills the objectives of the
hedge strategy, and the carrying value of the hedged item is
fair value. Market value for these instruments is determined
based on readily available market prices or by using pricing
models where no market price is available. Under mark-to-market
accounting, realized and unrealized gains and losses on the
hedging instrument are reflected in the line items being hedged
and recorded in income when they occur in conjunction with the
gains and losses on the hedged item.
BAC accounts for certain interest rate swaps designated as
hedges of available-for-sale securities on a mark-to-market
basis. These interest rate swaps must reduce risk at the level
of the specific transaction, with effectiveness expected at the
inception of the hedge and on an ongoing basis. Hedge
effectiveness at the inception of the hedge is assessed through
the probability that changes in the fair value of the interest
rate swap will offset the changes in the fair value of the
available-for-sale security. There must be a clear economic
relationship between the price of the available-for-sale
security and the interest rate swap as well as a high level of
correlation between these prices during the relevant prior
periods. On an ongoing basis, the ratio of the cumulative
change in the fair value of the interest rate swap and the
cumulative change in the fair value of the available-for-sale
security is monitored. If a high level of correlation is not
being achieved, hedge accounting will be terminated. The
accrual of interest payable and interest receivable on these
interest rate swaps is reported in interest income-available-
for-sale securities. Changes in the market values of these
interest rate swaps, exclusive of net interest accruals, are
reported in stockholders' equity on a net-of-tax basis.
9
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
================================================================================
If at any time a derivative financial instrument no longer
qualifies for hedge accounting treatment, it must be marked to
market on a prospective basis and any deferred gain or loss
associated with the hedging instrument is amortized over the
original hedge period. When an anticipated transaction is no
longer likely to occur, any deferred gain or loss associated
with the hedging instrument is recognized immediately in the
interest income or expense account related to the hedged item.
If the item being hedged is sold, extinguished, terminated, or
matures, hedge accounting is terminated. Gains and losses on
terminated hedging instruments are accounted for in a manner
similar to the method described above. Any deferred or
unrealized amounts related to the hedging instrument are
treated as part of the carrying value of the item being hedged
and, therefore, considered in calculating the gain or loss on
the sold, extinguished, terminated, or matured item. If the
related derivative contract is not terminated, it must be
marked to market on a prospective basis.
- --------------------------------------------------------------------------------
NOTE 2. During the six-month periods ended June 30, 1997 and 1996,
SUPPLEMENTAL BAC made interest payments on deposits and other interest-
DISCLOSURE OF bearing liabilities of $4,153 million and $3,923 million,
CASH FLOW respectively, and made net income tax payments of $695
INFORMATION million and $884 million, respectively. In addition, during
the same periods foreclosures took place on loans with
carrying values of $166 million and $242 million,
respectively.
During the six-month period ended June 30, 1997, BAC made
payments on accrued liabilities of $18 million related to
common stock repurchased during 1996. At June 30, 1997, BAC
accrued a $32 million liability related to common stock
repurchased during the six-month period ended June 30, 1997.
- --------------------------------------------------------------------------------
NOTE 3. During the six-month period ended June 30, 1997, BAC sold
AVAILABLE- available-for-sale securities for aggregate proceeds of $1,350
FOR-SALE million, resulting in gross realized gains of $46 million and
AND HELD- gross realized losses of $12 million. During the six-month
TO-MATURITY period ended June 30, 1996, BAC sold available-for-sale
SECURITIES securities for aggregate proceeds of $541 million, resulting in
AND TRADING gross realized gains of $56 million and gross realized losses
ACTIVITIES of $22 million.
The fair values and amortized costs of available-for-sale and
held-to-maturity securities were as follows:
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE HELD-TO-MATURITY
SECURITIES SECURITIES
------------------- ------------------
FAIR AMORTIZED FAIR AMORTIZED
(IN MILLIONS) VALUE COST VALUE COST
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
June 30, 1997 $11,959 $11,959 $3,655 $3,858
March 31, 1997 11,532 11,701 3,666 3,972
December 31, 1996 12,113 12,059 3,920 4,138
September 30, 1996 11,717 11,765 3,892 4,200
June 30, 1996 10,964 11,094 3,886 4,280
</TABLE>
10
<PAGE>
================================================================================
The net unrealized gain on available-for-sale securities at
June 30, 1997 included a $12 million unrealized gain on excess
servicing assets primarily associated with credit card
securitizations, which are included in other assets.
During the six-month periods ended June 30, 1997 and 1996,
trading income included net unrealized holding gains on trading
securities of $22 million and $16 million, respectively. These
amounts exclude the net unrealized trading results of the
Parent's securities broker and dealer subsidiaries.
- --------------------------------------------------------------------------------
NOTE 4. The trust preferred securities are issued by trusts all of
TRUST PREFERRED whose outstanding common securities are owned by the Parent.
SECURITIES Such common securities represent an aggregate liquidation
amount equal to 3 percent of the total capital of each trust.
The sole assets of the trusts are junior subordinated
deferrable interest debentures of the Parent.
During the first quarter of 1997, BankAmerica Capital III, a
trust, all of whose outstanding common securities ($12 million
liquidation amount) are owned by the Parent, issued trust
preferred securities (the Series 3 preferred securities) with
an aggregate liquidation amount of $400 million. The sole
assets of the trust are junior subordinated deferrable interest
debentures issued by the Parent having an aggregate principal
amount of $412 million (the Series 3 debentures). In addition,
the Parent has entered into an expense agreement with the trust
obligating the Parent to pay any costs, expenses or liabilities
of the trust, other than obligations of the trust to pay
amounts due pursuant to the terms of the Series 3 preferred
securities.
The distribution rate for the Series 3 preferred securities
corresponds to the interest rate on the Series 3 debentures,
which is a floating rate adjusted quarterly based on the three-
month London Interbank Offered Rate (LIBOR) for U.S. dollar
deposits plus 0.57%. The interest payment dates are January 15,
April 15, July 15, and October 15. The Parent has the right to
defer payment of interest on the Series 3 debentures at any
time or from time to time for an extension period not exceeding
20 quarters. During any such extension period, distributions on
the Series 3 preferred securities will also be deferred and the
Parent's ability to pay dividends on its common and preferred
stock will be restricted.
The Series 3 debentures have a stated maturity of January 15,
2027, although the Parent may redeem the Series 3 debentures
prior to stated maturity (i) on or after January 15, 2002 or
(ii) prior to January 15, 2002 upon the occurrence of certain
events relating to the tax treatment of the trust or the Series
3 debentures or relating to the capital treatment of the Series
3 preferred securities, in each case, at a redemption price of
100% of the principal amount plus accrued interest. The Series
3 preferred securities are subject to mandatory redemption upon
repayment of the Series 3 debentures a their stated maturity
date or their earlier redemption at a redemption price equal to
their liquidation amount plus accrued distributions to the date
fixed for redemption.
The Parent has issued a guarantee for the payment of
distributions and payments on liquidation or redemption of the
Series 3 preferred securities, but only to the extent of funds
held by the trust. The guarantee is a junior subordinated
obligation of the Parent.
11
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
================================================================================
In the second quarter and six months ended June 30, 1997,
distributions and amortization of deferred issuance costs on
all of the trust preferred securities totaling $36 million and
$71 million, respectively, were included in noninterest expense
in the consolidated statement of operations.
For specific details on other trust preferred securities, refer
to Note 15 on page 64 of BAC's 1996 Annual Report to
Shareholders.
- --------------------------------------------------------------------------------
NOTE 5. During the first quarter of 1997, BAC's Board of Directors
STOCK authorized an amendment to its existing stock repurchase
REPURCHASE program. The amended program enables the Parent to buy back up
PROGRAM to an additional $3.0 billion of its common stock by the end of
1998 and to buy back or redeem up to an additional $1.0 billion
of its preferred stock by the end of 1998.
During the six months ended June 30, 1997, the Parent
repurchased 16.8 million shares of its common stock under the
amended and prior stock repurchase programs at an average per-
share price of $56.59. These transactions reduced stockholders'
equity by $950 million.
On January 15, 1997, the Parent redeemed all 11,250,000
outstanding shares of its 9% Cumulative Preferred Stock,
Series H, reducing stockholders' equity by $281 million. The
redemption price was equal to the stated value of $25.00 per
share, plus accrued and unpaid dividends to the redemption date
of $0.28125 per share. On February 15, 1997, the Parent
redeemed all 14,600,000 outstanding shares of its 8 3/8%
Cumulative Preferred Stock, Series K, reducing stockholders'
equity by $365 million. The redemption price was equal to the
stated value of $25.00 per share, plus accrued and unpaid
dividends to the redemption date of $0.44201 per share.
On May 9, 1997, the Parent announced its intention to redeem
all outstanding shares of its 8.16% Cumulative Preferred Stock,
Series L on July 14, 1997, which will reduce stockholders'
equity in the third quarter of 1997 by $399 million. The
remaining buyback and redemption authorities for common stock
and preferred stock under the current amended program totaled
$2.8 billion and $0.8 billion, respectively, at June 30, 1997.
- --------------------------------------------------------------------------------
NOTE 6. The following is a summary of the components of income tax
INCOME expense:
TAXES
<TABLE>
<CAPTION>
1997 1996 SIX MONTHS ENDED
---------------- -------------------------- JUNE 30
SECOND FIRST FOURTH THIRD SECOND ----------------
(IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PROVISION FOR INCOME TAXES
Federal $359 $370 $265 $301 $361 $ 729 $ 723
State and local 86 84 58 90 95 170 188
Foreign 95 72 89 81 53 167 105
- -----------------------------------------------------------------------------------------------
$540 $526 $412 $472 $509 $1,066 $1,016
- -----------------------------------------------------------------------------------------------
</TABLE>
BAC's estimated annual effective income tax rates for the six-
month periods ended June 30, 1997 and 1996 were 40.3 percent
and 41.3 percent, respectively. These rates are higher than the
federal statutory tax rate of 35.0 percent due principally to
state income taxes.
12
<PAGE>
================================================================================
NOTE 7. Earnings per common share have been computed based on the
EARNINGS PER following:
COMMON SHARE
<TABLE>
<CAPTION>
1997 1996 SIX MONTHS ENDED
-------------------- --------------------------------- JUNE 30
(DOLLAR AMOUNTS IN MILLIONS, SECOND FIRST FOURTH THIRD SECOND ------------------
SHARE AMOUNTS IN THOUSANDS) QUARTER QUARTER QUARTER QUARTER QUARTER 1997 1996
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net income applicable to
common stock $769 $746 $703 $640 $678 $ 1,515 $1,345
Average number of common
shares outstanding 701,458 708,585/a/ 715,609/a/ 718,035/a/ 723,716/a/ 705,022 727,925/a/
Average number of common
and common equivalent
shares outstanding 719,514 726,800/a/ 731,022/a/ 731,343/a/ 737,085/a/ 723,157 740,927/a/
Average number of common
shares outstanding -
assuming full dilution 722,179 726,800/a/ 732,416/a/ 731,770/a/ 737,182/a/ 724,490 742,139/a/
-------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/Restated to reflect a two-for-one stock split effective
June 2, 1997.
In February 1997, the FASB issued Statement of Financial
Accounting Standards No.128, "Earnings per Share" (SFAS No.
128), which is effective for periods ending after December 15,
1997. BAC expects to adopt SFAS No. 128 in the fourth quarter
of 1997. At that time, BAC will be required to change the
method currently used to compute earnings per share and to
restate all prior periods presented. SFAS No. 128 eliminates
primary earnings per share and earnings per common share,
assuming full dilution, and requires the presentation of
basic and diluted earnings per share. As a result, under the
new requirements, BAC's computation of earnings per common and
common equivalent share will be replaced by earnings per common
share, which excludes any dilutive effects of outstanding stock
options and warrants. Also, BAC's computation of earnings per
common share, assuming full dilution, will be replaced with
diluted earnings per share and will be based on the average
market price of BAC's common stock for the period. Had SFAS No.
128 been in effect, it would have resulted in an increase in
earnings per common share of $0.03 for the second quarter of
1997, $0.02 for the first quarter of 1997, $0.02 for the fourth
quarter of 1996, $0.02 for the third quarter of 1996, and $0.02
for the second quarter of 1996 as well as an increase of $0.05
and $0.03 for the six months ended June 30, 1997 and 1996,
respectively. Per share amounts for prior periods reflect a
two-for-one stock split effective June 2, 1997. The impact of
SFAS No. 128 on converting earnings per common share, assuming
full dilution, to diluted earnings per share for the
aforementioned quarters is not material.
- --------------------------------------------------------------------------------
NOTE 8. In the ordinary course of business, BAC enters into various
OFF-BALANCE- types of transactions that involve credit-related financial
SHEET instruments and derivative financial instruments that contain
TRANSACTIONS off-balance-sheet risk. Credit-related financial instruments
are typically customer-driven, while derivative financial
instruments are entered into both on behalf of customers
and for BAC's own account in managing interest rate and
foreign exchange risk.
13
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
================================================================================
Credit-Related Financial Instruments
A summary of the contractual amounts of each significant class
of credit-related financial instruments outstanding appears in
the table below. The contractual amounts of these instruments
are not recorded as assets or liabilities on the balance sheet.
These amounts represent the amounts at risk should the contract
by fully drawn upon, the client default, and the value of any
existing collateral become worthless.
<TABLE>
<CAPTION>
1997 1996
----------------------- -------------------------------------
(IN MILLIONS) JUNE 30 MARCH 31 DEC. 31 SEPT. 30 JUNE 30
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commitments to extend credit:
Unutilized credit card lines $ 38,028 $ 37,917 $ 36,897 $37,271 $36,978
Other commitments to extend credit/a/ 106,590 101,128 100,234 92,965 97,954
Standby letters of credit/b/ 18,680 18,954 17,092 16,486 17,121
Commercial letters of credit 4,186 3,677 4,064 3,833 4,596
--------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Represents agreements to extend credit to customers for
which BAC may have received fees. These commitments have
specified interest rates and generally have fixed
expiration dates and may be terminated by BAC if certain
conditions of the contract are violated.
/b/ Net of participations sold of $2,907 million at June 30,
1997, $3,102 million at March 31, 1997, $2,999 million at
December 31, 1996, $2,940 million at September 30, 1996,
and $2,619 million at June 30, 1996.
INTEREST RATE, FOREIGN EXCHANGE AND COMMODITY DERIVATIVE
FINANCIAL INSTRUMENTS
The tables on page 15 summarize the notional and credit risk
amounts for each significant class of interest rate, foreign
exchange and commodity derivative financial instruments
outstanding in BAC's trading and asset and liability management
portfolios. These tables should be read in conjunction with the
descriptions of such products and their risks included on pages
38 through 44 and 72 through 78 of BAC's 1996 Annual Report to
Shareholders.
14
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
================================================================================
NOTIONAL AND CREDIT RISK AMOUNTS FOR DERIVATIVE FINANCIAL INSTRUMENTS HELD OR
ISSUED FOR TRADING PURPOSES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
June 30, 1997 DECEMBER 31, 1996
------------------- -------------------
NOTIONAL CREDIT NOTIONAL CREDIT
(IN MILLIONS) AMOUNT RISK/a/ AMOUNT RISK/a/
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps $ 457,649 $1,839/b/ $ 442,160 $2,968/b/
Futures and forward rate contracts:
Commitments to purchase 142,084 39 138,381 34
Commitments to sell 158,591 119 182,065 280
Written options 27,502 -/c/ 32,679 -/c/
Purchased options 46,383 360 40,805 373
- ------------------------------------------------------------------------------------
832,209 2,357 836,090 3,655
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures contracts 638,798 3,361 612,767 2,670
Written options 41,581 -/c/ 24,840 -/c/
Purchased options 40,040 462 23,272 319
Currency swaps 30,045 1,082 27,589 951
- ------------------------------------------------------------------------------------
750,464 4,905 688,468 3,940
Stock index options and
commodity contracts 2,046 57 1,561 87
- ------------------------------------------------------------------------------------
$1,584,719/d/ $7,319 $1,526,119/e/ $7,682
- -------------------------------------===============================================
</TABLE>
NOTIONAL AND CREDIT RISK AMOUNTS FOR DERIVATIVE FINANCIAL INSTRUMENTS HELD OR
ISSUED FOR ASSET AND LIABILITY MANAGEMENT PURPOSES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
JUNE 30, 1997 DECEMBER 31, 1996
------------------- -------------------
NOTIONAL CREDIT NOTIONAL CREDIT
(IN MILLIONS) AMOUNT RISK/a/ AMOUNT RISK/a/
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps $ 60,425 $ 60 $ 46,445 $128
Futures and forward rate contracts 71,822 - 58,467 -
Purchased options 13,873 50 10,957 81
- ----------------------------------------------------------------------------------
146,120 110 115,869 209
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures contracts 1,805 - 1,746 -
Currency swaps 774 - 673 -
- ----------------------------------------------------------------------------------
2,579 - 2,419 -
- ----------------------------------------------------------------------------------
$148,699/d/ $110 $118,288/e/ $209
- ----------------------------------------==========================================
</TABLE>
/a/ Credit risk represents current replacement cost after the effects of master
netting agreements.
/b/ Includes the effects of cross product netting of certain interest rate
derivatives and currency swaps.
/c/ Interest rate and foreign exchange options written have no credit risk.
/d/ Interest rate swaps and interest rate options in both the trading and asset
and liability management portfolios include $23.5 billion and $0.7 billion,
respectively, of intercompany hedging-related contracts. Foreign exchange
contracts in both the trading and asset and liability management portfolios
include $2.4 billion of intercompany hedging-related contracts.
/e/ Interest rate swaps and interest rate options in both the trading and asset
and liability management portfolios include $13.9 billion and $0.7 billion,
respectively, of intercompany hedging-related contracts. Foreign exchange
contracts in both the trading and asset and liability management portfolios
include $2.4 billion of intercompany hedging-related contracts.
For most contracts, notional amounts are used solely to determine cash flows to
be exchanged. However, certain foreign exchange contracts are designed for
principal amounts to be exchanged on a common settlement date. The notional or
contract amounts associated with interest rate, foreign exchange and commodity
derivative financial instruments are not recorded as assets or liabilities on
the balance sheet and do not represent the potential for gain or loss associated
with such transactions. Credit risk represents unrealized gains on foreign
exchange and derivatives contracts. It is the amount of loss that BAC would
suffer if all counterparties failed to perform according to the terms of the
contract and the value of any existing collateral became worthless, based on
then-current currency exchange and interest rates at each respective period
after the effects of master netting agreements.
15
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
================================================================================
The following tables summarize the average and period-end fair
values of each significant class of interest rate, foreign
exchange and commodity derivative financial instruments
outstanding in BAC's trading portfolio and the period-end fair
values for each significant class of foreign exchange and
commodity derivative financial instruments outstanding in BAC's
asset and liability management portfolio. Fair value amounts
consist of unrealized gains and losses, accrued interest
receivable and payable, and premiums paid or received, and take
into account master netting agreements. The fair value amounts
for the trading portfolio are disaggregated by gross unrealized
gains (assets) and gross unrealized losses (liabilities), while
the fair value amounts for the asset and liability management
portfolio are shown on a net basis. Fair value amounts were
generally calculated using discounted cash flow models based on
current market yields for similar instruments and the maturity
of each instrument.
FAIR VALUES OF DERIVATIVE INSTRUMENTS HELD OR ISSUED FOR TRADING
PURPOSES
<TABLE>
<CAPTION>
==============================================================================================
JUNE 30, 1997 DECEMBER 31, 1996
--------------------------- -------------------------
AVERAGE AVERAGE
FAIR VALUE FAIR VALUE
FOR THE PERIOD-END FOR THE YEAR-END
(IN MILLIONS) QUARTER ENDED/a/ FAIR VALUE YEAR ENDED/a/ FAIR VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps:
Assets $ 2,401 $ 1,839 $ 2,956 $ 2,968
Liabilities (2,164) (1,809) (2,661) (2,820)
Futures and forward rate contracts:
Assets 170 158 335 314
Liabilities (175) (135) (331) (329)
Written options (279) (282) (221) (300)
Purchased options 327 360 307 373
- ----------------------------------------------------------------------------------------------
280 131 385 206
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures contracts:
Assets 3,866 3,361 2,358 2,670
Liabilities (3,936) (3,380) (2,709) (2,842)
Written options (621) (567) (333) (369)
Purchased options 496 462 283 319
Currency swaps:
Assets 1,093 1,082 1,137 951
Liabilities (895) (931) (1,308) (937)
- ----------------------------------------------------------------------------------------------
3 27 (572) (208)
STOCK INDEX OPTIONS AND COMMODITY CONTRACTS
Assets 40 57 58 87
Liabilities (36) (53) (25) (36)
- ----------------------------------------------------------------------------------------------
4 4 33 51
- ----------------------------------------------------------------------------------------------
$ 287 $ 162 $ (154) $ 49
- ----------------------------------------------================================================
</TABLE>
/a/ Average fair value amounts are calculated based on monthly balances.
FAIR VALUES OF DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR ASSET AND
LIABILITY MANAGEMENT PURPOSES
<TABLE>
<CAPTION>
===============================================================================================
(IN MILLIONS) JUNE 30, 1997 DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps $(627) $(369)
Futures and forward rate contracts (16) (26)
Purchased options 51 (4)
- -----------------------------------------------------------------------------------------------
(592) (399)
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures contracts - -
Currency swaps (65) (63)
- -----------------------------------------------------------------------------------------------
(65) (63)
- -----------------------------------------------------------------------------------------------
$(657) $(462)
- ---------------------------------------------------------------------==========================
</TABLE>
16
<PAGE>
================================================================================
TRADING ACTIVITIES
Trading income represents the net amount earned from BAC's
trading activities, which include entering into transactions to
meet customer demand and taking positions for BAC's own account
in a diverse range of financial instruments and markets. The
profitability of these trading activities depends largely on
the volume and diversity of the transactions BAC executes, the
level of risk it is willing to assume, and the volatility of
price and rate movements. Trading income, as disclosed in BAC's
consolidated statement of operations, does not include the net
interest income derived from interest rate, foreign exchange
and commodity derivative financial instruments associated with
trading activities. However, the trading-related net interest
income amounts are presented in the table below as they are
considered in evaluating the overall profitability of those
activities.
<TABLE>
<CAPTION>
TRADING-RELATED INCOME
-----------------------------------------------------------------------------------------------
1997 1996 SIX MONTHS ENDED
---------------- ------------------------ JUNE 30
SECOND FIRST FOURTH THIRD SECOND ----------------
(IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER 1997 1996
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TRADING INCOME
Interest rate $ 17 $ 12 $ 19 $ 17 $ 8 $ 29 $ 20
Foreign exchange 107 92 64 64 90 199 188
Debt instruments 94 84 51 72 80 178 135
-----------------------------------------------------------------------------------------------
$218 $188 $134 $153 $178 $406 $343
--------------------------------------=========================================================
OTHER TRADING-RELATED INCOME/a/
Interest rate $ 12 $ 10 $ 13 $ 5 $ 7 $ 22 $ 13
Foreign exchange 2 4 3 4 7 6 13
Debt instruments 47 50 53 52 59 97 103
-----------------------------------------------------------------------------------------------
$ 61 $ 64 $ 69 $ 61 $ 73 $125 $129
--------------------------------------=========================================================
</TABLE>
/a/Primarily includes the net interest revenue and expense
associated with these contracts.
To reflect the business purpose and use of the financial
contracts into which BAC enters, trading income and the related
net interest revenue or expense associated with such contracts
have been allocated into three broad functional categories:
interest rate trading, foreign exchange trading, and debt
instruments trading. Trading-related income from interest rate
instruments primarily includes the results from transactions
using interest rate and currency swaps, interest rate futures,
option contracts, and forward rate agreements, as well as cash
instruments used in the management of this function. Foreign
exchange trading-related income primarily includes the results
from transactions using foreign exchange spot, forward,
futures, and option contracts. Trading-related income from debt
instruments primarily represents the results from trading
activities in various debt securities, including U.S.
government and government agency securities, foreign government
securities, mortgage-backed securities, municipal bonds, and
corporate debt.
ASSET AND LIABILITY MANAGEMENT ACTIVITIES
BAC uses interest rate and foreign exchange derivative
financial instruments, to manage interest rate risk related to
specific assets and liabilities, including fixed rate and
adjustable rate residential mortgages, long-term debt, and
deposits. Foreign exchange derivative financial instruments are
used to hedge net capital exposure and foreign currency
exposures. For a detailed description of BAC's asset and
liability management objectives and strategies used to achieve
those objectives, refer to pages 76 through 78 of BAC's 1996
Annual Report to Shareholders.
17
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
================================================================================
The expected maturities and weighted average interest rates
associated with BAC's asset and liability management interest
rate swap portfolio at June 30, 1997 were not significantly
different from those at year-end 1996.
SECURITIES LENDING
BAC completed the divestiture of its securities lending
portfolio during the third quarter of 1996 following its
decision in 1995 to exit the institutional trust and securities
services business. Securities lending transactions were
conducted primarily for institutional trust customers and, at
times, these customers were indemnified against various losses.
All securities lending transactions were collateralized by U.S.
government or federal agency securities, cash, or letters of
credit with total market value equal to or in excess of the
market value of the securities lent.
The following summarizes indemnified securities lending
transactions and the associated collateral:
<TABLE>
<CAPTION>
1997 1996
-------------------- -------------------------------
(IN MILLIONS) JUNE 30 MARCH 31 DEC. 31 SEPT. 30 JUNE 30
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Indemnified securities lent $ - $ - $ - $ - $ 73
Associated collateral - - - - 75
--------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTE 9. BAC recorded a pre-tax restructuring charge of $280 million in
RESTRUCTURING the fourth quarter of 1996 as a result of decisions to
CHARGES implement a number of restructurings of its business
activities. The charge covers approximately $196 million for
severance payments, approximately $72 million for premises,
primarily reflecting the planned closure of 120 branches, and
approximately $12 million for other costs connected with the
wholesale banking, retail banking, and staff support areas
affected by the actions. Management expects that the projects
relating to these restructurings will be implemented in 1997
and completed by the end of 1998.
The severance payments will reflect an estimated reduction of
3,700 positions due to the restructuring of BAC's business
activities. Approximately 522 an 723 positions were reduced
during the first and second quarters of 1997, respectively,
reflecting a remaining balance of 2,455 positions at June 30,
1997. Following is a summary of changes in restructuring
charges for the second quarter of 1997:
<TABLE>
<CAPTION>
(IN MILLIONS) SEVERANCE PREMISES OTHER/a/ TOTAL
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at January 1, 1997 $196 $72 $12 $280
Payments 34 6 1 41
-------------------------------------------------------------------------
BALANCE AT MARCH 31, 1997 162 66 11 239
Payments 24 9 1 34
-------------------------------------------------------------------------
Balance at June 30, 1997 $138 $57 $10 $205
---------------------------------------==================================
</TABLE>
/a/ Includes equipment write-offs and other miscellaneous costs.
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
HIGHLIGHTS
================================================================================
The following is a summary of second-quarter 1997 financial
information for BankAmerica Corporation and subsidiaries (BAC).
. BAC reported second-quarter 1997 earnings per share of
$1.07, an increase of 16 percent from $0.92 for the same
period a year ago. The per share results include the effects
of a two-for-one stock split which was effective June 2,
1997. Net income for the second quarter of 1997 was $799
million, up 11 percent from $723 million for the second
quarter of 1996.
. The return on average common equity was 16.73 percent, an
increase of 131 basis points from the amount reported in the
second quarter of 1996.
. BAC continued to progress with the strategic management of
its capital through the following activities in the second
quarter of 1997:
-- Announced on June 9, 1997, agreements to acquire the
investment banking firm, Robertson, Stephens & Company
Group, L.L.C. and to sell the consumer finance
subsidiary Security Pacific Financial Services Inc.;
-- Completed the sale of 68 Texas branches and agreed to
sell its branch system in Hawaii;
-- Sold $1.8 billion of residential first mortgages and
announced plans to securitize and sell $675 million of
mortgages;
-- Securitized $750 million of credit card receivables; and
-- Announced the redemption of its Series L preferred
stock.
. Net interest income was $2,194 million, up $35 million from
the second quarter of 1996. BAC's net interest margin for
the second quarter of 1997 was 4.11 percent, down 16 basis
points from the comparable period a year ago. Excluding the
effects of the credit card securitizations that have taken
place beginning mid-1996, net interest income for the second
quarter of 1997 would have increased $75 million from the
second quarter of 1996 and the net interest margin would
have been 4.15 percent.
. Noninterest income was $1,442 million, an increase of $122
million, or 9 percent, from the second quarter of 1996.
Excluding the effect of an $82 million gain from the sale of
a Hong Kong consumer and commercial finance subsidiary
during the second quarter of 1996, noninterest income would
have increased $204 million, or 16 percent, from the second
quarter of 1996.
19
<PAGE>
================================================================================
. Noninterest expense was $2,047 million, up $50 million from
the same period last year, and included $36 million of
expenses associated with trust preferred securities. Without
these expenses, noninterest expense would have been $2,011
million, an increase of $14 million, or less than 1 percent,
from the second quarter of 1996. BAC's adjusted expense-to-
revenue ratio for the second quarter of 1997 was 52.93
percent, a decrease of 60 basis points and 221 basis points
from the prior quarter and the second quarter of 1996,
respectively.
. Nonaccrual assets were $861 million at June 30, 1997, a
decrease of $169 million, or 16 percent, from their March
31, 1997 level. Net credit losses were $224 million for the
second quarter of 1997, a decline of $22 million from the
second quarter of 1996, but up $20 million from the first
quarter of 1997. The provision for credit losses was $250
million, up $30 million from the previous quarter, but
unchanged from the second quarter of 1996.
. In connection with BAC's ongoing efforts to effectively
manage capital, BAC repurchased 8.2 million shares of its
common stock during the second quarter of 1997 at an average
per-share price of $58.02, which reduced stockholders'
equity by $475 million.
20
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 SIX MONTHS ENDED
------------------ --------------------------------------- JUNE 30
(DOLLAR AMOUNTS IN MILLIONS, SECOND FIRST FOURTH THIRD SECOND ---------------------
EXCEPT PER SHARE DATA) QUARTER QUARTER/a/ QUARTER/a,b/ QUARTER/a,c/ QUARTER/a/ 1997 1996/a/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Interest income $ 4,359 $ 4,240 $ 4,238 $ 4,206 $ 4,126 $ 8,599 $ 8,215
Interest expense 2,165 2,066 2,108 2,054 1,967 4,231 3,910
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income 2,194 2,174 2,130 2,152 2,159 4,368 4,305
Provision for credit losses 250 220 220 235 250 470 430
Noninterest income 1,442 1,385 1,499 1,319 1,320 2,827 2,594
Noninterest expense 2,047 2,033 2,250 2,081 1,997 4,080 4,010
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 1,339 1,306 1,159 1,155 1,232 2,645 2,459
Provision for income taxes 540 526 412 472 509 1,066 1,016
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 799 $ 780 $ 747 $ 683 $ 723 $ 1,579 $ 1,443
- ----------------------------------------------------================================================================================
PER SHARE DATA
Earnings per common and common
equivalent share $ 1.07 $ 1.03 $ 0.96 $ 0.87 $ 0.92 $ 2.10 $ 1.82
Earnings per common share --
assuming full dilution 1.07 1.03 0.96 0.87 0.92 2.09 1.81
Dividends declared per common share 0.31 0.31 0.27 0.27 0.27 0.62 0.54
- -----------------------------------------------------------------------------------------------------------------------------------
STOCK DATA
Book value per common share at period end $ 26.88 $ 26.25 $ 26.00 $ 25.46 $ 24.82 $ 26.88 $ 24.82
Common stock price range:
High 69 61 7/8 51 15/16 42 5/8 40 3/16 69 40 3/16
Low 49 9/16 47 11/16 41 1/16 36 34 7/8 47 11/16 29 3/8
Closing common stock price 64 9/16 50 7/16 49 7/8 41 1/16 37 7/8 64 9/16 37 7/8
Average number of common and common
equivalent shares outstanding (in
thousands) 719,514 726,800 731,022 731,343 737,085 723,157 740,927
Average number of common shares outstanding --
assuming full dilution (in thousands) 722,179 726,800 732,416 731,770 737,182 724,490 742,139
Number of common shares outstanding at
period end (in thousands) 698,407 704,708 710,534 717,651 719,786 698,407 719,786
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA AT PERIOD END
Loans $168,806 $167,338 $165,415 $161,833 $160,640 $168,806 $160,640
Total assets 258,363 249,904 250,753 242,953 238,841 258,363 238,841
Deposits 173,168 168,999 168,015 164,901 161,845 173,168 161,845
Long-term debt 14,736 14,725 15,785 15,454 14,953 14,736 14,953
Common equity 18,772 18,501 18,471 18,270 17,866 18,772 17,866
Total equity 20,368 20,097 20,713 20,512 20,108 20,368 20,108
- ------------------------------------------------------------------------------------------------------------------------------------
SELECTED FINANCIAL RATIOS
Expense to revenue/d/ 52.93% 53.53% 54.01% 54.47% 55.14% 53.23% 55.46%
Rate of return (based on net income) on:
Average common equity 16.73 16.50 15.24 14.16 15.42 16.62 15.31
Average total equity 15.99 15.70 14.42 13.44 14.56 15.85 14.42
Average total assets 1.26 1.25 1.21 1.12 1.21 1.26 1.21
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL RATIOS
Ratio of common equity to total assets 7.27% 7.40% 7.37% 7.52% 7.48% 7.27% 7.48%
Ratio of total equity to total assets 7.88 8.04 8.26 8.44 8.42 7.88 8.42
Ratio of average total equity to average
total assets 7.86 7.99 8.40 8.29 8.29 7.92 8.42
====================================================================================================================================
</TABLE>
/a/ Share and per share amounts and stock prices have been restated to reflect a
two-for-one stock split effective June 2, 1997.
/b/ Includes the income statement effect of a $147 million nontaxable gain from
the initial public offering of BA Merchant Services, Inc. (BAMS) common
stock and a $280 million pre-tax restructuring charge.
/c/ Includes the income statement effect of a one-time Savings Association
Insurance Fund (SAIF) assessment that increased noninterest expense by $82
million.
/d/ Excludes net other real estate owned expense, amortization of intangibles,
expenses associated with trust preferred securities, and the effects of a
one-time assessment for SAIF in the third quarter of 1996, a fourth-quarter
1996 restructuring charge, and a fourth-quarter 1996 gain on the initial
public offering of BAMS common stock.
21
<PAGE>
BUSINESS SECTORS
================================================================================
SELECTED BUSINESS SECTOR DATA
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30/a/
--------------------------------------------------------------------------------------------
U.S. CORPORATE AND
TOTAL CONSUMER BANKING INTERNATIONAL BANKING MIDDLE MARKET BANKING
-------------------- ---------------- --------------------- ---------------------
(DOLLAR AMOUNTS IN MILLIONS) 1997 1996 1997 1996 1997 1996 1997 1996
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net interest income $4,368 $4,305 $2,784 $2,731 $ 748 $ 696 $444 $401
Noninterest income 2,827 2,594 1,331 1,134 1,137 1,045 118 110
Noninterest expense 4,080 4,010 2,445 2,390 1,024 1,003 292 281
- --------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE THE PROVISIONS FOR
CREDIT LOSSES AND INCOME TAXES 3,115 2,889 1,670 1,475 861 738 270 230
Provision for credit losses 470 430 577 418 (29) 2 (6) 5
Provision for income taxes 1,066 1,016 476 451 322 298 112 94
- --------------------------------------------------------------------------------------------------------------------------------
NET INCOME 1,579 1,443 617 606 568 438 164 131
Preferred stock dividends 64 98 29 44 20 32 7 10
- --------------------------------------------------------------------------------------------------------------------------------
NET INCOME ATTRIBUTABLE TO
COMMON EQUITY $1,515 $1,345 $ 588 $ 562 $ 548 $ 406 $157 $121
- --------------------------------------==========================================================================================
SELECTED AVERAGE
BALANCE SHEET COMPONENTS
Loans $166,242 $156,241 $83,340 $80,283 $45,605 $41,566 $21,758 $19,214
Earning assets 212,511 200,145 84,472 81,221 77,590 70,956 21,463 19,029
Total assets 253,618 239,069 93,165 90,799 102,631 93,434 24,630 21,858
Deposits 167,742 160,928 97,461 94,965 48,460 44,635 8,190 7,301
Common equity 18,392 17,684 8,350 7,850 5,885 5,821 1,980 1,801
SELECTED FINANCIAL RATIOS
Return on average common
equity 16.62% 15.31% 14.20% 14.40% 18.78% 14.03% 15.99% 13.51%
Expense to revenue/b/ 53.23 55.46 55.55 57.70 51.67 56.81 46.80 50.88
================================================================================================================================
</TABLE>
For management reporting purposes, BAC segregates its
operations into five primary business or operating sectors. BAC
determines its business sector results based on an internal
management reporting system that allocates certain revenues,
expenses, assets, and liabilities to each business.
Furthermore, for internal business sector monitoring, the
unallocated allowance for credit losses and related provision
for credit losses are assigned to the businesses. Equity is
assigned to each business on a risk-adjusted basis taking into
account goodwill and tax-effected identifiable intangibles.
While BAC manages its interest-rate risk hedging activities
centrally, the effects of hedging are generally allocated to
the businesses through a transfer pricing process. As a result,
the effects of hedging interest rate risk are reflected in the
appropriate business sectors.
The information set forth in the tables on pages 22 and 23
reflects the condensed income statements and selected average
balance sheet line items and financial ratios by business
sector. The information presented does not necessarily
represent the business sectors' financial condition and results
of operations as if they were independent entities. Results
from prior periods are restated for changes in sector
composition and in allocation and assignment methodologies to
provide comparability. In addition, the expense-to-revenue
ratios have been adjusted to exclude net other real estate
owned expense, amortization of intangibles, and expenses
related to trust preferred securities. For a detailed
discussion of the composition of each business sector, refer to
pages 19 through 22 of BAC's 1996 Annual Report to
Shareholders.
22
<PAGE>
================================================================================
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30/a/
------------------------------------------------------------------------
COMMERCIAL REAL ESTATE WEALTH MANAGEMENT ALL OTHER
----------------------- ----------------- -----------------------
(DOLLAR AMOUNTS IN MILLIONS) 1997 1996 1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net interest income $ 227 $ 209 $ 90 $ 81 $ 75 $ 187
Noninterest income 19 18 208 192 14 95
Noninterest expense 59 45 236 230 24 61
- -----------------------------------------------------------------------------------------------------------
INCOME BEFORE THE PROVISIONS FOR
CREDIT LOSSES AND INCOME TAXES 187 182 62 43 65 221
Provision for credit losses (71) 3 (1) - - 2
Provision for income taxes 102 69 25 23 29 81
- -----------------------------------------------------------------------------------------------------------
NET INCOME 156 110 38 20 36 138
Preferred stock dividends 3 5 2 3 3 4
- -----------------------------------------------------------------------------------------------------------
NET INCOME ATTRIBUTABLE TO
COMMON EQUITY $ 153 $ 105 $ 36 $ 17 $ 33 $ 134
- ------------------------------------=======================================================================
SELECTED AVERAGE
BALANCE SHEET COMPONENTS
Loans $ 9,734 $10,392 $4,877 $4,316 $ 928 $ 470
Earning assets 9,786 10,426 4,960 4,409 14,240 14,104
Total assets 10,096 10,795 5,807 5,127 17,289 17,056
Deposits 2,214 2,093 7,422 6,962 3,995 4,972
Common equity 789 887 663 571 725 754
SELECTED FINANCIAL RATIOS
Return on average common equity 39.11% 23.80% 10.94% 5.99% NM NM
Expense to revenue/b/ 23.98 29.07 75.17 80.95 NM NM
===========================================================================================================
</TABLE>
/a/ For comparability purposes, both 1997 and 1996 amounts reflect BAC's
business-sector allocation methodologies at June 30, 1997.
/b/ Excludes net other real estate owned expense, amortization of intangibles,
and expenses associated with trust preferred securities.
NM - Not meaningful.
Consumer Banking -- Consumer Banking's net income for the first
half of 1997 was up $11 million, or 2 percent, from the amount
for the same period last year. Net interest income increased
primarily due to higher volumes on consumer installment and
consumer lease financing loans. Partially offsetting these
volume increases were reductions in residential real estate and
credit card loans as a result of continued sales of residential
mortgages and securitizations of credit card receivables.
Noninterest income increase due to higher revenues from service
charges on deposit accounts and ATM fees, larger gains on the
sale of residential first mortgages, and higher loan services
revenue. Noninterest income for the first six months of 1996
included an $82 million gain from the sale of a Hong-Kong
consumer and commercial finance subsidiary. The increases in
net interest income and noninterest income, coupled with BAC's
efforts to contain costs, resulted in an expense-to-revenue
ratio of 55.55 percent, a 215 basis point improvement from the
same period a year ago. The provision for credit losses
increased $159 million, primarily in the credit card, consumer
financing, and manufacturing housing portfolios. Average loan
outstandings grew $3 billion, or 4 percent, from June 30, 1996,
reflecting growth in manufacturing housing loans, consumer auto
loans, and lease financing, while a reduction in residential
real estate loans partly offset this increase.
23
<PAGE>
================================================================================
U.S. Corporate and International Banking -- U.S. Corporate and
International Banking's net income for the first six months of
1997 increased $130 million, or 30 percent, from the amount
reported for the same period a year ago. The increase reflected
higher net interest and noninterest income levels and a
reduction in the provision for credit losses. These
improvements were partially offset by higher noninterest
expense. The increase in net interest income resulted from
higher earning asset balances. Noninterest income was up $92
million predominantly due to improved foreign exchange and
trading account profits, higher securities gains and lower
foreign exchange hedging losses, and increased gains on the
sales of loans and leveraged leases. Lower commitment fees and
reductions in private equity investment activity income
partially offset the increases in noninterest income. This
sector's expense-to-revenue ratio decreased to 51.67 percent, a
514 basis point improvement from the same period a year ago.
Middle Market Banking -- Middle Market Banking's net income for
the first half of 1997 increased $33 million, or 25 percent,
from the first half of 1996. An increase in net interest income
and a decrease in the provision for credit losses contributed
to this growth. Net interest income was up due primarily to
higher loan volumes. The reduction in the provision for credit
losses was primarily a result of improved credit quality in
middle market commercial and industrial loans.
Commercial Real Estate -- Net income in the commercial real
estate sector increased $46 million, or 42 percent, from the
first six months of 1996. The reduction in the provision for
credit losses primarily contributed to this increase, while the
increase in net interest income was offset by an increase in
noninterest expense. Improved credit quality of commercial real
estate loans caused the decrease in the provision for credit
losses.
Wealth Management -- Wealth Management's net income was $38
million for the first six months of 1997, an increase of $18
million, or 90 percent, from the same period a year ago. Higher
trust fees during the first half of 1997, as compared to the
same period last year, contributed to the growth in noninterest
income.
All Other -- This sector includes the results from corporate
asset and liability management activities (investment
securities, federal funds bought and sold, institutional and
brokered deposits and intermediate debt), along with any
residual differences between actual centrally managed external
hedging results and the transfer of interest rate risk hedging
to the appropriate business sectors. Also included in this
sector are the residual income and expenses related to BAC's
Institutional Trust and Securities Services (ITSS) business,
which the corporation had substantially divested by the end of
the first quarter of 1996.
This sector's net income for the first six months of 1997
decreased $102 million from the amount reported for the
comparable period a year ago. Net interest income decreased
$112 million primarily due to lower results from corporate
liquidity management activities. Noninterest income for the
first six months of 1996 included a $50 million pre-tax gain
associated with the divestiture of the ITSS business. The
reduction in noninterest expense was primarily related to the
sale of the ITSS business.
24
<PAGE>
OPERATING LEVERAGE AND CAPITAL MANAGEMENT
================================================================================
BAC continued to demonstrate effective management of operating
leverage in the second quarter and six months ended June 30,
1997. Operating leverage is achieved when the rate of revenue
growth exceeds that of expenses. As shown in the table on page
26, revenue for the second quarter and six months ended June
30, 1997 increased 5 percent and 4 percent, respectively, while
noninterest expense increased 3 percent and 2 percent,
respectively, from the same periods in 1996. Noninterest income
included a $50 million pre-tax gain associated with the
divestiture of BAC's ITSS business during the first quarter of
1996 and an $82 million pre-tax gain from the sale of a Hong
Kong consumer and commercial finance subsidiary during the
second quarter of 1996. Excluding these gains, revenue for the
second quarter and six months ended June 30, 1997 would have
increased 7 percent and 6 percent, respectively. Furthermore,
noninterest expense for the second quarter and first half of
1997 included expense associated with trust preferred
securities of $36 million and $71 million, respectively.
Excluding these expenses, noninterest expense would have
increased less than 1 percent for the second quarter of 1997
and would have been essentially unchanged for the six months
ended June 30, 1997.
Capital management objectives are achieved when the rates of
growth in common shares outstanding and preferred stock
dividends are below that of net income. As a result of BAC's
stock repurchase program, the average number of common shares
outstanding, assuming full dilution, decreased 2 percent in the
second quarter and six months ended June 30, 1997 from the
comparable periods in the prior year. Additionally, preferred
stock dividends decreased 33 percent and 35 percent for the
second quarter and six months ended June 30, 1997,
respectively, compared to the same periods in 1996. However,
the decrease in preferred stock dividends is partially offset
by the after-tax effect of noninterest expense related to
expenses on trust preferred securities.
By increasing revenues, effectively managing expenses, and
taking strategic capital management steps, BAC reported
increases in net income for the second quarter and six months
ended June 30, 1997 of 11 percent and 9 percent, respectively,
from the comparable periods last year. In addition, the rate of
return on average common equity increased 131 basis points for
the second quarter and six months ended June 30, 1997 from the
same periods in 1996.
25
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================================
OPERATING LEVERAGE AND CAPITAL MANAGEMENT
- --------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
SECOND QUARTER JUNE 30
(DOLLAR AMOUNTS IN MILLIONS, ---------------------- ----------------------
EXCEPT PER SHARE DATA) 1997 1996 CHANGE 1997 1996 CHANGE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING LEVERAGE COMPONENTS
Net interest income $ 2,194 $ 2,159 2% $ 4,368 $ 4,305 1%
Noninterest income 1,442 1,320 9 2,827 2,594 9
Total revenue 3,636 3,479 5 7,195 6,899 4
Noninterest expense 2,047 1,997 3 4,080 4,010 2
Operating income/a/ 1,589 1,482 7 3,115 2,889 8
Provision for credit losses 250 250 - 470 430 9
Provision for income taxes 540 509 6 1,066 1,016 5
CAPITAL MANAGEMENT COMPONENTS
Net income 799 723 11 1,579 1,443 9
Preferred stock dividends 30 45 (33) 64 98 (35)
Net income applicable to common stock 769 678 13 1,515 1,345 13
Average number of common shares outstanding --
assuming full dilution (in thousands) 722,179 737,182/b/ (2) 724,490 742,139/b/ (2)
Earnings per common share --
assuming full dilution $ 1.07 $ 0.92/b/ 16 $ 2.09 $ 1.81/b/ 15
Average common equity 18,459 17,703 4 18,392 17,684 4
Rate of return on average common equity 16.73% 15.42% 131/bp/ 16.62% 15.31% 131/bp/
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Represents net income before the provisions for credit losses and income
taxes.
/b/ Restated to reflect a two-for-one stock split effective June 2, 1997.
/bp/ - Basis points.
26
<PAGE>
RESULTS OF OPERATIONS
================================================================================
NET INTEREST Taxable-equivalent net interest income for the second quarter
INCOME and the first half of 1997 was $2,200 million and $4,380
million, respectively, up $40 million and $69 million from the
corresponding periods of 1996. The increases primarily resulted
from growth in earning assets, partially offset by an increase
in the cost of funds. Excluding the effects of credit card
securitizations, taxable-equivalent net interest income for the
second quarter of 1997 would have increased $80 million from
the comparable 1996 period.
Average earning assets totaled $214.5 billion and $212.5
billion in the second quarter and first six months of 1997,
respectively, up $11.9 billion and $12.4 billion from the same
periods in 1996. The increases were largely attributable to
growth in most segments of the loan portfolio as average loans
increased $9.5 billion and $10 billion from the second quarter
and first six months of 1996, respectively. In addition,
average trading account assets rose $2.8 billion and $2.6
billion from the second quarter and first six months of 1996,
respectively.
BAC's net interest margin for the second quarter and first half
of 1997 was 4.11 percent and 4.13 percent, respectively, down
16 and 19 basis points from the comparable periods a year ago.
The yield on average earning assets decreased 2 and 9 basis
points from the second quarter and first six months of 1996,
respectively, primarily due to lower prevailing market rates
and an increase in lower yielding trading portfolio assets. The
cost of funds increased 14 and 10 basis points from the second
quarter and first six months of 1996, respectively, primarily
due to increased rates on domestic interest-bearing deposits,
the largest component of interest-bearing liabilities. In
addition, BAC has shifted the mix of liabilities toward
wholesale funding sources, including foreign interest-bearing
deposits and domestic purchased funds, which are more costly
than traditional core deposits.
BAC's net interest income and margin include the results of
hedging with certain on- and off-balance sheet financial
instruments. Hedging with derivative financial instruments
reduced BAC's net interest income results by approximately $15
million in the second quarter and increased approximately $35
million in the first six months of 1997, compared with
increases of approximately $15 million and $35 million,
respectively, in the corresponding periods of 1996. The effect
of the hedging amounts on the net interest margin for both the
second quarter and first half of 1997 as well as the comparable
periods of 1996 was approximately 5 basis points.
27
<PAGE>
================================================================================
AVERAGE BALANCES, INTEREST, AND AVERAGE RATES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
SECOND QUARTER 1997 SECOND QUARTER 1996
-------------------------------- --------------------------------
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ RATE/b/ BALANCE/a/ INTEREST/b/ RATE/b/
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits in banks $ 6,627 $ 105 6.32% $ 5,472 $ 96 7.04%
Federal funds sold 631 9 5.58 535 7 5.43
Securities purchased under resale agreements 9,729 180 7.41 11,155 176 6.34
Trading account assets 15,273 301 7.90 12,492 247 7.96
Available-for-sale securities/c,d/ 11,277 200 7.10 10,976 214 7.85
Held-to-maturity securities/d/ 3,918 73 7.44 4,395 82 7.41
Domestic loans:
Consumer-residential first mortgages 35,872 666 7.42 37,848 705 7.46
Consumer-residential junior mortgages 14,997 319 8.54 14,131 301 8.56
Consumer-credit card 8,218 299 14.55 9,100 330 14.52
Other consumer 20,543 498 9.73 17,071 421 9.92
Commercial and industrial 34,386 678 7.90 32,665 629 7.75
Commercial loans secured by real estate 12,551 273 8.70 11,160 251 8.99
Financial institutions 3,201 43 5.38 3,039 32 4.24
Lease financing 2,793 40 5.75 1,983 38 7.72
Construction and development loans
secured by real estate 2,243 78 14.03/f/ 3,052 77 10.19
Loans for purchasing or carrying securities 1,930 44 9.13/g/ 1,108 18 6.70
Agricultural 1,514 32 8.50 1,567 34 8.73
Other 1,448 20 6.11 1,111 22 7.47
-------- ------ -------- ------
Total domestic loans 139,696 2,990 8.58 133,835 2,858 8.57
Foreign loans 27,311 507 7.45 23,718 447 7.58
-------- ------ -------- ------
Total loans/c/ 167,007 3,497 8.40 157,553 3,305 8.42
-------- ------ -------- ------
Total earning assets 214,462 $4,365 8.16 202,578 $4,127 8.18
Nonearning assets 44,222 ====== 41,974 ======
Less: Allowance for credit losses 3,553 3,496
-------- --------
TOTAL ASSETS $255,131 $241,056
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic interest-bearing deposits:
Transaction $ 5,151 $ 21 1.60% $ 13,212 $ 39 1.21%
Savings 11,942 62 2.09 13,075 66 2.04
Money market 36,746 272 2.97 27,942 220 3.16
Time 30,009 398 5.32 30,130 367 4.89
-------- ------ -------- ------
Total domestic interest-bearing deposits 83,848 753 3.60 84,359 692 3.30
Foreign interest-bearing deposits:
Banks located in foreign countries 13,306 195 5.89 13,416 192 5.77
Governments and official institutions 11,312 154 5.45 9,798 130 5.31
Time, savings, and other 21,172 322 6.09 18,945 293 6.22
-------- ------ -------- ------
Total foreign interest-bearing deposits 45,790 671 5.87 42,159 615 5.86
-------- ------ -------- ------
Total interest-bearing deposits 129,638 1,424 4.40 126,518 1,307 4.15
Federal funds purchased 1,361 19 5.59 1,530 20 5.40
Securities sold under repurchase agreements 10,777 178 6.63 12,061 176 5.88
Other short-term borrowings 19,275 287 5.98 13,471 208 6.21
Long-term debt 14,717 257 7.02 15,175 256 6.79
-------- ------ -------- ------
Total interest-bearing liabilities 175,768 $2,165 4.94 168,755 $1,967 4.69
Domestic noninterest-bearing deposits 37,486 ====== 34,182 ======
Foreign noninterest-bearing deposits 1,870 1,612
Other noninterest-bearing liabilities 18,079 16,532
-------- --------
Total liabilities 233,203 221,081
Trust preferred securities/e/ 1,873 -
Stockholders' equity 20,055 19,975
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $255,131 $241,056
======== ========
Interest income as a percentage of average
earning assets 8.16% 8.18%
Interest expense as a percentage of average
earning assets (4.05) (3.91)
----- -----
NET INTEREST MARGIN 4.11% 4.27%
===== =====
=============================================================================================================================
</TABLE>
/a/ Average balances are obtained from the best available daily, weekly, or
monthly data.
/b/ Interest income and average rates are presented on a taxable-equivalent
basis. The taxable-equivalent adjustments are based on a marginal tax rate
of 40 percent.
/c/ Average balances include nonaccrual assets.
/d/ Refer to the table on page 36 of the Balance Sheet Review section for more
detail on available-for-sale and held-to-maturity securities.
/e/ Trust preferred securities represent corporation obligated mandatorily
redeemable preferred securities of subsidiary trusts holding solely junior
subordinated deferrable interest debentures of the corporation.
/f/ Rates reflect a higher level of interest recoveries on nonaccrual loans
during the second quarter of 1997 as compared to the second quarter of 1996.
/g/ Rates reflect an increase in fees during the second quarter of 1997 as
compared to the second quarter of 1996.
28
<PAGE>
================================================================================
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30
-------------------------------------------------------------------------
1997 1996
-------------------------------- --------------------------------
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ RATE/b/ BALANCE/a/ INTEREST/b/ RATE/b/
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits in banks $ 6,348 $ 204 6.47% $ 5,735 $ 213 7.45%
Federal funds sold 611 17 5.45 485 13 5.38
Securities purchased under resale agreements 9,546 334 7.08 10,233 331 6.51
Trading account assets 14,315 570 8.03 11,750 464 7.94
Available-for-sale securities/c,d/ 11,436 403 7.07 11,198 428 7.67
Held-to-maturity securities/d/ 4,013 159 7.93 4,503 168 7.46
Domestic loans:
Consumer-residential first mortgages 36,474 1,352 7.41 37,354 1,396 7.48
Consumer-residential junior mortgages 14,886 628 8.51 13,980 602 8.66
Consumer-credit card 8,308 604 14.55 9,021 664 14.72
Other consumer 20,166 978 9.78 16,748 825 9.91
Commercial and industrial 34,134 1,324 7.83 32,768 1,276 7.83
Commercial loans secured by real estate 12,490 548 8.78 11,075 495 8.94
Financial institutions 3,071 75 4.95 2,912 64 4.40
Lease financing 2,761 78 5.66 1,946 64 6.65
Construction and development loans
secured by real estate 2,255 144 12.91 3,107 158 10.25
Loans for purchasing or carrying securities 1,841 74 8.06 1,173 39 6.71
Agricultural 1,538 67 8.73 1,611 71 8.89
Other 1,368 41 6.06 1,160 39 6.70
-------- ------ -------- ------
Total domestic loans 139,292 5,913 8.53 132,855 5,693 8.60
Foreign loans 26,950 1,011 7.56 23,386 911 7.84
-------- ------ -------- ------
Total loans/c/ 166,242 6,924 8.38 156,241 6,604 8.48
-------- ------ -------- ------
Total earning assets 212,511 $8,611 8.15 200,145 $8,221 8.24
Nonearning assets 44,657 ====== 42,445 ======
Less: Allowance for credit losses 3,550 3,521
-------- --------
TOTAL ASSETS $253,618 $239,069
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic interest-bearing deposits:
Transaction $ 6,140 $ 45 1.47% $ 13,221 $ 79 1.21%
Savings 12,050 123 2.05 13,053 133 2.05
Money market 35,677 527 2.98 27,828 437 3.15
Time 29,992 797 5.36 29,903 738 4.96
-------- ------ -------- -------
Total domestic interest-bearing deposits 83,859 1,492 3.59 84,005 1,387 3.32
Foreign interest-bearing deposits:
Banks located in foreign countries 13,198 376 5.74 13,694 408 5.99
Governments and official institutions 10,990 291 5.34 8,844 233 5.29
Time, savings, and other 21,058 631 6.04 18,791 593 6.35
-------- ------ -------- -------
Total foreign interest-bearing deposits 45,246 1,298 5.78 41,329 1,234 6.00
-------- ------ -------- -------
Total interest-bearing deposits 129,105 2,790 4.36 125,334 2,621 4.20
Federal funds purchased 1,208 32 5.38 1,596 42 5.32
Securities sold under repurchase agreements 10,351 327 6.37 11,440 339 5.97
Other short-term borrowings 18,636 562 6.09 12,619 386 6.15
Long-term debt 15,162 520 6.92 15,309 522 6.86
-------- ------ -------- -------
Total interest-bearing liabilities 174,462 $4,231 4.89 166,298 $ 3,910 4.73
Domestic noninterest-bearing deposits 36,914 ====== 33,997 =======
Foreign noninterest-bearing deposits 1,723 1,597
Other noninterest-bearing liabilities 18,580 17,049
-------- --------
Total liabilities 231,679 218,941
Trust preferred securities/e/ 1,842 -
Stockholders' equity 20,097 20,128
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $253,618 $239,069
======== ========
Interest income as a percentage of average
earning assets 8.15% 8.24%
Interest expense as a percentage of average
earning assets (4.02) (3.92)
----- -----
NET INTEREST MARGIN 4.13% 4.32%
===== =====
=============================================================================================================================
</TABLE>
29
<PAGE>
================================================================================
NONINTEREST Noninterest income for the second quarter and first half of
INCOME 1997 was $1,442 million and $2,827 million, respectively,
representing increases of $122 million and $233 million,
respectively, from the comparable periods last year.
Noninterest income included a $50 million pre-tax gain
associated with the divestiture of BAC's ITSS business during
the first quarter of 1996 and an $82 million pre-tax gain from
the sale of a Hong Kong consumer and commercial finance
subsidiary during the second quarter of 1996. Excluding these
gains, noninterest income would have increased $204 million and
$365 million in the second quarter and first half of 1997. The
increase reflected growth in fees and commissions, trading
income, and other noninterest income.
Fees and commissions, the largest component of noninterest
income, for the second quarter and first six months of 1997
increased $107 million and $180 million, respectively, from the
same periods a year ago, reflecting BAC's continued focus on
expanding its fee-generating activities. Revenues earned from
retail deposit account fees rose $14 million and $34 million
for the second quarter and first half of 1997, respectively,
compared with the corresponding periods last year, reflecting
increased revenues from service fees and charges associated
with deposit accounts, primarily due to an increase in the
volume of fee-generating accounts. Other fees and commissions
rose $84 million and $139 million for the second quarter and
first half of 1997, respectively, from the comparable periods
in the prior year. These increases were primarily attributable
to increased revenues from loan fees and charges as well as ATM
fees. Loan fees and charges are reported net of amortization
expense and valuation adjustments on mortgage servicing rights
and, commencing the first quarter of 1997, other consumer loan
servicing rights, which are recognized in connection with the
adoption of Statement of Financial Accounting Standards No.
125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities" (SFAS No. 125). The
increase in loan fees and charges resulted primarily from the
impact of the implementation of SFAS No. 125 and higher
revenues from late payment and overlimit charges on credit card
accounts offset by an increase in the amortization expense and
valuation adjustments on servicing rights. The growth in ATM
fees is largely attributable to expanded transaction volume as
well as surcharges levied on nonbank customers.
Trading income for the second quarter and first half of 1997
increased $40 million and $63 million, respectively, from the
comparable periods a year ago. The improved performance for the
first half of 1997 is largely attributable to BAC's trading
activities in foreign exchange and emerging market debt
securities in the current quarter and investments in domestic
debt securities in the first quarter of 1997. For more
information on the functional components of trading income,
refer to Note 8 of the Notes to Consolidated Financial
Statements on pages 13 through 18.
30
<PAGE>
================================================================================
NONINTEREST INCOME
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
SECOND QUARTER JUNE 30
-------------- ----------------
(IN MILLIONS) 1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FEES AND COMMISSIONS
Deposit account fees:
Retail $ 272 $ 258 $ 543 $ 509
Commercial 89 88 178 181
Credit card fees:
Membership 5 7 11 17
Other 88 83 169 152
Trust fees:
Corporate and employee benefit 2 4 4 13
Personal and other 59 52 114 106
Other fees and commissions:
Loan fees and charges 152 87 286 166
Off-balance-sheet credit-related instrument fees 75 86 153 173
Financial services fees 56 46 94 88
Mutual fund and annuity commissions 26 27 52 52
Other 108 87 207 174
- -----------------------------------------------------------------------------------------------------------
932 825 1,811 1,631
- -----------------------------------------------------------------------------------------------------------
TRADING INCOME 218 178 406 343
- -----------------------------------------------------------------------------------------------------------
OTHER NONINTEREST INCOME
Private equity investment activities 83 112 182 222
Net gain on sales of loans 44 17 103 44
Net gain on sales of subsidiaries and operations 27 83 40 134
Net gain on available-for-sale securities 14 4 34 34
Other income 124 101 251 186
- -----------------------------------------------------------------------------------------------------------
292 317 610 620
- -----------------------------------------------------------------------------------------------------------
$1,442 $1,320 $2,827 $2,594
- --------------------------------------------------------------=============================================
</TABLE>
Other noninterest income totaled $292 million and $610 million
in the second quarter and first half of 1997, respectively,
representing a decrease of $25 million from the first quarter
of last year and $10 million from the first half of 1996.
Excluding the ITSS and Hong Kong gains during 1996, other
noninterest income would have increased $57 million and $122
million, respectively, compared to the same periods last year.
The increase included higher income related to net gain on
sales of loans and net gain on sales of subsidiaries and
operations. Net gain on sales of loans increased by $27 million
and $59 million for the second quarter and first half of 1997,
respectively, compared to the same periods in the prior year,
largely due to growth in the sale of residential first
mortgages in the first half of 1997 and growth in the sale of
commercial and industrial loans in the second quarter of 1997.
Excluding the ITSS and Hong Kong gains during 1996, net gain on
sales of subsidiaries and operations for the second quarter and
first six months of 1997 would have increased $26 million and
$38 million, respectively, from the comparable periods last
year, primarily reflecting net gains from the previously
announced Texas branch divestitures.
31
<PAGE>
================================================================================
NONINTEREST Noninterest expense for the second quarter and the first half
EXPENSE of 1997 increased $50 million and $70 million, respectively,
from the corresponding periods in 1996 and included expenses
associated with trust preferred securities of $36 million and
$71 million, respectively. Excluding the trust preferred
securities expense, noninterest expense would have been $2,011
million for the second quarter of 1997, an increase of $14
million, or less than 1 percent, from the comparable quarter in
1996. The rise mainly reflects a modest increase in personnel
expense which was partially offset by a decrease in occupancy,
equipment, amortization, and other noninterest expense. In the
first half of 1997, excluding the trust preferred securities
expense, noninterest expense would have been $4,009 million, a
decline of $1 million from the comparable period in 1996. The
decrease is primarily due to lower other noninterest expense
which is partially offset by increases in personnel and total
occupancy and equipment expenses.
Personnel expense, the largest component of noninterest
expense, was $1,062 million and $2,090 million in the second
quarter and first half of 1997, respectively, up $35 million
and $40 million, respectively, from the comparable periods in
1996, primarily due to variable pay. BAC's staff level on a
full-time-equivalent (FTE) basis was approximately 77,400 at
June 30, 1997, down from approximately 78,300 at June 30, 1996.
FTE is a measurement equal to one full-time employee working a
standard day. BAC had approximately 91,000 employees, both
full-time and part-time, at June 30, 1997, down from
approximately 93,200 at June 30, 1996.
Other noninterest expense was $629 million and $1,266 million
in the second quarter and first six months of 1997,
respectively. Excluding the trust preferred securities expense,
other noninterest expense would have been $593 million in the
second quarter of 1997, a decrease of $16 million over the same
quarter last year, and $1,195 million in the first half of
1997, down $51 million over the comparable period in 1996. The
decrease was mainly due to lower miscellaneous expenses in the
second quarter and first half of 1997 as well as a decline in
advertising expenditures in the first half of 1997 compared to
the corresponding periods in the prior year.
BAC's noninterest expense for the second quarter of 1997 and
for several preceding quarters has included charges incurred in
connection with making its computer systems year 2000
compliant. BAC expects to continue incurring charges related to
this project through the year 2000, however, none of these
costs are expected to materially impact its results of
operations in any one period. In addition, a significant
portion of these costs are not expected to be incremental to
BAC but instead are likely to constitute a reassignment of
existing internal systems technology resources.
32
<PAGE>
================================================================================
NONINTEREST EXPENSE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SIX MONTHS ENDED
SECOND QUARTER JUNE 30
---------------- -----------------
(IN MILLIONS) 1997 1996 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PERSONNEL
Salaries $ 873 $ 814 $ 1,712 $ 1,635
Employee benefits 189 213 378 415
- --------------------------------------------------------------------------------
1,062 1,027 2,090 2,050
- --------------------------------------------------------------------------------
OCCUPANCY AND EQUIPMENT
Occupancy 183 186 369 376
Equipment 173 175 355 338
- --------------------------------------------------------------------------------
356 361 724 714
- --------------------------------------------------------------------------------
OTHER NONINTEREST EXPENSE
Communications 96 90 189 182
Amortization of intangibles 89 93 180 188
Professional services 82 80 157 161
Regulatory fees and related expenses 10 13 20 26
Other expense 352 333 720 689
- --------------------------------------------------------------------------------
629 609 1,266 1,246
- --------------------------------------------------------------------------------
$ 2,047 $ 1,997 $ 4,080 $ 4,010
- -------------------------------------===========================================
Full-time-equivalent staff at
period end 77,400 78,300
Employees at period end 91,000 93,200
- --------------------------------------------------------------------------------
</TABLE>
INCOME The provision for income taxes was $540 million and $509
TAXES million for the quarters ended June 30, 1997 and 1996,
respectively, reflecting forecasted annual effective income
tax rates of 40.3 percent and 41.3 percent, respectively.
For further information concerning BAC's provision for federal,
state, and foreign income taxes for the most recent five
quarters, refer to Note 6 of the Notes to Consolidated
Financial Statements on page 12.
33
<PAGE>
BALANCE SHEET REVIEW
================================================================================
Interest-earning assets totaled $216 billion at June 30, 1997,
up $9 billion, or 4 percent, from year-end 1996. Growth in
interest-earning assets, primarily loans, trading account
assets, and interest-bearing deposits in banks, was funded
primarily by increases in other short-term borrowings and
foreign interest-bearing deposits.
Total deposits at June 30, 1997 increased $5.2 billion from
December 31, 1996. The growth was primarily attributable to a
$3.9 billion increase in foreign interest-bearing deposits that
resulted from BAC's continued participation in selected global
markets.
In June 1996, the Financial Accounting Standards Board (FASB)
issued SFAS No. 125. The FASB subsequently amended SFAS No. 125
in December 1996. As amended, SFAS No. 125 applies to
securities lending, repurchase agreements, dollar rolls, and
other similar secured financing transactions occurring after
December 31, 1997 and to all other transfers and servicing of
financial assets occurring after December 31, 1996. The
adoption of SFAS No. 125 did not and is not expected to have a
material effect on BAC's financial position or results of
operations.
34
<PAGE>
================================================================================
CREDIT CARD BAC securitized and sold $2,221 million in credit card
SECURITIZATION receivables since mid-1996. The securitizations affect, among
other things, the manner and time period in which revenue is
reported in the statement of operations. The amounts that would
otherwise be included in net interest revenue are instead
included in noninterest income as fees and commissions, net of
any credit losses on the securitized portion of the credit card
portfolio.
The table below shows the impact of the securitization of
credit card receivables on BAC's results of operations and
financial position as of June 30, 1997. The table includes the
effects of the adoption of SFAS No. 125, which requires the
recognition of gains and amortized cost resulting from the
securitization transactions.
- --------------------------------------------------------------------------------
IMPACT OF CREDIT CARD SECURITIZATION
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1997/a/
--------------------------------------------
BEFORE
CREDIT CARD CREDIT CARD
(DOLLAR AMOUNTS IN MILLIONS) SECURITIZATION SECURITIZATION REPORTED
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING RESULTS
Net interest income $ 4,443 $ (75) $ 4,368
Credit card fees 193 (13) 180
Other noninterest income 2,573 74/b/ 2,647
- ------------------------------------------------------------------------------------------------------------
Total revenue 7,209 (14) 7,195
Noninterest expense 4,080 - 4,080
- ------------------------------------------------------------------------------------------------------------
Income before provision for credit
losses and income taxes 3,129 (14) 3,115
Provision for credit losses 518 (48)/c/ 470
- ------------------------------------------------------------------------------------------------------------
Income before income taxes $ 2,611 $ 34 $ 2,645
- ----------------------------------------------------------------------======================================
NET INTEREST MARGIN 4.17% (0.04)% 4.13%
- ------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA AT PERIOD END
Credit card loans outstanding $ 9,845 $ (2,221) $ 7,624
Total assets 260,584 (2,221) 258,363
- ------------------------------------------------------------------------------------------------------------
AVERAGE BALANCE SHEET DATA
Credit card loans 9,837 (1,529) 8,308
Earning assets 214,040 (1,529) 212,511
Total assets 255,147 (1,529) 253,618
- ------------------------------------------------------------------------------------------------------------
NET CREDIT LOSSES - CREDIT CARD PORTFOLIO 287 (48) 239
- ------------------------------------------------------------------------------------------------------------
SELECTED FINANCIAL RATIOS
Annualized ratio of net credit losses on credit card loans
to average credit card loans outstanding 5.90% (0.08)% 5.82%
Delinquent credit card loan ratio/d/ 2.71 (0.04) 2.67
============================================================================================================
</TABLE>
/a/ Includes the impact of credit card securitization transactions since mid-
1996. There were credit card securitizations of $750 million during the
second quarter of 1997 and $1,471 million during the last half of 1996.
/b/ Includes $34 million gain, net of amortized cost, associated with the
continued application of SFAS No. 125.
/c/ Represents the investors' share of charge-offs.
/d/ 60 days or more past due.
35
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================
AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES - AVERAGE BALANCES,
INTEREST, AND AVERAGE RATES
- ----------------------------------------------------------------------------------------------
SECOND QUARTER 1997
----------------------------------------------------------
RATE
RATE BASED ON
BASED ON AMORTIZED
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ FAIR VALUE/b/ COST/b/
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury and other
government agency securities $ 1,533 $ 26 6.77% 6.61%
Mortgage-backed securities 6,415 112 6.97 6.91
Other domestic securities 870 13 5.94 6.53
Foreign securities 2,459/c/ 49 8.06/d/ 7.68/d/
- ----------------------------------------------------------------------------------------------
$11,277 $200 7.10% 7.02%
- ---------------------------------------=======================================================
<CAPTION>
SECOND QUARTER 1996
----------------------------------------------------------
RATE
RATE BASED ON
BASED ON AMORTIZED
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ FAIR VALUE/b/ COST/b/
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury and other
government agency securities $ 1,417 $ 24 6.90% 6.83%
Mortgage-backed securities 6,108 104 6.82 6.77
Other domestic securities 744 11 5.93 7.00
Foreign securities 2,707/c/ 75 11.20/d/ 10.55/d/
- ----------------------------------------------------------------------------------------------
$10,976 $214 7.85% 7.77%
- ---------------------------------------=======================================================
</TABLE>
<TABLE>
<CAPTION>
SECOND QUARTER 1997 SECOND QUARTER 1996
----------------------------------- ----------------------------------
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ RATE/b/ BALANCE/a/ INTEREST/b/ RATE/b/
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HELD-TO-MATURITY SECURITIES
U.S. Treasury and other
government agency securities $ 10 $ -/e/ 5.87% $ 26 $ 1 5.74%
Mortgage-backed securities 2,062 39 7.49 2,343 45 7.57
State, county, and municipal
securities 384 7 7.52 421 8 7.84
Other domestic securities 54 1 6.86 123 2 7.54
Foreign securities 1,408 26 7.34 1,482 26 7.06
- ------------------------------------------------------------------------------------------------------------
$3,918 $73 7.44% $4,395 $82 7.41%
- ---------------------------------------=====================================================================
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
----------------------------------------------------------
1997
----------------------------------------------------------
RATE
RATE BASED ON
BASED ON AMORTIZED
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ FAIR VALUE/b/ COST/b/
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury and other
government agency securities $ 1,435 $ 48 6.70% 6.58%
Mortgage-backed securities 6,476 222 6.85 6.83
Other domestic securities 903 26 5.83 6.53
Foreign securities 2,622/c/ 107 8.23/d/ 7.90/d/
- ----------------------------------------------------------------------------------------------
$11,436 $403 7.07% 7.03%
- ---------------------------------------=======================================================
<CAPTION>
SIX MONTHS ENDED JUNE 30
----------------------------------------------------------
1996
----------------------------------------------------------
RATE
RATE BASED ON
BASED ON AMORTIZED
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ FAIR VALUE/b/ COST/b/
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury and other
government agency securities $ 1,427 $ 48 6.73% 6.75%
Mortgage-backed securities 6,328 214 6.77 6.78
Other domestic securities 733 21 5.76 6.75
Foreign securities 2,710/c/ 145 10.81/d/ 10.15/d/
- ----------------------------------------------------------------------------------------------
$11,198 $428 7.67% 7.64%
- ---------------------------------------=======================================================
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
-------------------------------------------------------------------------
1997 1996
----------------------------------- ----------------------------------
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ RATE/b/ BALANCE/a/ INTEREST/b/ RATE/b/
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HELD-TO-MATURITY SECURITIES
U.S. Treasury and other
government agency securities $ 12 $ 1 5.99% $ 49 $ 1 4.91%
Mortgage-backed securities 2,095 78 7.47 2,390 91 7.60
State, county, and municipal
securities 388 15 7.48 427 17 7.70
Other domestic securities 55 2 6.84 135 5 7.45
Foreign securities 1,463 63 8.74 1,502 54 7.25
- ------------------------------------------------------------------------------------------------------------
$4,013 $159 7.93% $4,503 $168 7.46%
- ---------------------------------------=====================================================================
</TABLE>
/a/ Average balances are obtained from the best available daily, weekly, or
monthly data.
/b/ Interest income and average rates are presented on a taxable-equivalent
basis. The taxable-equivalent adjustments are based on a marginal tax rate
of 40 percent.
/c/ Average balances include nonaccrual assets.
/d/ Rates reflect lower levels of interest received on nonaccrual debt-
restructuring par bonds in the second quarter of 1997 compared to the second
quarter of 1996.
/e/ Amount rounds to less than $0.5 million.
36
<PAGE>
CREDIT RISK MANAGEMENT
================================================================================
LOAN PORTFOLIO Total loans at June 30, 1997 were up $3.4 billion, or 2
MANAGEMENT percent, from year-end 1996. This growth was primarily in
the domestic commercial and foreign portfolios.
- --------------------------------------------------------------------------------
LOAN OUTSTANDINGS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
1997 1996
------------------- ------------------------------
(IN MILLIONS) JUNE 30 MARCH 31 DEC. 31 SEPT. 30 JUNE 30
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DOMESTIC
Consumer:
Residential first mortgages $ 35,709 $ 35,881 $ 37,459 $ 37,445 $ 38,012
Residential junior mortgages 15,154 14,857 14,743 14,525 14,386
Other installment 18,410 17,863 16,979 15,998 15,057
Credit card 7,624/a/ 8,365/a/ 8,707/a/ 9,021/a/ 9,342
Other individual lines of credit 1,961 1,939 1,948 1,845 1,824
Other 413 391 401 303 307
- ------------------------------------------------------------------------------------------------------
79,271 79,296 80,237 79,137 78,928
Commercial:
Commercial and industrial 34,266 34,554 33,404 33,076 33,097
Loans secured by real estate 12,669 12,445 12,488 12,062 11,410
Financial institutions 2,947 3,232 3,109 2,537 3,075
Lease financing 2,809 2,790 2,542 2,682 2,019
Construction and development loans
secured by real estate 2,262 2,261 2,252 2,530 2,896
Loans for purchasing or carrying securities 2,616 2,447 1,941 1,328 1,399
Agricultural 1,560 1,475 1,696 1,561 1,581
Other 1,738 1,450 1,270 1,253 1,146
- ------------------------------------------------------------------------------------------------------
60,867 60,654 58,702 57,029 56,623
- ------------------------------------------------------------------------------------------------------
140,138 139,950 138,939 136,166 135,551
FOREIGN
Commercial and industrial 17,762 17,540 16,394 16,257 15,958
Banks and other financial institutions 4,818 3,526 3,958 3,480 4,077
Governments and official institutions 851 1,008 970 943 1,015
Other 5,237 5,314 5,154 4,987 4,039
- ------------------------------------------------------------------------------------------------------
28,668 27,388 26,476 25,667 25,089
- ------------------------------------------------------------------------------------------------------
TOTAL LOANS 168,806 167,338 165,415 161,833 160,640
Less: Allowance for credit losses 3,563 3,538 3,523 3,511 3,495
- ------------------------------------------------------------------------------------------------------
$165,243 $163,800 $161,892 $158,322 $157,145
- --------------------------------------------------====================================================
</TABLE>
/a/ Excludes outstanding securitized credit card receivables of $2,221 million
at June 30, 1997, $1,471 million at March 31, 1997 and December 31, 1996,
and $500 million at September 30, 1996. There was a $750 million credit card
securitization during the second quarter of 1997 and $1,471 million during
the last half of 1996.
37
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================
Domestic Consumer Loans -- During the six months ended June 30,
1997, domestic consumer loans decreased by $1 billion, or 1
percent, primarily due to the sale of $5.1 billion of
residential first mortgages. Residential first mortgages
continued to grow, but was more than offset by the sale of
mortgages from the portfolio, resulting in a net decrease of
$1.8 billion in this portfolio. In addition, other installment
loans increased $1.4 billion due to continued growth in
manufactured housing in the 13 states in the southeastern
region of the U.S. and auto loans and leases in California,
reflecting strong customer demand in these loan categories.
================================================================================================================
DOMESTIC CONSUMER LOANS BY GEOGRAPHIC AREA AND LOAN TYPE AS OF JUNE 30, 1997
- ----------------------------------------------------------------------------------------------------------------
RESIDENTIAL RESIDENTIAL
FIRST JUNIOR MANUFACTURED CREDIT OTHER TOTAL
(IN MILLIONS) MORTGAGES MORTGAGES HOUSING CARD AUTO CONSUMER CONSUMER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
California $25,521 $10,080 $1,000 $3,037 $2,829 $2,292 $44,759
Washington 1,400 2,011 355 1,211 1,533 572 7,082
Arizona 964 886 260 280 576 151 3,117
Texas 804 123 702 344 793 270 3,036
Oregon 969 537 153 231 275 90 2,255
Other/a/ 6,051 1,517 6,539 2,521 1,027 1,367 19,022
- -----------------------------------------------------------------------------------------------------------------
$35,709 $15,154 $9,009 $7,624 $7,033 $4,742 $79,271
- ----------------------------------===============================================================================
</TABLE>
/a/ No other state individually exceeded 2 percent of total domestic consumer
loans.
Delinquent domestic consumer loans that are 60 days or more
past due totaled $811 million at June 30, 1997, a decrease of
$63 million from the December 31, 1996 level. The decrease
reflected lower levels of delinquencies, primarily in
residential first mortgages.
<TABLE>
<CAPTION>
==================================================================================================================
DOMESTIC CONSUMER LOAN DELINQUENCY INFORMATION/a/
- ------------------------------------------------------------------------------------------------------------------
1997 1996
------------------- -----------------------------
(DOLLAR AMOUNTS IN MILLIONS) JUNE 30 MARCH 31 DEC. 31 SEPT. 30 JUNE 30
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DELINQUENT CONSUMER LOANS
Residential first mortgages $422 $463 $477 $518 $535
Residential junior mortgages 59 61 62 64 70
Credit card 204 216 206 207 204
Other 126 122 129 113 96
- ------------------------------------------------------------------------------------------------------------------
$811 $862 $874 $902 $905
- -------------------------------------------------------------------===============================================
<CAPTION>
<S> <C> <C> <C> <C> <C>
DELINQUENT CONSUMER LOAN RATIOS/b/
Residential first mortgages 1.18% 1.29% 1.27% 1.38% 1.41%
Residential junior mortgages 0.39 0.41 0.42 0.44 0.48
Credit card 2.67 2.58 2.36 2.29 2.19
Other 0.61 0.60 0.67 0.63 0.56
Total 1.02 1.09 1.09 1.14 1.15
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ 60 days or more past due.
/b/ Ratios represent delinquent balances expressed as a percentage of total
loans for that loan category.
38
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================
Domestic Commercial Loans -- Domestic commercial loans
increased $2.2 billion, or 3.7 percent, during the six months
ended June 30, 1997, reflecting growth in most commercial loan
categories. Commercial and industrial loans increased $0.9
billion, loans for purchasing or carrying securities increased
$0.7 billion, and lease financing increased $0.3 billion. The
growth in commercial and industrial loans primarily reflected
BAC's efforts to diversify its market share as well as
increased loan demand from large corporate and middle market
borrowers in various industries throughout the United States.
===============================================================================================================
DOMESTIC COMMERCIAL LOANS SECURED BY REAL ESTATE BY GEOGRAPHIC AREA AND PROJECT
TYPE AT JUNE 30, 1997
- ---------------------------------------------------------------------------------------------------------------
LIGHT APARTMENT &
(IN MILLIONS) OFFICE INDUSTRY RETAIL CONDOMINIUM HOTEL OTHER TOTAL
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
California $1,552 $1,403 $1,398 $ 993 $150 $ 786 $ 6,282
Washington 523 511 372 402 153 564 2,525
Nevada 171 82 142 238 105 205 943
Arizona 85 60 103 113 46 112 519
Oregon 64 81 82 183 14 56 480
Illinois 56 42 29 92 - 47 266
Texas 22 52 12 120 - 55 261
Other/a/ 506 230 207 145 135 170 1,393
- ---------------------------------------------------------------------------------------------------------------
$2,979 $2,461 $2,345 $2,286 $603 $1,995 $12,669
- -----------------------------------------======================================================================
</TABLE>
/a/ No other state individually exceeded 2 percent of total domestic commercial
loans secured by real estate
<TABLE>
<CAPTION>
============================================================================================================
DOMESTIC CONSTRUCTION AND DEVELOPMENT LOANS BY GEOGRAPHIC AREA AND PROJECT TYPE
AT JUNE 30, 1997
- ------------------------------------------------------------------------------------------------------------
APARTMENT & LIGHT
(IN MILLIONS) SUBDIVISION RETAIL CONDOMINIUM OFFICE INDUSTRY HOTEL OTHER TOTAL
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
California $210 $183 $ 92 $ 78 $ 51 $ 18 $ 53 $ 685
Washington 216 40 77 68 18 22 58 499
Nevada 85 31 63 30 44 54 32 339
Arizona 49 11 43 7 15 1 23 149
Texas 31 22 44 1 16 1 4 119
Oregon 9 30 37 9 6 3 11 105
Florida - 81 - - 1 - - 82
Illinois 8 13 28 10 5 - 2 66
New York - 10 - - - - 40 50
Other/a/ 27 46 57 4 13 5 16 168
- ------------------------------------------------------------------------------------------------------------
$635 $467 $441 $207 $169 $104 $239 $2,262
-----------------------------------========================================================================
</TABLE>
/a/ No other state individually exceeded 2 percent of total domestic
construction and development loans.
39
<PAGE>
================================================================================
Foreign Loans -- BAC has expanded its lending activities in the
Pacific Rim as well as in selected countries in Latin America.
As a result, total foreign loans increased $2.2 billion, or 8
percent, between year-end 1996 and June 30, 1997, primarily
reflected in an increase in commercial and industrial loans of
$1.4 billion and an increase in loans to banks and other
financial institutions of $0.9 billion.
- --------------------------------------------------------------------------------
EMERGING In connection with its effort to maintain a diversified
MARKET EXPOSURE portfolio, BAC limits its exposure to any one country. In
particular, BAC monitors its exposure to economies that are
considered to be emerging markets. As indicated in the table
below, at June 30, 1997, BAC's emerging market exposure totaled
$13.6 billion, or 5 percent of total assets, compared to $12.1
billion, or 5 percent, at year-end 1996. This exposure
represents loans, restructured debt, which is included in the
securities portfolios, and other monetary assets. BAC's
investments in emerging markets are predominantly concentrated
in Latin America and Asia. As developing countries in these
areas improve their economic performance, business environment,
infrastructure, and regional trade capabilities, BAC may
selectively expand its investment in these regions.
================================================================================
EMERGING MARKET EXPOSURE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------------------------------------------------------
LOANS AVAILABLE-FOR-SALE SECURITIES/a/
------------------------- ---------------------------------
MEDIUM AND
(IN MILLIONS) TOTAL/c/ SHORT-TERM LONG-TERM COLLATERALIZED UNCOLLATERALIZED
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mexico $ 2,956 $ 549 $ 725/d/ $362 $19
Brazil 1,941 608 146 - 7
India 1,512 224 247 - -
Chile 1,197 186 520 - -
Argentina 1,164 301 97 - 11
Philippines 986 166 30 22 32
China 691 397 54 - -
Indonesia 656 171 212 - -
Columbia 638 209 294 - -
Russia 495 4 5 - -
Venezuela 404 30 - - -
Pakistan 329 18 7 - -
Other/e/ 673 143 151 87 -
- -------------------------------------------------------------------------------------------
$13,642 $3,006/f/ $2,488/f/ $471 $69
- --------------------=======================================================================
<CAPTION>
HELD-TO-MATURITY SECURITIES/a/ OTHER/b/
------------------------------ -------------------------
MEDIUM AND
COLLATERALIZED UNCOLLATERALIZED SHORT-TERM LONG-TERM
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mexico $ 754 $190 $ 264 $ 93
Brazil - 11 1,136 33
India - - 1,036 5
Chile - - 421 70
Argentina - 22 707 26
Philippines - - 714 22
China - - 228 12
Indonesia - - 273 -
Columbia - 1 134 -
Russia - - 486 -
Venezuela 288 23 45 18
Pakistan - - 304 -
Other/e/ - - 285 7
- --------------------------------------------------------------------------------------
$1,042/g/ $247/g/ $6,033 $286
- ----------------------------==========================================================
</TABLE>
/a/ Represents medium- and long-term exposure.
/b/ Includes the following assets, primarily in U.S. dollars, with borrowers or
customers in a foreign country: accrued interest receivable, acceptances,
interest-bearing deposits with other banks, trading account assets, other
interest-earning investments, and other monetary assets.
/c/ Excludes local currency outstandings that were funded by local currency
borrowings as follows: $62 million for Mexico, $33 million for Brazil, $533
million for India, $179 million for Chile, $1 million for Argentina, $57
million for the Philippines, $37 million for Indonesia, $32 million for
Venezuela, and $55 million for Pakistan.
/d/ Includes a $30 million loan that is collateralized by zero-coupon U.S.
Treasury securities.
/e/ No other country individually exceeded 2 percent of total emerging market
exposure.
/f/ Total loans include nonaccrual loans of $7 million.
/g/ Total fair value of held-to-maturity securities was approximately $1
billion.
40
<PAGE>
================================================================================
ALLOWANCE FOR The allowance for credit losses at June 30, 1997 was $3,563
CREDIT LOSSES million, or 2.11 percent of loans outstanding, compared with
$3,523 million, or 2.13 percent, at December 31, 1996. The
ratio of the allowance for credit losses to total nonaccrual
assets was 414 percent at June 30, 1997, up from 315 percent at
December 31, 1996.
Management develops the allowance for credit losses using a
"building block approach" for various portfolio segments.
Significant loans, particularly those considered to be
impaired, are individually analyzed, while other loans are
analyzed by portfolio segment. In establishing the allowance
for the portfolio segments, credit officers include results
obtained from statistical models using historical loan
performance data. While management has allocated the allowance
to various portfolio segments, it is general in nature and is
available for the loan portfolio in its entirety.
================================================================================
COMPOSITION OF ALLOWANCE FOR CREDIT LOSSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
--------------------- ---------------------------------
(IN MILLIONS) JUNE 30 MARCH 31 DEC. 31 SEPT. 30 JUNE 30
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Special mention and classified:
Historical loss experience component $ 316 $ 334 $ 349 $ 393 $ 406
Credit management allocated component 370 404 426 375 398
- -------------------------------------------------------------------------------------------------------------
Total special mention and classified 686 738 775 768 804
Other:
Domestic consumer 1,523 1,475 1,414 1,366 1,333
Domestic commercial 262 240 252 255 240
Foreign 310 309 300 288 283
- -------------------------------------------------------------------------------------------------------------
Total allocated 2,781 2,762 2,741 2,677 2,660
Unallocated 782 776 782 834 835
- -------------------------------------------------------------------------------------------------------------
$3,563 $3,538 $3,523 $3,511 $3,495
- ------------------------------------------------=============================================================
</TABLE>
Total net credit losses for the second quarter and first six
months of 1997 decreased $22 million and $57 million,
respectively, from the same periods a year ago. Domestic
commercial net credit losses decreased $51 million and $116
million from the 1996 amounts, primarily in the construction
and development portfolio and the financial institutions
portfolio. In addition, domestic commercial charge-offs
decreased $149 million from the first six months a year ago.
Domestic consumer net credit losses increased $17 million and
$39 million from the 1996 amounts due to growth in the consumer
portfolio, primarily in the credit card and other installment
categories. In the foreign portfolio, net credit losses
increased $12 million and $20 million for the second quarter
and first half of 1997, respectively.
41
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================================
QUARTERLY CREDIT LOSS EXPERIENCE
- ---------------------------------------------------------------------------------------------------------------------------------
1997 1996
----------------------- ------------------------------------------
SECOND FIRST FOURTH THIRD SECOND
(DOLLAR AMOUNTS IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR CREDIT LOSSES
Balance, beginning of period $ 3,538 $ 3,523 $ 3,511 $ 3,495 $ 3,496
CREDIT LOSSES
Domestic consumer:
Residential first mortgages 7 7 7 12 12
Residential junior mortgages 13 13 17 17 16
Credit card 134 124 114 119 117
Other installment 85 104 108 90 81
Other individual lines of credit 22 21 20 20 20
Other 5 5 4 4 3
Domestic commercial:
Commercial and industrial 24 16 20 20 50
Loans secured by real estate 2 1 3 5 2
Financial institutions - - - - 23
Lease financing - - - 1 -
Construction and development loans secured by real
estate - 1 2 17 16
Loans for purchasing or carrying securities - - - - -
Agricultural - - 2 - 1
Foreign 9 2 15 18 2
- --------------------------------------------------------------------------------------------------------------------------------
Total credit losses 301 294 312 323 343
CREDIT LOSS RECOVERIES
Domestic consumer:
Residential first mortgages - - - 1 -
Residential junior mortgages 5 4 5 4 4
Credit card 10 9 10 8 9
Other installment 36 45 44 48 38
Other individual lines of credit 2 2 3 2 2
Other 1 1 - 1 1
Domestic commercial:
Commercial and industrial 5 16 20 11 21
Loans secured by real estate 2 2 6 3 2
Financial institutions - - - - -
Lease financing - 1 - 1 1
Construction and development loans secured by real
estate 8 3 1 1 3
Loans for purchasing or carrying securities - - - - 1
Agricultural 1 1 1 - 3
Foreign 7 6 15 17 12
- --------------------------------------------------------------------------------------------------------------------------------
Total credit loss recoveries 77 90 105 97 97
- --------------------------------------------------------------------------------------------------------------------------------
Total net credit losses 224 204 207 226 246
Provision for credit losses 250 220 220 235 250
Other net additions (deductions) (1) (1) (1) 7 (5)
- --------------------------------------------------------------------------------------------------------------------------------
BALANCE, END OF PERIOD $ 3,563 $ 3,538 $ 3,523 $ 3,511 $ 3,495
- ---------------------------------------------------------=======================================================================
ANNUALIZED RATIO OF NET CREDIT LOSSES (RECOVERIES)
TO AVERAGE LOAN OUTSTANDINGS
Domestic consumer:
Residential first mortgages 0.08% 0.08% 0.07% 0.12% 0.13%
Residential junior mortgages 0.23 0.27 0.35 0.35 0.33
Credit card 6.07 5.57 4.95 4.95 4.76
Other installment 1.08 1.36 1.54 1.08 1.16
Other individual lines of credit 3.98 3.89 3.67 3.81 3.91
Other 3.64 3.91 3.58 3.28 3.46
Domestic commercial:
Commercial and industrial 0.23 - - 0.11 0.34
Loans secured by real estate (0.01) (0.05) (0.04) 0.07 -
Financial institutions - - - - 2.93
Lease financing - (0.09) - - (0.18)
Construction and development loans secured by real
estate (1.47) (0.38) 0.24 2.34 1.80
Loans for purchasing or carrying securities - - - - (0.27)
Agricultural (0.12) (0.28) 0.03 - (0.19)
Total domestic 0.64 0.61 0.60 0.66 0.77
Foreign 0.04 (0.06) - 0.01 (0.17)
TOTAL 0.54 0.50 0.51 0.56 0.63
RATIO OF ALLOWANCE TO LOANS AT QUARTER END 2.11 2.11 2.13 2.17 2.18
EARNINGS COVERAGE OF NET CREDIT LOSSES/a/ 7.08x 7.49X 6.65X 6.15x 6.03X
- ------------------------------------------------------------====================================================================
<CAPTION>
- ---------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30
------------------------
(DOLLAR AMOUNTS IN MILLIONS) 1997 1996
- ---------------------------------------------------------------------------------
<S> <C> <C>
ALLOWANCE FOR CREDIT LOSSES
Balance, beginning of period $ 3,523 $ 3,554
CREDIT LOSSES
Domestic consumer:
Residential first mortgages 14 23
Residential junior mortgages 26 36
Credit card 258 230
Other installment 189 156
Other individual lines of credit 43 39
Other 10 7
Domestic commercial:
Commercial and industrial 40 90
Loans secured by real estate 3 14
Financial institutions - 46
Lease financing - -
Construction and development loans secured by real
estate 1 42
Loans for purchasing or carrying securities - -
Agricultural - 1
Foreign 11 6
- ---------------------------------------------------------------------------------
Total credit losses 595 690
CREDIT LOSS RECOVERIES
Domestic consumer:
Residential first mortgages - -
Residential junior mortgages 9 8
Credit card 19 19
Other installment 81 71
Other individual lines of credit 4 5
Other 2 2
Domestic commercial:
Commercial and industrial 21 49
Loans secured by real estate 4 6
Financial institutions - 2
Lease financing 1 2
Construction and development loans secured by real
estate 11 9
Loans for purchasing or carrying securities - 1
Agricultural 2 3
Foreign 13 28
- ---------------------------------------------------------------------------------
Total credit loss recoveries 167 205
- ---------------------------------------------------------------------------------
Total net credit losses 428 485
Provision for credit losses 470 430
Other net additions (deductions) (2) (4)
- ---------------------------------------------------------------------------------
BALANCE, END OF PERIOD $ 3,563 $ 3,495
- ---------------------------------------------------------========================
ANNUALIZED RATIO OF NET CREDIT LOSSES (RECOVERIES)
TO AVERAGE LOAN OUTSTANDINGS
Domestic consumer:
Residential first mortgages 0.08% 0.12%
Residential junior mortgages 0.25 0.40
Credit card 5.82 4.69
Other installment 1.22 1.17
Other individual lines of credit 3.94 3.75
Other 3.77 3.68
Domestic commercial:
Commercial and industrial 0.11 0.25
Loans secured by real estate (0.03) 0.15
Financial institutions - 3.06
Lease financing (0.05) (0.17)
Construction and development loans secured by real
estate (0.93) 2.13
Loans for purchasing or carrying securities - (0.13)
Agricultural (0.20) (0.24)
Total domestic 0.62 0.77
Foreign (0.01) (0.19)
TOTAL 0.52 0.62
RATIO OF ALLOWANCE TO LOANS AT QUARTER END 2.11 2.18
EARNINGS COVERAGE OF NET CREDIT LOSSES/a/ 7.28x 5.96X
- ------------------------------------------------------------=====================
</TABLE>
/a/ Earnings coverage of net credit losses is calculated as income before income
taxes plus the provision for credit losses as a multiple of net credit
losses.
42
<PAGE>
================================================================================
NONPERFORMING Total nonaccrual assets decreased $257 million, or 23 percent,
ASSETS between year-end 1996 and June 30, 1997 to the lowest level in
sixteen years. This decrease reflected improvements in all but
the lease financing segment of the loan portfolio, particularly
in commercial loans secured by real estate and in commercial
and industrial loans. These improvements resulted primarily
from full or partial payments, sales of nonaccrual loans, and
the restoration of nonaccrual loans to accrual status. The
decrease in nonaccruals also reflects lower levels of loans
that were placed on nonaccrual status.
BAC's nonperforming asset ratios reflected improvement in the
credit quality of its portfolios during the first six months of
1997. At June 30, 1997, the ratio of nonaccrual loans to total
loans was 0.51 percent, down from 0.66 percent at December 31,
1996. In addition, the ratio of nonperforming assets (comprised
of nonaccrual assets and other real estate owned) to total
assets declined 16 basis points from year-end 1996 to 0.43
percent at June 30, 1997.
For further information concerning nonaccrual assets, refer to
the tables below and on pages 44 and 45.
================================================================================
ANALYSIS OF CHANGE IN NONACCRUAL ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
------------------ -----------------------------
SECOND FIRST FOURTH THIRD SECOND
(IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, beginning of quarter $1,030 $1,118 $1,119 $1,488 $1,697
Additions:
Loans placed on nonaccrual status 103 108 119 66 129
Leases acquired - - - 34 -
Other/a/ - - 144 - -
Deductions:
Sales (103) (3) (33) (4) (26)
Restored to accrual status (38) (75) (34) (229) (37)
Foreclosures (1) (8) (3) (5) (6)
Charge-offs (20) (10) (19) (51) (77)
Other, primarily payments (110) (100) (175) (180) (192)
- -------------------------------------------------------------------------------------------
BALANCE, END OF QUARTER $ 861 $1,030 $1,118 $1,119 $1,488
- -----------------------------------------==================================================
</TABLE>
/a/ Reflects the effect of a change in the past due period on nonaccrual loans.
During the fourth quarter of 1996, BAC changed the past due period for
nonaccrual residential real estate loans and consumer loans that were
collateralized by junior mortgages on residential real estate. The maximum
period loans can be past due before being placed on nonaccrual status was
reduced from 180 days to 90 days.
43
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================================
NONACCRUAL ASSETS, RESTRUCTURED LOANS, AND LOANS PAST DUE 90 DAYS OR MORE AND STILL ACCRUING INTEREST
- -------------------------------------------------------------------------------------------------------------------------
1997 1996
-------------------- --------------------------------
(IN MILLIONS) JUNE 30 MARCH 31 DEC. 31 SEPT. 30 JUNE 30
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NONACCRUAL ASSETS
Domestic consumer loans:
Residential first mortgages/a/ $318 $ 347 $ 354 $ 233 $ 272
Residential junior mortgages/a/ 54 60 59 55 66
Other consumer 1 2 2 3 4
Domestic commercial loans:
Commercial and industrial 203 251 241 323 381
Loans secured by real estate 120 147 206 229 245
Financial institutions - - - 5 4
Lease financing 2 2 1 1 3
Construction and development loans secured by real estate 59 104 95 119 346
Agricultural 23 23 28 28 34
- -------------------------------------------------------------------------------------------------------------------------
780 936 986 996 1,355
Foreign loans, primarily commercial 81 89 109 122 130
Other interest-bearing assets - 5 23 1 3
- -------------------------------------------------------------------------------------------------------------------------
$861 $1,030 $1,118/b/ $1,119/b/ $1,488/b/
- ---------------------------------------------------------------------====================================================
RESTRUCTURED LOANS
Domestic commercial:
Commerical and industrial $ 18 $ 21 $ 25 $ 21 $ 29
Loans secured by real estate 268 257 255 236 55
Construction and development loans secured by real estate 15 16 16 16 15
Agricultural 1 1 1 - -
- -------------------------------------------------------------------------------------------------------------------------
302 295 297 273 99
Foreign/c/ - - 5 1 4
- -------------------------------------------------------------------------------------------------------------------------
$302 $ 295 $ 302 $ 274 $ 103
- ---------------------------------------------------------------------====================================================
LOANS PAST DUE 90 DAYS OR MORE AND STILL ACCRUING INTEREST
Domestic consumer:
Residential first mortgages/a/ $ - $ - $ - $ 145 $ 133
Residential junior mortgages/a/ - - - 8 5
Other consumer 190 189 186 179 173
Domestic commercial:
Commercial and industrial 15 13 29 11 31
Loans secured by real estate 7 12 5 9 5
Financial institutions - - - - 21
Construction and development loans secured be real estate 1 1 12 4 21
Agricultural - 1 1 4 -
- -------------------------------------------------------------------------------------------------------------------------
213 216 233 360 389
Foreign 1 2 2 3 -
- -------------------------------------------------------------------------------------------------------------------------
$214 $ 218 $ 235 $ 363 $ 389
- ---------------------------------------------------------------------====================================================
</TABLE>
/a/ Reflects the effect of a change in the past due period on nonaccrual loans.
During the fourth quarter of 1996, BAC changed the past due period for
nonaccrual residential real estate loans and consumer loans that were
collateralized by junior mortgages on residential real estate. The maximum
period loans can be past due before being placed on nonaccrual status was
reduced from 180 days to 90 days.
/b/ Excludes certain nonaccrual debt-restructuring par bonds and other
instruments that were included in available-for-sale and held-to maturity
securities of $67 million at December 31, 1996, $62 million at September 30,
1996, and $6 million at June 30, 1996. There were no such amounts in 1997.
/c/ Excludes debt restructurings with countries that have experienced liquidity
problems of $1.5 billion at June 30, 1997, $1.5 billion at March 31, 1997,
and $1.6 billion at each quarter ended in 1996. The majority of these
instruments was classified as either available-for-sale or held-to-maturity
securities.
44
<PAGE>
================================================================================
INTEREST INCOME FOREGONE ON NONACCRUAL ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(IN MILLIONS) JUNE 30, 1997
- --------------------------------------------------------------------------------------
<S> <C>
DOMESTIC
Interest income that would have been recognized had the assets
performed in accordance with their original terms $93
Less: Interest income included in the results of operations 28
- --------------------------------------------------------------------------------------
Domestic interest income foregone 65
FOREIGN
Interest income that would have been recognized had the assets
performed in accordance with their original terms 8
Less: Interest income included in the results of operations 2
- --------------------------------------------------------------------------------------
Foreign interest income foregone 6
- --------------------------------------------------------------------------------------
$71
- -----------------------------------------------------------------------------------===
</TABLE>
===============================================================================
CASH INTEREST PAYMENTS ON NONACCRUAL ASSETS BY LOAN TYPE/a/
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1997
-----------------------------------------------------------------------
CUMULATIVE BOOK AS A
CONTRACTUAL INTEREST NONACCRUAL PERCENTAGE
PRINCIPAL CUMULATIVE APPLIED BOOK OF
(DOLLAR AMOUNTS IN MILLIONS) BALANCE CHARGE-OFFS TO PRINCIPAL BALANCE CONTRACTUAL
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DOMESTIC
Consumer:
Residential first mortgages $ 320 $ 1 $ 1 $318 99%
Residential junior mortgages 54 - - 54 100
Other consumer 4 2 1 1 25
Commercial:
Commercial and industrial 528 263 62 203 38
Loans secured by real estate 228 87 21 120 53
Financial institutions 52 51 1 - -
Lease financing 2 - - 2 100
Construction and development
loans secured by real estate 98 28 11 59 60
Agricultural 39 8 8 23 59
- -------------------------------------------------------------------------------------------------------
1,325 440 105 780 59
FOREIGN, PRIMARILY COMMERCIAL 194 96 17 81 42
Other interest-bearing assets - - - - -
- -------------------------------------------------------------------------------------------------------
$1,519 $536 $122 $861 57%
- -------------------------------------==================================================================
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1997
--------------------------------------------------------
CASH INTEREST
AVERAGE PAYMENTS APPLIED
NONACCRUAL -----------------------------------------
BOOK AS INTEREST
(DOLLAR AMOUNTS IN MILLIONS) BALANCE INCOME OTHER/b/ TOTAL
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DOMESTIC
Consumer:
Residential first mortgages $343 $ 8 $ - $ 8
Residential junior mortgages 56 1 - 1
Other consumer 2 - - -
Commercial:
Commercial and industrial 206 5 5 10
Loans secured by real estate 158 9 3 12
Financial institutions - - - -
Lease financing 2 - - -
Construction and development
loans secured by real estate 79 4 1 5
Agricultural 24 1 2 3
- ------------------------------------------------------------------------------------------------------
870 28 11 39
FOREIGN, PRIMARILY COMMERCIAL 86 2 2 4
Other interest-bearing assets 9 - - -
- ------------------------------------------------------------------------------------------------------
$965 $30 $13 $43
- ------------------------------------------------------------------------------------------------------
CASH YIELD ON AVERAGE TOTAL NONACCRUAL BOOK BALANCE 8.95%
- ------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Includes information related to all nonaccrual loans including those that
are fully charged off or otherwise have a book balance of zero.
/b/ Primarily represents cash interest payments applied to principal. Also
includes cash interest payments accounted for as credit loss recoveries,
which are recorded as increases to the allowance for credit losses.
45
<PAGE>
INTEREST RATE, FOREIGN EXCHANGE AND COMMODITY DERIVATIVE FINANCIAL INSTRUMENTS
================================================================================
BAC uses interest rate, foreign exchange and derivative
financial instruments in both its trading and its asset and
liability management activities. BAC uses commodity derivative
financial instruments solely in its trading activities.
Interest rate, foreign exchange and commodity derivative
financial instruments include swaps, futures, forwards, and
option contracts, all of which derive their value from
underlying interest rates, foreign exchange rates, commodity
values, or equity instruments. Certain transactions involve
standardized contracts executed on organized exchanges, while
others are negotiated over the counter, with the terms tailored
to meet the needs of BAC and its customers.
In meeting the needs of its global customers, BAC uses its
expertise to execute transactions to aid these customers in
managing their risk exposures to interest rates, exchange
rates, prices of securities, and financial or commodity
indexes. Counterparties to BAC's interest rate, foreign
exchange and commodity derivative transactions generally
include U.S. and foreign banks, nonbank financial
institutions, corporations, domestic and foreign governments,
and asset managers.
BAC generates trading revenue by executing transactions to
support customer's risk management needs, by efficiently
managing the positions that result from these transactions, and
by making markets in a wide variety of products.
As an end user, BAC employs foreign exchange derivative
financial instruments to hedge foreign exchange risk and
interest rate derivative financial instruments to hedge
interest rate risk and foreign exchange risk in connection
with its own asset and liability management activities. More
specifically, BAC primarily uses interest rate derivative
financial instruments to manage the interest rate risk
associated with its assets and liabilities, including
residential loans, long-term debt, and deposits.
Similar to on-balance-sheet financial instruments, such as
loans and investment securities, off-balance-sheet financial
instruments expose BAC to various types of risk. These risks
include credit risk (the possibility of loss from the failure
of a borrower or counterparty to fully perform under the terms
of a credit-related contract), operational risk (the
possibility of unexpected losses attributable to human error,
systems failures, fraud, or inadequate internal controls and
procedures), market risk (the possibility of loss arising from
adverse changes in market rates and prices, such as interest
rates and foreign currency exchange rates), and liquidity risk
(the possibility that BAC's cash flows may not be adequate to
fund operations and meet commitments on a timely and cost-
effective basis). For a detailed discussion of these risks and
how they are managed, refer to pages 38 through 44 of BAC's
1996 Annual Report to Shareholders.
For additional information concerning interest rate, foreign
exchange and commodity derivative financial instruments,
including their respective notional, credit risk, and fair
value amounts, refer to Note 8 of the Notes to Consolidated
Financial Statements on pages 13 through 18.
46
<PAGE>
INTEREST RATE RISK MANAGEMENT
================================================================================
BAC's banking activities other than trading include lending,
accepting deposits, investing in securities, and issuing debt
as needed to fund assets. BAC's governing objective in interest
rate risk management for these activities is to minimize the
potential for significant loss as a result of changes in market
conditions. BAC measures interest rate risk in terms of
potential impact on both its economic value and reported
earnings. Economic value calculations measure the changes in
the present value of net future cash flows. BAC measures its
exposure to reported earnings variability by estimating the
potential effect of changes in interest rates on projected net
interest income over a three-year period.
There are three sources of interest rate risk. These are gap
mismatches, options mismatches, and index mismatches. To
minimize exposure to declines in economic value due to gap
mismatches, BAC's policy is to minimize the duration difference
between its assets and liabilities. This asset and liability
management policy protects against losses of economic value in
the event of major upward and downward yield curve shifts. BAC
uses an internally developed model to translate the mismatch in
each repricing period (i.e., the "gap") into a one-year
mismatch with the same economic risk context.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Net Interest Rate Risk Position (plot point graph in non-Edgar version)
(in billions of dollars) 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 6/30/97
<S> <C> <C> <C> <C> <C> <C>
Net Interest Rate Risk Position $(6.9) $1.0 $(2.8) $0.0 $(1.9) $(3.2)
</TABLE>
Graph indicates the composite net asset (+) or net liability
(-) repricing position measured across the entire maturity
mismatch profile and expressed as a one-year mismatch position
bearing the same aggregate level of risk.
For example, a six-month gap of $200 million is treated as
having approximately the same economic risk as a one-year gap
of $100 million. As shown in the graph above, BAC's net one-
year position has been essentially balanced throughout the last
five years.
Gap mismatches result from timing differences in the repricing
of assets, liabilities, and off-balance-sheet instruments.
Expected interest rate sensitivity of individual categories of
assets and liabilities as of June 30, 1997 is shown in the
table on page 48.
47
<PAGE>
================================================================================
INTEREST RATE SENSITIVITY BY REPRICING OR MATURITY DATES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
JUNE 30, 1997
--------------------------------------------------------------
GREATER THAN GREATER THAN OVER
(IN BILLIONS) 0-6 MONTHS 6-12 MONTHS 1-5 YEARS 5 YEARS TOTAL
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DOMESTIC ASSETS
Federal funds sold and securities
purchased under resale agreements $ 1.1 $ - $ - $ - $ 1.1
Trading account securities 2.4 - - - 2.4
Loans:
Prime indexed 16.7 - - - 16.7
Adjustable rate residential first mortgages 9.2 5.0 7.1 3.9 25.2
Other loans, net 46.9 7.8 19.1 11.2 85.0
Other assets 15.0 1.1 16.6 9.8 42.5
- -------------------------------------------------------------------------------------------------------------------
Domestic Assets 91.3 13.9 42.8 24.9 172.9
- -------------------------------------------------------------------------------------------------------------------
DOMESTIC LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic deposits (66.4) (9.1) (21.7) (19.5) (116.7)
Other short-term borrowings (13.3) (2.2) (0.2) - (15.7)
Long-term debt and subordinated capital notes (10.9) (0.2) (3.4) (5.9) (20.4)
Other liabilities and stockholders' equity (5.6) (0.2) (11.7) (15.0) (32.5)
- -------------------------------------------------------------------------------------------------------------------
Domestic Liabilities and Stockholders' Equity (96.2) (11.7) (37.0) (40.4) (185.3)
OFFSHORE FUNDING BOOKS, NET (2.2) 0.7 0.4 1.1 -
- -------------------------------------------------------------------------------------------------------------------
Core Gap Before Risk Management Positions (7.1) 2.9 6.2 (14.4) (12.4)
- -------------------------------------------------------------------------------------------------------------------
INTEREST RATE RISK MANAGEMENT POSITIONS
Investment securities/a/ 1.7 0.9 3.9 5.9 12.4
Off-balance-sheet financial instruments/b/ 2.0 (1.7) (6.9) 6.6 -
- -------------------------------------------------------------------------------------------------------------------
Total Interest Rate Risk Management Positions 3.7 (0.8) (3.0) 12.5 12.4
- -------------------------------------------------------------------------------------------------------------------
Net Gap (3.4) 2.1 3.2 (1.9) -
- -------------------------------------------------------------------------------------------------------------------
Cumulative Gap $ (3.4) $ (1.3) $ (1.9) $ - $ -
- ---------------------------------------------------------==========================================================
</TABLE>
/a/ Available-for-sale and held-to-maturity securities.
/b/ Represents the repricing effect of off-balance-sheet positions, which
include interest rate swaps, futures contracts, and similar agreements.
At June 30, 1997, BAC had a "core" imbalance before risk
management positions as liabilities and equity exceeded assets
by approximately $12 billion. BAC's risk management activities
eliminated this imbalance while containing the size of net gap
mismatches in individual repricing periods. Investment
securities and "receive fixed" swaps essentially neutralized
core gaps beyond five years.
48
<PAGE>
FUNDING AND CAPITAL
================================================================================
LIQUIDITY BAC'S liquid assets consist of cash and due from banks,
REVIEW interest-bearing deposits in banks, federal funds sold,
securities purchased under resale agreements, trading account
assets, and available-for-sale securities. Liquid assets
totaled $58.2 billion at June 30, 1997, up $4.5 billion, or 8
percent, from year-end 1996. The increase in liquid assets was
primarily attributable to increases in trading account assets
and interest-bearing deposits in banks, which were offset by a
decrease in cash and due from banks.
The ongoing operations of BAC resulted in cash inflows of $5.9
billion and $8.3 billion for the first six months of 1997 and
1996, from deposits and short-term borrowings. During the same
periods, BAC's liquidity was enhanced by proceeds from sales of
loans, totaling $3.6 billion and $0.9 billion, respectively. In
addition, total sales, maturities, prepayments, and calls of
securities exceeded total purchases, resulting in cash inflows
of $0.2 billion and $1.4 billion, respectively.
Total loan originations and purchases exceeded total principal
collections, resulting in cash outflows of $7.5 billion and
$8.2 billion for the first six months of 1997 and 1996. In
addition, for the first six months of 1997 and 1996,
BankAmerica Corporation (the Parent) paid dividends of $494
million and $491 million, respectively, to its preferred and
common stockholders. During the same periods, the Parent
repurchased common and redeemed preferred stock for $1,582
million and $1,084 million, respectively.
- --------------------------------------------------------------------------------
CAPITAL In May 1997, BAC's shareholders approved a two-for-one stock
MANAGEMENT split of its common stock effective June 2, 1997. As a result
of the stock split, each shareholder of record at close of
business on June 2, 1997 received one additional share of
common stock for each share of common stock then owned. In
addition, the number of authorized shares of common stock was
increased from 700 million to 1.4 billion common shares, par
value $1.5625 per share. For additional information regarding
the common stock split, refer to Note 1 of the Notes to
Consolidated Financial Statements on page 6.
At June 30, 1997, total stockholders' equity amounted to $20.4
billion, a decrease of $0.3 billion from year-end 1996
primarily due to redemptions of preferred stock of $0.6 billion
offset by an increase in common equity of $0.3 billion.
Common equity increased during the first six months of 1997 due
to earnings in excess of common and preferred stock dividends
of $1.1 billion and shares issued in connection with restricted
stock bonus plans and other employee benefit related plans of
$0.2 billion. Partially offsetting these increases was a
reduction of $1.0 billion due to repurchases of common stock.
During the first six months of 1997, BAC repurchased 16.8
million shares of its common stock at an average price per
share of $56.59 reflecting the corporation's ongoing efforts to
effectively manage capital. This included the repurchase of 8.2
million shares during the second quarter of 1997 at an average
price per share of $58.02, which reduced second-quarter equity
by $0.5 billion. The shares were repurchased on the open market
over 51 trading days and represented approximately 6 percent of
the total volume of BAC common stock traded on those days.
Remaining buyback authority for common stock under the current
amended repurchase program totaled $2.8 billion at June 30,
1997. For additional information regarding the stock repurchase
program, refer to Note 5 of the Notes to Consolidated Financial
Statements on page 12.
49
<PAGE>
================================================================================
The decline in BAC's preferred stock of $0.6 billion resulted
from the redemptions of all 11,250,000 outstanding shares of
its 9% Cumulative Preferred Stock, Series H, on January 15,
1997 and all 14,600,000 shares of its 8 3/8% Cumulative
Preferred Stock Series K, (Preferred Stock, Series K) on
February 15, 1997.
On May 9, 1997, BAC announced its intention to redeem all
outstanding shares of its 8.16% Cumulative Preferred Stock,
Series L (Preferred Stock, Series L) on July 14, 1997 which
will reduce stockholders' equity in the third quarter of 1997
by $399 million. Remaining redemption authority for preferred
stock under the current amended repurchase program totaled $0.8
billion at June 30, 1997. For additional information regarding
the preferred stock component of the stock repurchase program,
refer to Note 5 of the Notes to Consolidated Financial
Statements on page 12.
On May 19, 1997, employees were granted their second option
awards through BAC's employee stock option program introduced
in 1996. Under the program, employees will be granted
additional options every six months for the next two years. BAC
is authorized to grant options to its employees for up to
70,200,000 shares of common stock. All options granted have
been included in the calculation of earnings per share.
For Federal Reserve has announced 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, together with the Parent's ability to
deduct, for federal income tax purposes, interest payable on
the related debentures, provide the Parent with a more cost-
effective means of obtaining capital for bank regulatory
purposes than if the Parent were to issue preferred stock.
Proceeds from trust preferred securities have been used to
redeem preferred stock, thereby reducing preferred dividends
and resulting in an increase in net income available to common
shareholders. During the first quarter of 1997, BAC issued
trust preferred securities totaling $396 million, net of $4
million of deferred debt issuance costs. For additional
information regarding trust preferred securities, refer to Note
4 of the Notes to COnsolidated Financial Statements on page 11
and 12.
BAC's risk-based capital ratios continued to exceed regulatory
guidelines for "well-capitalized" status. BAC's Tier 1 and
total risk-based capital ratios at June 30, 1997 decreased 5
basis points and 13 basis points, respectively, from year-end
1996 primarily due to a $2.7 billion increase in risk-weighted
assets combined with the redemption of the Preferred Stock,
Series K, of $365 million and the announced redemption of the
Preferred Stock, Series L, of $399 million. These were
partially offset by an increase in retained earnings and the
increase of $396 million of trust preferred securities. The
ratios at year-end 1996 represented a temporary increase from
targeted levels due to the issuance of trust preferred
securities. BAC's Tier 1 leverage ratio was 7.22 percent at
June 30, 1997, 22 basis points lower than 7.44 percent at
December 31, 1996, primarily due to an increase in BAC's
quarterly average total assets.
50
<PAGE>
================================================================================
RISK-BASED CAPITAL, RISK-WEIGHTED ASSETS, AND RISK-BASED CAPITAL RATIOS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
1997 1996
------------------- -------------------------------
(DOLLAR AMOUNTS IN MILLIONS) JUNE 30 MARCH 31 DEC. 31 SEPT. 30 JUNE 30
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RISK-BASED CAPITAL
Common stockholders' equity $ 18,759 $ 18,591 $ 18,439 $ 18,297 $ 17,945
Qualified perpetual preferred stock 1,197 1,596 1,961 2,242 2,242
Minority interest/a/ 1,967 1,964 1,566 - -
Less: Goodwill, nongrandfathered core deposit and
other identifiable intangibles, and other deductions/b/ (4,778) (4,832) (4,922) (5,007) (5,068)
- -------------------------------------------------------------------------------------------------------------------
Tier 1 risk-based capital 17,145 17,319 17,044 15,532 15,119
Eligible portion of the allowance for credit losses 2,791 2,778 2,758 2,673 2,651
Hybrid capital instruments 71 142 142 142 142
Subordinated notes and debentures 6,140 6,248 6,169 6,001 6,072
Less: Other deductions (196) (188) (184) (174) (164)
- -------------------------------------------------------------------------------------------------------------------
Tier 2 risk-based capital 8,806 8,980 8,885 8,642 8,701
- -------------------------------------------------------------------------------------------------------------------
Total 25,951 26,299 25,929 24,174 23,820
Less: Investments in unconsolidated banking
and finance subsidiaries (50) (48) (49) (49) (48)
- -------------------------------------------------------------------------------------------------------------------
TOTAL RISK-BASED CAPITAL $ 25,901 $ 26,251 $ 25,880 $ 24,125 $ 23,772
- -----------------------------------------------------------========================================================
RISK-WEIGHTED ASSETS
Balance sheet assets:
Trading account assets $ 6,846 $ 6,653 $ 6,022 $ 5,257 $ 5,289
Available-for-sale and held-to-maturity securities 3,358 4,953 5,121 4,812 4,769
Loans 139,457 141,317 139,412 137,360 135,403
Other assets 19,887 17,221 18,711 17,435 16,314
- -------------------------------------------------------------------------------------------------------------------
Total balance sheet assets 169,548 170,144 169,266 164,864 161,775
- -------------------------------------------------------------------------------------------------------------------
Off-balance-sheet items:
Unused commitments 30,089 28,455 28,368 26,721 26,485
Standby letters of credit 15,414 15,613 15,021 14,518 15,832
Foreign exchange and derivatives contracts 4,885 4,669 4,662 4,535 4,425
Other 2,213 2,190 2,166 1,990 2,390
- -------------------------------------------------------------------------------------------------------------------
Total off-balance-sheet items 52,601 50,927 50,217 47,764 49,132
- -------------------------------------------------------------------------------------------------------------------
TOTAL RISK-WEIGHTED ASSETS $222,149 $221,071 $219,483 $212,628 $210,907
- -----------------------------------------------------------========================================================
RISK-BASED CAPITAL RATIOS
TIER 1 CAPITAL RATIO 7.72% 7.83% 7.77% 7.30% 7.17%
TOTAL CAPITAL RATIO 11.66 11.87 11.79 11.35 11.27
TIER 1 LEVERAGE RATIO 7.22 7.36 7.44 6.90 6.75
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Represents trust preferred securities and BAMS minority interest of $1,873
million and $94 million, respectively, at June 30, 1997, $1,873 million and
$91 million, respectively, at March 31, 1997, and $1,477 million and $89
million, respectively, at December 31, 1996.
/b/ Includes nongrandfathered core deposit and other identifiable intangibles
acquired after February 19, 1992 of $705 million and $63 million,
respectively, at June 30, 1997, $739 million and $65 million, respectively,
at March 31, 1997, $772 million and $67 million, respectively, at December
31, 1996, $795 million and $69 million, respectively, at September 30, 1996,
and $814 million and $72 million, respectively, at June 30, 1996. Also
includes $18 million at June 30, 1997 and $8 million at December 31, 1996 of
the excess of the net book value over 90 percent of the fair value of
mortgage servicing assets and credit card intangibles. There were no such
excess amounts at March 31, 1997, September 30, 1996, and June 30, 1996.
51
<PAGE>
FORWARD-LOOKING STATEMENTS
================================================================================
This report contains forward-looking statements, usually
consisting of the words "estimate,' "project," "expect," or
similar expressions. These statements are subject to
uncertainties that could cause actual results to differ
materially. The uncertainties include those discussed in this
report, particularly in "Noninterest Expense" on pages 32 and
33, as well as those discussed in "Forward-Looking Statements"
on pages 20 and 21 of BAC's report on Form 10-K for the year
ended December 31, 1996. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date hereof.
52
<PAGE>
OTHER INFORMATION
================================================================================
ITEM 4. Set forth below is information concerning each matter
SUBMISSION submitted to a vote at the Parent's Annual Meeting of
OF MATTERS Shareholders on May 22, 1997 ("Annual Meeting"):
TO A VOTE
OF SECURITY DIRECTORS: Each of the following persons was elected as a
HOLDERS ---------
director of the Parent, to hold office until the 1997
Annual Meeting of Shareholders or until earlier retirement,
resignation or removal.
NUMBER OF VOTES
---------------
DIRECTOR'S NAME FOR WITHHELD
----------------------- ----------- ---------
Joseph F. Alibrandi 287,763,239 1,207,962
Jill E. Barad 287,797,851 1,173,350
Peter B. Bedford 287,707,240 1,263,961
Richard A. Clarke 287,812,643 1,158,558
David A. Coulter 287,774,463 1,196,738
Timm F. Crull 287,800,834 1,170,367
Kathleen Feldstein 287,779,834 1,191,367
Donald E. Guinn 287,827,134 1,144,067
Frank L. Hope, Jr. 287,708,683 1,262,518
Walter E. Massey 287,774,803 1,196,398
John M. Richman 287,778,105 1,193,096
Richard M. Rosenberg 287,765,555 1,205,646
A. Michael Spence 287,782,145 1,189,056
Solomon D. Trujitto 287,811,069 1,160,132
Auditors: The shareholders ratified the appointment of Ernst &
--------
Young LLP as independent auditors.
<TABLE>
<CAPTION>
NUMBER OF VOTES
---------------
BROKER
FOR AGAINST ABSTENTIONS NONVOTES
----------- ------- ----------- --------
<S> <C> <C> <C> <C>
Ernst & Young LLP as
Independent Auditors 287,514,525 435,891 1,020,824 --
</TABLE>
CERTIFICATE OF INCORPORATION: The shareholders of the
----------------------------
Parent approved an amendment to the Certificate of
Incorporation to increase the number of authorized shares
of common stock and to effect a two-for-one stock split of
the common stock.
<TABLE>
<CAPTION>
NUMBER OF VOTES
---------------
BROKER
FOR AGAINST ABSTENTIONS NONVOTES
----------- ------- ----------- --------
<S> <C> <C> <C> <C>
Amendment of
Certificate of
Incorporation 287,322,276 708,344 940,620 --
</TABLE>
53
<PAGE>
================================================================================
Performance Equity Program: The shareholders of the Parent
--------------------------
approved the BankAmerica Corporation Performance Equity Program
under which senior officers will receive stock options,
including premium price options.
<TABLE>
<CAPTION>
NUMBER OF VOTES
---------------
BROKER
FOR AGAINST ABSTENTIONS NONVOTES
----------- ------- ----------- --------
<S> <C> <C> <C> <C>
Performance Equity
Program 212,245,216 74,276,984 2,449,040 --
</TABLE>
Shareholders Proposals: The shareholders of the Parent did not
----------------------
approve any of the five shareholder proposals presented at the
Annual meeting. Two of the proposals were contained in the
Parent's proxy statement for the meeting, and the other three
were proposed at the meeting pursuant to the procedure set
forth in the Parent's bylaws.
<TABLE>
<CAPTION>
NUMBER OF VOTES
---------------
SHAREHOLDER BROKER
PROPOSAL FOR AGAINST ABSTENTIONS NONVOTES
----------- ----------- ------- ----------- --------
<S> <C> <C> <C> <C>
Cumulative Voting 80,245,944 151,215,986 28,294,456 29,214,855
Directors'
Compensation 14,783,665 239,645,512 5,327,209 29,214,855
Request for
Investigation of
Whether BAC's Net
Profits Were
Manipulated by
Misusing Reserve
Accounts 421 288,970,739 30 -
Stopping the
Deterioration of
the Parent's
Dividend Yield 435 288,970,740 15 -
Sending Quarterly
Reports to
Shareholders 1,207 288,969,983 - -
</TABLE>
54
<PAGE>
================================================================================
ITEM 6. (a) EXHIBITS:
EXHIBITS AND
REPORTS ON Exhibit
FORM 8-K Number Exhibit
------ -------
3.a BankAmerica Corporation Restated Certificate of
Incorporation. Section I of Article FOURTH was
amended, effective May 22, 1997 and the Certificate
of Incorporation was restated, effective June 3,
1997.
3.b BankAmerican Corporation Bylaws, as amended.
Article II, Sections 12 and 13 were amended,
effective May 22, 1997.
10.a BankAmerica Corporation 1992 Management Stock Plan,
as amended.*
10.b BamkAmerica Corporation 1987 Management Stock Plan,
as amended.*
10.c Continental Bank Corporation 1991 Equity
Performance Incentive Plan, as amended.*
10.d Continental Bank Corporation 1982 Performance,
Restricted Stock and Stock Option Plan, as
amended.*
10.e BankAmerica Performance Equity Program, effective
May 22, 1997.*
10.f Security Pacific Corporation Stock Option Plan, as
amended.*
10.g Security Pacific Corporation Stock-Based Incentive
Award Plan, as amended.*
10.h Change in Control Severance Pay Program, as
amended.*
12.a Ratio of Earnings to Fixed Charges and Ratios of
Earnings to Combined Fixed Charges and Preferred
Stock Dividends.
12.b Historical and Pro Forma Combined Ratios of
Earnings to Fixed Charges and Ratios of Earnings to
Combined Fixed Charges and Preferred Stock
Dividends.
27 Financial Data Schedule.
- --------------------------------------------------------------------------------
*Management contract or compensatory plan, contract, or
arrangement.
55
<PAGE>
================================================================================
(b) Reports on Form 8-K:
During the second quarter of 1997, the Parent filed reports on
Form 8-K dated April 16, 1997, May 5, 1997, May 22, 1997, and
June 9, 1997. The April 16 report filed, pursuant to Items 5
and 7 of the report, a copy of the Parent's press release
titled "BankAmerica First Quarter Earnings." The May 5 report
disclosed, pursuant to Item 5 of the report, information about
a legal action entitled State of California, etc. ex rel Stull
--------------------------------------
v. Bank of America Nt&SA, et al. The May 22 report disclosed,
-------------------------------
pursuant to Item 5 of the report, the Board of Directors'
approval of a two-for-one stock split and increase in the
authorized shares of common stock. The June 9 report disclosed,
pursuant to Item 5 of the report, BankAmerica Corporation's
agreement to acquire Robertson, Stephens & Company Group,
L.L.C. After the second quarter of 1997, the Parent filed a
report on Form 8-K dated July 16, 1997. The July 16 report
disclosed, pursuant to Items 5 and 7 of the report, a copy of
the Parent's press release titled "BankAmerica Second Quarter
Earnings."
56
<PAGE>
SIGNATURES
================================================================================
Pursuant to the requirements 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
Registrant
By Principal Financial Officer and
Duly Authorized Signatory:
/s/ MICHAEL E. O'NEILL
----------------------------------------
Vice Chairman of the Board and
Chief Financial Officer
August 13, 1997
By Chief Accounting Officer and
Duly Authorized Signatory:
/s/ JOHN J. HIGGINS
----------------------------------------
Executive Vice President
and Chief Accounting Officer
August 13, 1997
57
<PAGE>
[BANKAMERICA CORPORATION LOGO APPEARS HERE]
BANKAMERICA
Other information about BankAmerica Corporation may be found in its Annual
Report to Shareholders. This report, as well as additional copies of this
Analytical Review and Form 10-Q, may be obtained from:
BANK OF AMERICA
CORPORATE SECRETARY'S OFFICE #13018
P.O. BOX 37000
SAN FRANCISCO, CA 94137
Information Online - To keep current online via the Internet, visit BankAmerica
Corporation's home page on the World Wide Web [http://www.bankamerica.com] to
view the latest information about the corporation and its products and services,
or apply for a loan or credit card. Corporate disclosure documents filed with
the Securities and Exchange Commission by BankAmerica Corporation and other
companies can be obtained from the Securities and Exchange Commission's home
page on the World Wide Web [http://www.sec.gov].
Recycled
NL-9 8/97 Paper Logo Appears
Here
<PAGE>
GRAPHICS APPENDIX INDEX
<TABLE>
<CAPTION>
BankAmerica Corporation
Second Quarter 1997 10-Q
page reference Description of omitted graphic
- ----------------------- --------------------------------------------------
<S> <C>
47 Net Interest Rate Risk Position
(Plot point graph in non-EDGAR version)
</TABLE>
1
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
REFERENCE DESCRIPTION
- --------- -----------
<S> <C>
3.a BankAmerica Corporation Restated Certificate of Incorporation.
Section I of Article FOURTH was amended, effective May 22, 1997
and the Certificate of Incorporation was restated, effective
June 3, 1997.
3.b BankAmerica Corporation Bylaws, as amended. Article II, Sections
12 and 13 were amended, effective May 22, 1997
10.a BankAmerica Corporation 1992 Management Stock Plan, as amended.*
10.b BankAmerica Corporation 1987 Management Stock Plan, as amended.*
10.c Continental Bank Corporation 1991 Equity Performance Incentive
Plan, as amended.*
10.d Continental Bank Corporation 1982 Performance, Restricted Stock
and Stock Option Plan, as amended.*
10.e BankAmerica Performance Equity Program, effective May 22, 1997.*
10.f Security Pacific Corporation Stock Option Plan, as amended.*
10.g Security Pacific Corporation Stock Based Incentive Award Plan,
as amended.*
10.h Change in Control Severance Pay Program, as amended.*
12.a Ratio of Earnings to Fixed Charges and Preferred Stock
Dividends.
27 Financial Data Schedule.
- --------------------------------------------------------------------------------
</TABLE>
*Management contract or compensatory plan, contract, or arrangement.
<PAGE>
EXHIBIT 3.a
RESTATED CERTIFICATE OF INCORPORATION
AND
BYLAWS
------------------------------
BANKAMERICA CORPORATION
CERTIFICATE: LAST AMENDED JUNE 2, 1997
BYLAWS: LAST AMENDED MAY 22, 1997
RESTATED CERTIFICATE OF INCORPORATION: FILED JUNE 3, 1997
<PAGE>
RESTATED CERTIFICATE OF
INCORPORATION
OF
BANKAMERICA CORPORATION
(Originally incorporated October 7, 1968)
FIRST. The name of the Corporation is
BankAmerica Corporation
SECOND. The address of its registered office in the State of Delaware
is No. 1209 Orange Street, in the City of Wilmington, County of New Castle. The
name of its registered agent at such address is The Corporation Trust Company.
THIRD. The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH. I. The Corporation may issue 1,470,000,000 shares of capital
stock, including 70,000,000 preferred shares, without par value, and
1,400,000,000 common shares, par value $1.5625 per share. Except as otherwise
expressly provided by this Certificate of Incorporation or the resolution or
resolutions of the Board of Directors providing for the issue of a series of
preferred stock, stock of any class or classes may be increased or decreased by
the affirmative vote of the holders of a majority of the stock of the
Corporation at the time entitled to vote.
II. A statement of the designations and the powers, preferences and
rights, and the qualifications, limitations or restrictions thereof, in respect
of the classes of capital stock of this Corporation is as follows:
1. Series of Preferred Stock. The preferred stock shall be issuable
-------------------------
in one or more series with such voting powers, full or limited, and such
designations, preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions thereof, as shall be
stated and expressed in this Certificate of Incorporation or any amendment
hereto, or in the resolution or resolutions providing for the issue of such
stock, or series thereof, adopted, at any time and from time to time, by the
Board of Directors of the Corporation pursuant to the authority hereby expressly
vested in the Board of Directors.
Except as otherwise expressly provided by the Delaware law or this
Certificate of Incorporation, there shall be no limitation or restriction on
variation between any of the different series of preferred stock. All preferred
stock of all series shall share pro rata in the payment of all dividends on the
preferred stock at the various rates fixed
<PAGE>
for each series and in any amounts payable or distributable upon liquidation,
dissolution or winding up of the Corporation to the extent of the respective
liquidation preferences fixed for each series; and, except for variations
between the different series of preferred stock, as herein expressly provided or
permitted, all series of preferred stock shall rank on a parity. All preferred
stock of any one series shall be entitled to the same dividend rate and shall
have the same voting, redemption, conversion, liquidation and other rights,
preferences, privileges, limitations and restrictions.
2. Dividend Rights. The holders of the preferred stock of all
---------------
series shall be entitled to receive, when and as declared by the Board of
Directors, dividends at the rate or rates fixed for the respective series, and
no more, without priority of one series over any other series, out of funds of
the Corporation legally available therefor, payable in cash quarterly on such
dates as may be fixed by the Board of Directors as to any series of preferred
stock (the periods between any such dates, commencing on such dates, being
herein designated as "dividend periods"). Dividends on the preferred stock of
any series shall be cumulative from and after such date as may be fixed by the
Board of Directors prior to the issuance thereof. Such dividends on the
preferred stock of all series shall be declared and paid or set apart for
payment before any dividend shall be declared or paid or set apart for payment
on, or any other distribution made in respect of, the common stock, and shall be
cumulative as above provided so that if, in any dividend period, dividends at
the respective rates fixed for each such series shall not have been declared and
paid or set apart for payment on all outstanding shares of each such series for
such dividend period and all preceding dividend periods from and after the date
from which dividends on each such series shall be cumulative, then the aggregate
deficiency shall be fully paid or declared and set apart for payment, but
without interest, before any dividends shall be declared or paid or set apart
for payment on, or any other distribution made in respect of the common stock.
After full cumulative dividends on the outstanding preferred stock of
all series shall have been paid or set apart for payment for all previous
dividend periods and for the then current dividend period, as above provided,
and after sufficient funds shall have been set aside to meet all matured
obligations, if any, of the Corporation with respect to all sinking funds,
retirement funds or purchase funds for any series of preferred stock, then and
not otherwise, as long as any preferred stock of any series shall remain
outstanding, dividends may be declared and paid or set apart for payment on the
common stock in the discretion of the Board of Directors out of any funds of the
Corporation thereafter remaining and legally available therefor.
Accumulations of dividends, whether declared or passed, shall not bear
interest.
3. Voting Rights. Except as otherwise expressly provided by
-------------
Delaware law or this Certificate of Incorporation or the resolution or
resolutions of the Board of Directors providing for the issue of a series of
preferred stock, the holders of the common stock shall possess exclusive voting
power for the election of Directors and for all other purposes. Every holder of
record of common stock entitled to vote and, except as otherwise expressly
provided in the resolution or resolutions of the Board of Directors providing
for the issue of a series of preferred stock, every
<PAGE>
holder of record of any series of preferred stock at the time entitled to vote,
shall be entitled to one vote for each share held.
Whenever and as often as dividends payable on the preferred stock at
the time outstanding shall be accumulated and unpaid in an amount equivalent to
or exceeding six quarterly dividends (whether or not declared and whether
consecutive or not), the holders of record of the preferred stock of all series
shall thereafter have the right, as a single class, to elect two directors, and,
subject to the terms of any outstanding series of preferred stock, the holders
of record of the common stock, as a single class, shall have the right to elect
the remaining authorized number of Directors.
Upon the happening of the six (6) dividend defaults hereinabove set
forth, a special meeting of stockholders of the Corporation then entitled to
vote shall be called by the Chairman of the Board or the President or the
Secretary of the Corporation, if requested in writing by the holders of record
of not less than ten (10) per cent of the preferred stock then outstanding. At
such special meeting, or, if no such special meeting shall have been called,
then at the next annual meeting of stockholders, the stockholders of the
Corporation then entitled to vote shall elect, voting as above provided, an
entirely new Board of Directors, and the term of office of the Directors in
office at the time of such election shall expire upon the election of their
successors at such meeting; provided, however, that nothing herein contained
shall be construed to be a bar to the re-election of any Director at such
meeting. At all meetings of stockholders at which holders of preferred stock
shall be entitled to vote for Directors as a single class, the holders of a
majority of the outstanding shares of each class or series of capital stock of
the Corporation having the right to vote as a single class shall be necessary to
constitute a quorum, whether present in person or by proxy, for the election by
that class or series of its designated Directors. In order to validate an
election of Directors by stockholders voting as a class, such Directors shall be
elected by the vote of at least a plurality of shares held by such stockholders
present or represented at the meeting. At any such meeting, the election of
Directors by stockholders voting as a class shall be valid notwithstanding that
a quorum of other stockholders voting as one or more classes may not be present
or represented at such meeting, and if any stockholders voting as a class shall
elect Directors, the Directors so elected shall be deemed to be Directors of the
Corporation unless and until the other stockholders entitled to vote as one or
more classes shall elect their Directors.
While class voting is in effect with respect to the preferred stock,
any Director elected by holders of preferred stock voting as a class may be
removed at any annual or special meeting, by vote of a majority of the
stockholders voting as a class who elected such Director, for any cause deemed
sufficient by such stockholders present at such meeting. In case any vacancy
shall occur among the Directors elected by such stockholders voting as a class,
such vacancy may be filled by the remaining Director so elected, or his
successor then in office, and the Director so elected to fill such vacancy shall
serve until the next meeting of stockholders for the election of Directors.
Such voting rights of the holders of preferred stock as a single
class, once effective, shall continue only until all arrears in dividends
(whether or not declared) on the preferred stock shall have been
<PAGE>
paid or declared and set apart for payment at which time the right of the
preferred stock to vote as a single class for the election of Directors, as
hereinabove set forth, shall terminate. Upon such termination, a special
meeting of the stockholders of the corporation then entitled to vote may be
called by the Chairman of the Board or the President, and shall be called by the
Chairman of the Board or the President or the Secretary of the Corporation if
requested in writing by the holders of record of not less than one (1) per cent
of the common stock then outstanding, and at such special meeting, or if no such
special meeting shall have been called then at the next annual meeting of the
stockholders, the stockholders of the Corporation then entitled to vote shall
elect an entirely new Board of Directors and the term of office of the Directors
in office at the time of such election shall expire upon the election of their
successors at such meeting; provided, however, that nothing herein contained
shall be construed to be a bar to the re-election of any such Director at such
meeting.
The consent of the holders of at least two-thirds of the number of
shares of preferred stock at the time outstanding, given in person or by proxy,
either in writing or at a meeting of stockholders at which the holders of the
preferred stock shall vote separately as a class, shall be necessary for
effecting or validating:
(a) any change in the Certificate of Incorporation or By-laws of the
Corporation which would materially and adversely alter or change the
preferences, privileges, rights or powers given to the holders of the
preferred stock, provided, that if one or more but not all series of
preferred stock at the time outstanding are so affected, only the consent
of the holders of at least two-thirds of each series so affected, voting
separately as a class, shall be required; or
(b) the issuance of any shares of any other class of stock of the
Corporation ranking prior to the preferred stock.
The term "ranking prior to the preferred stock" shall mean and include
all shares of stock of the Corporation in respect of which the rights of the
holders thereof as to the payment of dividends or as to distributions in the
event of a voluntary or an involuntary liquidation, dissolution or winding up of
the Corporation, are given preference over the rights of the holders of the
preferred stock.
4. Redemption Provisions. Every series of preferred stock shall be
---------------------
subject to redemption at the election of the Corporation and by operation of the
respective sinking funds, retirement funds or purchase funds of any series
thereof, in whole or in part, at any time or from time to time, at such price or
prices and upon such other terms and conditions as stated in this Certificate of
Incorporation, or at such price or prices and upon such other terms and
conditions, not inconsistent with the express provisions of this Certificate of
Incorporation, as shall be fixed in the resolution or resolutions of the Board
of Directors providing for the issue of such series of preferred stock.
The following additional conditions shall apply to the redemption of
all series of preferred stock:
Notice of any proposed redemption shall be given by the
<PAGE>
Corporation by publication (not less than 30 days nor more than 90 days prior to
the redemption date) at least once in a newspaper printed in the English
language and of general circulation in the City and County of San Francisco,
State of California (upon any secular day of the week) stating such election on
the part of the Corporation and that on the redemption date there will become
due and payable upon each of the shares to be redeemed, at the place or places
specified in such notice, the applicable redemption price therein specified. A
similar notice shall be mailed by the Corporation, postage prepaid, not less
than 30 days nor more than 90 days prior to the date fixed for redemption, to
each holder of record of such shares to be redeemed at his address as shown on
the records of the Corporation. The failure to mail such notice or any defect
in such mailing shall not invalidate the redemption of such shares.
If less than all the shares of preferred stock of any series are to be
redeemed, redemption shall be made by lot or pro rata, in any manner determined
by the Board of Directors to be fair and proper, and the notice of redemption
shall specify the shares to be redeemed. From and after the date fixed for
redemption, unless default shall be made by the Corporation in payment of the
redemption price, all dividends on the shares of preferred stock called for
redemption shall cease to accrue and all rights of the holders of such shares as
shareholders of the Corporation shall cease and terminate, except the right to
receive the applicable redemption price, without interest, upon surrender of the
certificates representing the shares so called for redemption, duly endorsed for
transfer, if required.
If the Corporation, on or prior to the date fixed for the redemption
of any of the preferred stock, shall deposit with a bank or trust company doing
business in San Francisco, California, as a trust fund for the benefit of the
respective holders of such shares to be redeemed, sums sufficient to redeem such
shares called for redemption, with irrevocable instructions and authority to
such depositary to publish, in the name of the Corporation, the notice of
redemption thereof (if not theretofore published) and to pay on or after the
date fixed for such redemption to the respective holders of such shares the
redemption price thereof upon surrender of the certificates representing the
shares so called for redemption, then from and after the time of such deposit
(although prior to the date fixed for redemption) such shares so called for
redemption shall be deemed to be redeemed and dividends thereon shall cease to
accrue after said date fixed for redemption. Said deposit shall be deemed to
constitute full payment of such shares to the respective holders thereof and
such shares shall no longer be deemed to be outstanding and the holders thereof
shall cease to be shareholders with respect to such shares and shall have no
rights with respect thereto, except only the right to receive from such bank or
trust company payment of the redemption price of such shares, without interest,
upon surrender of the certificates representing the shares so called for
redemption and the right to exercise any existing conversion rights in
accordance with the express terms of such shares. All funds so deposited and
not used for redemption because of any such conversions shall be returned to the
Corporation.
No redemption or purchase of any preferred stock of any series,
through the operation of any sinking fund, retirement fund or purchase fund
therefor, or otherwise, shall be made unless full cumulative dividends on all
preferred stock of all series then outstanding which are not to be redeemed or
purchased, to the end of the dividend period next
<PAGE>
preceding such redemption or purchase (and for the current dividend period if
such redemption or purchase is on a dividend payment date), shall have been paid
or declared and set apart for payment, and unless all matured obligations of the
Corporation with respect to all sinking funds, retirement funds or purchase
funds for all series of preferred stock then outstanding have been met. Subject
to the foregoing, the Corporation may, to the extent permitted by Delaware law,
purchase or acquire preferred stock of any series (in addition to purchases
through the respective sinking funds, retirement funds or purchase funds for
such series) at prices not exceeding the respective then applicable voluntary
redemption prices thereof, plus customary brokerage commissions paid in
connection with the purchase or acquisition thereof.
All preferred stock redeemed or otherwise retired shall immediately on
the redemption or retirement thereof be cancelled and restored to the status of
authorized but unissued preferred stock.
5. Liquidation Rights. In the event of any liquidation, dissolution
------------------
or winding up of the Corporation, voluntary or involuntary, the holders of all
shares of preferred stock of all series shall be entitled to be paid in full out
of the assets of the Corporation, without priority between series, the
respective voluntary or involuntary liquidation price fixed for such series, and
no more, plus all accrued and unpaid dividends thereon to the date that payment
is made available to the holders of such shares, prior to any payment or
distribution of any assets of the Corporation to the holders of the common
stock. If, upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation shall be
insufficient to permit the payment in full of the amounts payable as aforesaid
to the holders of the preferred stock of all series, then, to the exclusion of
the holders of the common stock, the holders of the preferred stock of all
series shall share ratably in proportion to the amounts which they are
respectively entitled to receive in the distribution of the entire amount of the
assets of the Corporation according to the number of shares of all series of the
preferred stock which they respectively hold.
After payment to the holders of the preferred stock of all series of
the full preferential amounts to which they are respectively entitled, as
aforesaid, the holders of the common stock shall be entitled to receive as a
class, pro rata, all remaining assets of the Corporation available for
distribution to its stockholders.
Consolidation or merger of the Corporation with or into another
corporation or corporations, or a sale, whether for cash, shares of stock,
securities or properties, of all or substantially all of the assets of the
Corporation, shall not be deemed or construed to be a liquidation, dissolution
or winding up of the Corporation within the meaning of this paragraph 5.
6. Prior Designations. Pursuant to the authority conferred by this
------------------
Article FOURTH, the series of Preferred Stock described in Exhibit A, which is
attached hereto and incorporated herein by reference, have been designated, each
such series consisting of such number of shares, with such voting powers, full
or limited, and such designations, preferences and relative, participating,
optional or other special rights and qualifications, limitations or restrictions
thereof, as are stated and expressed in such Exhibit A with respect to such
series.
<PAGE>
FIFTH. Meetings of stockholders may be held within or without the
State of Delaware as the By-laws may provide. The books of the Corporation may
be kept, subject to any provision contained in the statutes, outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the By-laws of the Corporation. Elections of
Directors need not be by written ballot unless a By-law of the Corporation shall
so provide.
SIXTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred on
stockholders herein are granted subject to this reservation. The Directors of
the Corporation shall have the power to make, alter or repeal By-laws of the
Corporation.
SEVENTH. No action may be taken by the stockholders except at an
annual or special meeting of stockholders, and the power of stockholders to act
by written consent, without a meeting, is specifically denied.
EIGHTH. A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derives any
improper personal benefit. Notwithstanding the foregoing, if the Delaware
General Corporation Law is amended to further eliminate or limit the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended, without further stockholder action.
Any repeal or modification of the foregoing paragraph shall not result
in any liability for a director with respect to any action or omission occurring
prior to such repeal or modification.
<PAGE>
EXHIBIT A
CUMULATIVE ADJUSTABLE PREFERRED STOCK, SERIES A
of
BANKAMERICA CORPORATION
1. Designation. The designation of such series shall be "Cumulative
-----------
Adjustable Preferred Stock, Series A" (hereinafter referred to as the "Series A
Preferred Stock") and the number of shares constituting such series is five
million one hundred seventy eight thousand (5,178,000). Shares of Series A
Preferred Stock shall have a stated value of $50 per share. The number of
authorized shares of Series A Preferred Stock may be reduced by further
resolution duly adopted by the Board of Directors of the Corporation or the
Executive Committee of the Board of Directors and by the filing of a certificate
pursuant to the provisions of the General Corporation Law of the State of
Delaware stating that such reduction has been so authorized, but the number of
authorized shares of Series A Preferred Stock shall not be increased.
2. Dividends. Dividend rates on the shares of Series A Preferred
---------
Stock shall be: (i) for the period (the "Initial Dividend Period") from the
respective dates of original issue thereof to and including February 28, 1983,
the rate shall be 10.25% per annum, and (ii) for each Quarterly Dividend Period
(hereinafter referred to as a "Quarterly Dividend Period"; and the Initial
Dividend Period or any Quarterly Dividend Period being hereinafter individually
referred to as a "Dividend Period" and collectively referred to as "Dividend
Periods") thereafter, which Quarterly Dividend Periods shall commence on March
1, June 1, September 1 and December 1 in each year and shall end on and include
the day next preceding the first day of the next Quarterly Dividend Period, at a
rate per annum of the stated value thereof equal to the Applicable Rate (as
defined in Section 3) in respect of such Quarterly Dividend Period. Such
dividends shall be cumulative from the respective dates of original issue of
such shares and shall be payable, when and as declared by the Board of
Directors, on February 28, May 31, August 31 and November 30 of each year,
commencing November 30, 1982. Each such dividend shall be paid to the holders
of record of shares of Series A Preferred Stock as they appear on the stock
register of the Corporation on such record date, not exceeding 30 days preceding
the payment date thereof, as shall be fixed by the Board of Directors of the
Corporation. Dividends on account of arrears for any past Dividend Periods may
be declared and paid at any time, without reference to any regular dividend
payment date, to holders of record on such date, not exceeding 45 days preceding
the payment date thereof, as may be fixed by the Board of Directors of the
Corporation. If there shall be outstanding shares of any other series of
Preferred Stock ranking on a parity as to dividends with the Series A Preferred
Stock, the Corporation, in making any dividend payment on account of arrears on
the Series A Preferred Stock or such other series of Preferred Stock, shall make
payments ratably upon all outstanding shares of Series A Preferred Stock and
such other series of Preferred Stock in proportion to the respective amounts of
dividends in arrears upon all such outstanding shares of Series A Preferred
Stock and such other series of Preferred Stock to the date of such dividend
payment. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments which may be in arrears.
<PAGE>
The amount of dividends per share payable for each Quarterly Dividend
Period shall be computed by dividing the dividend rate for such Dividend Period
by four and applying such rate against the stated value per share of the Series
A Preferred Stock. Dividends payable on the Series A Preferred Stock for any
period less than a full Quarterly Dividend Period, and for any portion of the
Initial Dividend Period occurring prior to November 30, 1982, shall be computed
on the basis of a 360-day year of four 90-day quarters and the actual number of
days elapsed in the period for which payable.
3. Definition of Applicable Rate, etc. Except as provided below in
-----------------------------------
this paragraph, the "Applicable Rate" for any Quarterly Dividend Period shall be
(a) 2.00% less than (b) the highest of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate or the Twenty Year Constant Maturity Rate (each as
hereinafter defined) for such Dividend Period. If the Corporation determines in
good faith that for any reason one or more of such rates cannot be determined
for any Dividend Period, then the Applicable Rate for such Dividend Period shall
be 2.00% less than the higher of whichever of such rates can be so determined.
If the Corporation determines in good faith that none of such rates can be
determined for any Dividend Period, then the Applicable Rate in effect for the
preceding Dividend Period shall be continued for such Dividend Period. Anything
herein to the contrary notwithstanding, the Applicable Rate for any Quarterly
Dividend Period shall in no event be less than 6.50% per annum or greater than
14.50% per annum.
Except as provided below in this paragraph, the "Treasury Bill Rate"
for each Quarterly Dividend Period shall be the arithmetic average of the two
weekly per annum market discount rates (or the one weekly per annum market
discount rate, if only one such rate shall be published during the relevant
Calendar Period as provided below) for three-month U.S. Treasury bills, as
published weekly by the Federal Reserve Board during the Calendar Period
immediately prior to the ten calendar days immediately preceding the February
28, May 31, August 31 and November 30, as the case may be, prior to the
Quarterly Dividend Period for which the dividend rate on the Series A Preferred
Stock is being determined. If the Federal Reserve Board does not publish such a
weekly per annum market discount rate during such Calendar Period, then the
Treasury Bill Rate for such Dividend Period shall be the arithmetic average of
the two weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate shall be published during the
relevant Calendar Period as provided below) for three-month U.S. Treasury bills,
as published weekly during such Calendar Period by any Federal Reserve Bank or
by any U.S. Government department or agency selected by the Corporation. If a
per annum market discount rate for three-month U.S. Treasury bills shall not be
published by the Federal Reserve Board or by any Federal Reserve Bank or by any
U.S. Government department or agency during such Calendar Period, then the
Treasury Bill Rate for such Dividend Period shall be the arithmetic average of
the two weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate shall be published during the
relevant Calendar Period as provided below) for all the U.S. Treasury bills then
having maturities of not less than 80 nor more than 100 days, as finally
published during such Calendar Period by the Federal Reserve Board or, if the
Federal Reserve Board shall not publish such rates, by any Federal Reserve Bank
or by any U.S. Government department or agency selected by the Corporation. If
the Corporation determines in good faith that for any reason no such U.S.
Treasury bill rates are published as
<PAGE>
provided above during such Calendar Period, then the Treasury Bill Rate for such
Dividend Period shall be the arithmetic average of the per annum market discount
rates based upon the closing bids during such Calendar Period for each of the
issues of marketable non-interest bearing U.S. Treasury securities with a
maturity of not less than 80 nor more than 100 days from the date of each such
quotation, as chosen and quoted daily for each business day in New York City (or
less frequently if daily quotations shall not be generally available) to the
Corporation by at least three recognized U.S. Government securities dealers
selected by the Corporation. If the Corporation determines in good faith that
for any reason the Corporation cannot determine the Treasury Bill Rate for any
Quarterly Dividend Period as provided above in this paragraph, the Treasury Bill
Rate for such Dividend Period shall be the arithmetic average of the per annum
market discount rates based upon the closing bids during such Calendar Period
for each of the issues of marketable interest-bearing U.S. Treasury securities
with a maturity of not less than 80 nor more than 100 days from the date of each
such quotation, as chosen and quoted daily for each business day in New York
City (or less frequently if daily quotations shall not be generally available)
to the Corporation by at least three recognized U.S. Government securities
dealers selected by the Corporation.
Except as provided below in this paragraph, the "Ten Year Constant
Maturity Rate" for each Quarterly Dividend Period shall be the arithmetic
average of the two weekly per annum Ten Year Average Yields (or the one weekly
per annum Ten Year Average Yield, if only one such Yield shall be published
during the relevant Calendar Period as provided below), as published weekly by
the Federal Reserve Board during the Calendar Period immediately prior to the
ten calendar days immediately preceding the February 28, May 31, August 31 and
November 30, as the case may be, prior to the Quarterly Dividend Period for
which the dividend rate on the Series A Preferred Stock is being determined. If
the Federal Reserve Board does not publish such a weekly per annum Ten Year
Average Yield during such Calendar Period, then the Ten Year Constant Maturity
Rate for such Dividend Period shall be the arithmetic average of the two weekly
per annum Ten Year Average Yields (or the one weekly per annum Ten Year Average
Yield, if only one such Yield shall be published during the relevant Calendar
Period as provided below), as published weekly during such Calendar Period by
any Federal Reserve Bank or by any U.S. Government department or agency selected
by the Corporation. If a per annum Ten Year Average Yield shall not be
published by the Federal Reserve Board or by any Federal Reserve Bank or by any
U.S. Government department or agency during such Calendar Period, then the Ten
Year Constant Maturity Rate for such Dividend Period shall be the arithmetic
average of the two per weekly annum average yields to maturity (or the one
weekly average yield to maturity, if only one such yield shall be published
during the relevant Calendar Period as provided below) for all of the actively
traded marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) then having maturities of not less than eight nor more than
twelve years, as finally published during such Calendar Period by the Federal
Reserve Board or, if the Federal Reserve Board shall not publish such yields, by
any Federal Reserve Bank or by any U.S. Government department or agency selected
by the Corporation. If the Corporation determines in good faith that for any
reason the Corporation cannot determine the Ten Year Constant Maturity Rate for
any Quarterly Dividend Period as provided above in this paragraph, then the Ten
Year Constant Maturity Rate for such Dividend Period shall be the arithmetic
average of the per annum average yields to maturity based upon
<PAGE>
the closing bids during such Calendar Period for each of the issues of actively
traded marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) with a final maturity date not less than eight nor more than
twelve years from the date of each such quotation, as chosen and quoted daily
for each business day in New York City (or less frequently if daily quotations
shall not be generally available) to the Corporation by at least three
recognized U.S. Government securities dealers selected by the Corporation.
Except as provided below in this paragraph, the "Twenty Year Constant
Maturity Rate" for each Quarterly Dividend Period shall be the arithmetic
average of the two weekly per annum Twenty Year Average Yields (or the one
weekly per annum Twenty Year Average Yield, if only one such Yield shall be
published during the relevant Calendar Period as provided below), as published
weekly by the Federal Reserve Board during the Calendar Period immediately prior
to the ten calendar days immediately preceding the February 28, May 31, August
31 and November 30, as the case may be, prior to the Quarterly Dividend Period
for which the dividend rate on the Series A Preferred Stock is being determined.
If the Federal Reserve Board does not publish such a weekly per annum Twenty
Year Average Yield during such Calendar Period, then the Twenty Year Constant
Maturity Rate for such Dividend Period shall be the arithmetic average of the
two weekly per annum Twenty Year Average Yields (or the one weekly per annum
Twenty Year Average Yield, if only one such yield shall be published during the
relevant Calendar Period as provided below), as published weekly during such
Calendar Period by any Federal Reserve Bank or by any U.S. Government department
or agency selected by the Corporation. If a per annum Twenty Year Average Yield
shall not be published by the Federal Reserve Board or by any Federal Reserve
Bank or by any U.S. Government department or agency during such Calendar Period,
then the Twenty Year Constant Maturity Rate for such Dividend Period shall be
the arithmetic average of the two weekly per annum average yields to maturity
(or the one weekly average yield to maturity, if only one such yield shall be
published during the relevant Calendar Period as provided below) for all of the
actively traded marketable U.S. Treasury fixed interest rate securities (other
than Special Securities) then having maturities of not less than eighteen nor
more than twenty-two years, as finally published during such Calendar Period by
the Federal Reserve Board or, if the Federal Reserve Board shall not publish
such yields, by any Federal Reserve Bank or by any U.S. Government department or
agency selected by the Corporation. If the Corporation determines in good faith
that for any reason the Corporation cannot determine the Twenty Year Constant
Maturity Rate for any Quarterly Dividend Period as provided above in this
paragraph, then the Twenty Year Constant Maturity Rate for such Dividend Period
shall be the arithmetic average of the per annum average yields to maturity
based upon the closing bids during such Calendar Period for each of the issues
of actively traded marketable U.S. Treasury fixed interest rate securities
(other than Special Securities) with a final maturity date not less than
eighteen nor more than twenty-two years from the date of each such quotation, as
chosen and quoted daily for each business day in New York City (or less
frequently if daily quotations shall not be generally available) to the
Corporation by at least three recognized U.S. Government securities dealers
selected by the Corporation.
The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the
Twenty Year Constant Maturity Rate shall each be rounded to the nearest five
hundredths of a percentage point.
<PAGE>
The Applicable Rate with respect to each Quarterly Dividend Period
will be calculated as promptly as practicable by the Corporation according to
the appropriate method described herein. The mathematical accuracy of each such
calculation will be confirmed in writing by independent accountants of
recognized standing. The Corporation will cause each Applicable Rate to be
published in a newspaper of general circulation in New York City and San
Francisco prior to the commencement of the new Quarterly Dividend Period to
which it applies and will cause notice of such Applicable Rate to be enclosed
with the dividend payment checks next mailed to the holders of the Series A
Preferred Stock.
For purposes of this Section, the term
(i) "Calendar Period" shall mean 14 calendar days;
(ii) "Special Securities" shall mean securities which can, at the
option of the holder, be surrendered at face value in payment of any
Federal estate tax or which provide tax benefits to the holder and are
priced to reflect such tax benefits or which were originally issued at a
deep or substantial discount;
(iii) "Ten Year Average Yield" shall mean the average yield to
maturity for actively traded marketable U.S. Treasury fixed interest rate
securities (adjusted to constant maturities of ten years); and
(iv) "Twenty Year Average Yield" shall mean the average yield to
maturity for actively traded marketable U.S. Treasury fixed interest rate
securities (adjusted to constant maturities of twenty years).
4. Redemption. The Corporation, at its option, may redeem shares of
----------
the Series A Preferred Stock, as a whole or in part, at any time or from time to
time, at a redemption price of $50 per share plus accrued and unpaid dividends
thereon to the date fixed for redemption; provided, however, that no shares of
Series A Preferred Stock shall be redeemed hereunder prior to November 30, 1987;
and provided, further, that in the event of any such redemption on or after
November 30, 1987 and prior to November 30, 1992, shares of the Series A
Preferred Stock may be redeemed only at a redemption price of $51.50 per share
plus accrued and unpaid dividends thereon to the date fixed for redemption.
If the Corporation shall redeem shares of Series A Preferred Stock,
notice of such redemption shall be given by first class mail, postage prepaid,
mailed not less than 60 days nor more than 90 days prior to the redemption date,
to each holder of record of the shares to be redeemed, at such holder's address
as the same appears on the stock register of the Corporation. Each such notice
shall state: (1) the redemption date; (2) the number of shares of Series A
Preferred Stock to be redeemed and, if less than all the shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; (3) the redemption price; (4) the place or places where certificates
for such shares are to be surrendered for payment of the redemption price; and
(5) that dividends on the shares to be redeemed will cease to accrue on such
redemption date. Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in providing
money for the payment of the redemption price) dividends on the
<PAGE>
shares of the Series A Preferred Stock so called for redemption shall cease to
accrue, and said shares shall no longer be deemed to be outstanding, and all
rights of the holders thereof as stockholders of the Corporation (except the
right to receive from the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for any shares so
redeemed (properly endorsed or assigned for transfer, if the Board of Directors
of the Corporation shall so require and the notice shall so state), such shares
shall be redeemed by the Corporation at the redemption price aforesaid. If less
than all the outstanding shares of Series A Preferred Stock are to be redeemed,
shares to be redeemed shall be selected by the Corporation from outstanding
shares of Series A Preferred Stock not previously called for redemption by lot
or pro rata (as nearly as may be) or by any other method determined by the
Corporation in its sole discretion to be equitable.
In no event shall the Corporation redeem less than all the outstanding
shares of Series A Preferred Stock pursuant to the first paragraph of this
Section 4 unless full cumulative dividends shall have been paid or declared and
set apart for payment upon all outstanding shares of Series A Preferred Stock
for all past Dividend Periods, and unless all matured obligations of the
Corporation with respect to all sinking funds, retirement funds or purchase
funds for all series of Preferred Stock then outstanding have been met.
5. Shares to be Retired. All shares of Series A Preferred Stock
--------------------
redeemed by the Corporation shall be retired and cancelled and shall be restored
to the status of authorized but unissued shares of Preferred Stock, without
designation as to series, and may thereafter be issued.
6. Conversion or Exchange. The holders of shares of Series A
----------------------
Preferred Stock shall not have any rights herein to convert such shares into or
exchange such shares for shares of any other class or classes or of any other
series of any class or classes of capital stock of the Corporation.
7. Voting. Except as hereinafter in this Section 7 expressly
------
provided or as otherwise required by law, the Series A Preferred Stock shall
have no voting power.
Whenever and as often as dividends payable on any share or shares of
the Preferred Stock at the time outstanding shall be accumulated and unpaid in
an amount equivalent to or exceeding six quarterly dividends (whether or not
declared and whether or not consecutive), the holders of record of the Preferred
Stock of all series shall thereafter have the right, as a single class, to elect
two directors, and, subject to the terms of any outstanding series of Preferred
Stock, the holders of record of the common stock, as a single class, shall have
the right to elect the remaining authorized number of Directors. In any such
election, the holders of shares of Series A Preferred Stock shall be entitled to
cast one vote per share.
Upon the happening of the six dividend defaults hereinabove set forth,
a special meeting of stockholders of the Corporation then entitled to vote shall
be called by the Chairman of the Board or the President or the Secretary of the
Corporation, if requested in writing by the holders of record of not less than
ten percent of the Preferred Stock then outstanding. At such special meeting,
or, if no such special meeting
<PAGE>
shall have been called, then at the next annual meeting of stockholders, the
stockholders of the Corporation then entitled to vote shall elect, voting as
above provided, an entirely new Board of Directors, and the term of office of
the Directors in office at the time of such election shall expire upon the
election of their successors at such meeting; provided, however, that nothing
herein contained shall be construed to be a bar to the re-election of any
Director at such meeting. At all meetings of stockholders at which holders of
Preferred Stock shall be entitled to vote for Directors as a single class, the
holders of a majority of the outstanding shares of each class or series of
capital stock of the Corporation having the right to vote as a single class
shall be necessary to constitute a quorum, whether present in person or by
proxy, for the election by that class or series of its designated Directors. In
order to validate an election of Directors by stockholders voting as a class,
such Directors shall be elected by the vote of at least a plurality of shares
held by such stockholders present or represented at the meeting. At any such
meeting, the election of Directors by stockholders voting as a class shall be
valid notwithstanding that a quorum of other stockholders voting as one or more
classes may not be present or represented at such meeting, and if any
stockholders voting as a class shall elect Directors, the Directors so elected
shall be deemed to be Directors of the Corporation unless and until the other
stockholders entitled to vote as one or more classes shall elect their
Directors.
While class voting is in effect with respect to the Preferred Stock,
any Director elected by holders of Preferred Stock voting as a class may be
removed at any annual or special meeting, by vote of a majority of the
stockholders voting as a class who elected such Director, for any cause deemed
sufficient by such stockholders present at such meeting. In case any vacancy
shall occur among the Directors elected by such stockholders voting as a class,
such vacancy may be filled by the remaining Director so elected, or his
successor then in office, and the Director so elected to fill such vacancy shall
serve until the next meeting of stockholders for the election of Directors.
Such voting rights of the holders of Preferred Stock as a single
class, once effective, shall continue only until all arrears in dividends
(whether or not declared) on the Preferred Stock shall have been paid or
declared and set apart for payment at which time the right of the Preferred
Stock to vote as a single class for the election of Directors, as hereinabove
set forth, shall terminate. Upon such termination, a special meeting of the
stockholders of the Corporation then entitled to vote may be called by the
Chairman of the Board or the President, and shall be called by the Chairman of
the Board or the President or the Secretary of the Corporation if requested in
writing by the holders of record of not less than one percent of the common
stock then outstanding, and at such special meeting, or if no such special
meeting shall have been called then at the next annual meeting of the
stockholders, the stockholders of the Corporation then entitled to vote shall
elect an entirely new Board of Directors and the term of office of the Directors
in office at the time of such election shall expire upon the election of their
successors at such meeting; provided, however, that nothing herein contained
shall be construed to be a bar to the re-election of any such Director at such
meeting.
The consent of the holders of at least two-thirds of the number of
shares of Preferred Stock at the time outstanding, given in
<PAGE>
person or by proxy, either in writing or at a meeting of stockholders at which
the holders of the Preferred Stock shall vote separately as a class without
regards to series, the holders of shares of Series A Preferred Stock being
entitled to cast one vote per share thereon, shall be necessary for effecting or
validating:
(a) Any change in the Certificate of Incorporation or certificate
supplemental thereto or By-laws of the Corporation which would materially
and adversely alter or change the preferences, privileges, rights or powers
given to the holders of the Preferred Stock, provided, that if one or more
but not all series of Preferred Stock at the time outstanding are so
affected, only the consent of the holders of at least two-thirds of each
series so affected, voting separately as a class, shall be required; or
(b) the issuance of any shares of any other class of stock of the
Corporation ranking prior to the Preferred Stock.
The term "ranking prior to the Preferred Stock" shall mean and include
all shares of stock of the Corporation in respect of which the rights of the
holders thereof as to the payment of dividends or as to distributions in the
event of a voluntary or an involuntary liquidation, dissolution or winding up of
the Corporation, are given preference over the rights of the holders of the
Preferred Stock.
8. Liquidation Preference. In the event of any liquidation,
----------------------
dissolution or winding up of the Corporation, voluntary or involuntary, the
holders of all shares of Series A Preferred Stock shall be entitled to be paid
in full out of the assets of the Corporation available for distribution to
stockholders, before any distribution of assets shall be made to the holders of
common stock or of any other shares of stock of the Corporation ranking as to
such distribution junior to the Series A Preferred Stock, an amount equal to $50
per share plus an amount equal to any accrued and unpaid dividends thereon to
the date fixed for payment of such distribution. If, upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
amounts payable with respect to the Series A Preferred Stock and any other
shares of stock of the Corporation ranking as to any such distribution on a
parity with the Series A Preferred Stock are not paid in full, the holders of
the Series A Preferred Stock and of such other shares shall share ratably in any
such distribution of assets of the Corporation in proportion to the full
respective preferential amounts to which they are entitled. After payment to the
holders of the Series A Preferred Stock of the full preferential amounts
provided for in this Section 8, the holders of the Series A Preferred Stock
shall be entitled to no further participation in any distribution of assets by
the Corporation.
Consolidation or merger of the Corporation with or into another
corporation or corporations, or a sale, whether for cash, shares of stock,
securities or properties, of all or substantially all of the assets of the
Corporation, shall not be deemed or construed to be a liquidation, dissolution
or winding up of the Corporation within the meaning of this Paragraph 8.
9. Limitation on Dividends on Junior Ranking Stock. So long as any
-----------------------------------------------
Series A Preferred Stock shall be outstanding, the Corporation
<PAGE>
shall not declare any dividends on the common stock of the Corporation or any
other stock of the Corporation ranking as to dividends or distribution of assets
junior to the Series A Preferred Stock (the common stock and any such other
stock being herein referred to as "Junior Stock"), or make any payment on
account of, or set apart money for, a sinking or other analogous fund for the
purchase, redemption or other retirement of any shares of Junior Stock, or make
any distribution in respect thereof, whether in cash or property or in
obligations or stock of the Corporation, other than Junior Stock (such
dividends, payments, setting apart and distributions being herein called "Junior
Stock Payments"), unless all of the conditions set forth in the following
subsections A and B shall exist at the date of such declaration in the case of
any such dividend, or the date of such setting apart in the case of any such
fund, or the date of such payment or distribution in the case of any other
Junior Stock Payment:
A. Full cumulative dividends shall have been paid or declared and
set apart for payment upon all outstanding shares of Preferred Stock other than
Junior Stock.
B. The Corporation shall not be in default or in arrears with
respect to any sinking or other analogous fund or any call for tenders
obligation or other agreement for the purchase, redemption or other retirement
of any shares of Preferred Stock other than Junior Stock.
<PAGE>
CUMULATIVE ADJUSTABLE PREFERRED STOCK, SERIES B
of
BANKAMERICA CORPORATION
1. Designation. The designation of such series shall be "Cumulative
-----------
Adjustable Preferred Stock, Series B" (hereinafter referred to as the "Series B
Preferred Stock") and the number of shares constituting such series is three
million five hundred forty six thousand one hundred (3,546,100). Shares of
Series B Preferred Stock shall have a stated value of $100.00 per share. The
number of authorized shares of Series B Preferred Stock may be reduced by
further resolution duly adopted by the Board of Directors of the Corporation or
the Executive Committee of the Board of Directors and by the filing of a
certificate pursuant to the provisions of the General Corporation Law of the
State of Delaware stating that such reduction has been so authorized, but the
number of authorized shares of Series B Preferred Stock shall not be increased.
2. Dividends. Dividend rates on the shares of Series B Preferred
---------
Stock shall be: (i) for the period (the "Initial Dividend Period") from the
respective dates of original issue thereof to and including May 31, 1983, the
rate shall be 9.25% per annum, and (ii) for each Quarterly Dividend Period
(hereinafter referred to as a "Quarterly Dividend Period"; and the Initial
Dividend Period or any Quarterly Dividend Period being hereinafter individually
referred to as a "Dividend Period" and collectively referred to as "Dividend
Periods") thereafter, which Quarterly Dividend Periods shall commence on March
1, June 1, September 1 and December 1 in each year and shall end on and include
the day next preceding the first day of the next Quarterly Dividend Period, at a
rate per annum of the stated value thereof equal to the Applicable Rate (as
defined in Section 3) in respect of such Quarterly Dividend Period. Such
dividends shall be cumulative from the respective dates of original issue of
such shares and shall be payable, when and as declared by the Board of
Directors, on February 28, May 31, August 31 and November 30 of each year,
commencing February 28, 1983. Each such dividend shall be paid to the holders
of record of shares of Series B Preferred Stock as they appear on the stock
register of the Corporation on such record date, not exceeding 30 days preceding
the payment date thereof, as shall be fixed by the Board of Directors of the
Corporation. Dividends on account of arrears for any past Dividend Periods may
be declared and paid at any time, without reference to any regular dividend
payment date, to holders of record on such date, not exceeding 45 days preceding
the payment date thereof, as may be fixed by the Board of Directors of the
Corporation. If there shall be outstanding shares of any other series of
Preferred Stock ranking on a parity as to dividends with the Series B Preferred
Stock, the Corporation, in making any dividend payment on account of arrears on
the Series B Preferred Stock or such other series of Preferred Stock, shall make
payments ratably upon all outstanding shares of Series B Preferred Stock and
such other series of Preferred Stock in proportion to the respective amounts of
dividends in arrears upon all such outstanding shares of Series B Preferred
Stock and such other series of Preferred Stock to the date of such dividend
payment. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments which may be in arrears.
The amount of dividends per share payable for each Quarterly Dividend
Period shall be computed by dividing the dividend rate for such
<PAGE>
Dividend Period by four and applying such rate against the stated value per
share of the Series B Preferred Stock. Dividends payable on the Series B
Preferred Stock for any period less than a full Quarterly Dividend Period, and
for any portion of the Initial Dividend Period occurring prior to February 28,
1983, shall be computed on the basis of a 360-day year of four 90-day quarters
and the actual number of days elapsed in the period for which payable.
3. Definition of Applicable Rate, etc. Except as provided below in
----------------------------------
this paragraph, the "Applicable Rate" for any Quarterly Dividend Period shall be
(a) 4.00% less than (b) the highest of the Treasury Bill Rate, the Ten Year
Constant maturity Rate or the Twenty Year Constant Maturity Rate (each as
hereinafter defined) for such Dividend Period. If the Corporation determines in
good faith that for any reason one or more of such rates cannot be determined
for any Dividend Period, then the Applicable Rate for such Dividend Period shall
be 4.00% less than the higher of whichever of such rates can be so determined.
If the Corporation determines in good faith that none of such rates can be
determined for any Dividend Period, then the Applicable Rate in effect for the
preceding Dividend Period shall be continued for such Dividend Period. Anything
herein to the contrary notwithstanding, the Applicable Rate for any Quarterly
Dividend Period shall in no event be less than 6.00% per annum or greater than
12.00% per annum.
Except as provided below in this paragraph, the "Treasury Bill Rate"
for each Quarterly Dividend Period shall be the arithmetic average of the two
weekly per annum market discount rates (or the one weekly per annum market
discount rate, if only one such rate shall be published during the relevant
Calendar Period as provided below) for three-month U.S. Treasury bills, as
published weekly by the Federal Reserve Board during the Calendar Period
immediately prior to the ten calendar days immediately preceding the February
28, May 31, August 31 and November 30, as the case may be, prior to the
Quarterly Dividend Period for which the dividend rate on the Series B Preferred
Stock is being determined. If the Federal Reserve Board does not publish such a
weekly per annum market discount rate during such Calendar Period, then the
Treasury Bill Rate for such Dividend Period shall be the arithmetic average of
the two weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate shall be published during the
relevant Calendar Period as provided below) for three-month U.S. Treasury bills,
as published weekly during such Calendar Period by any Federal Reserve Bank or
by any U.S. Government department or agency selected by the Corporation. If a
per annum market discount rate for three-month U.S. Treasury bills shall not be
published by the Federal Reserve Board or by any Federal Reserve Bank or by any
U.S. Government department or agency during such Calendar Period, then the
Treasury Bill Rate for such Dividend Period shall be the arithmetic average of
the two weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate shall be published during the
relevant Calendar Period as provided below) for all the U.S. Treasury bills then
having maturities of not less than 80 nor more than 100 days, as finally
published during such Calendar Period by the Federal Reserve Board or, if the
Federal Reserve Board shall not publish such rates, by any Federal Reserve Bank
or by any U.S. Government department or agency selected by the Corporation. If
the Corporation determines in good faith that for any reason no such U.S.
Treasury bill rates are published as provided above during such Calendar Period,
then the Treasury Bill Rate for such Dividend Period shall be the arithmetic
average of the per annum
<PAGE>
market discount rates based upon the closing bids during such Calendar Period
for each of the issues of marketable non-interest bearing U.S. Treasury
securities with a maturity of not less than 80 nor more than 100 days from the
date of each such quotation, as chosen and quoted daily for each business day in
New York City (or less frequently if daily quotations shall not be generally
available) to the Corporation by at least three recognized U.S. Government
securities dealers selected by the Corporation. If the Corporation determines
in good faith that for any reason the Corporation cannot determine the Treasury
Bill Rate for any Quarterly Dividend Period as provided above in this paragraph,
the Treasury Bill Rate for such Dividend Period shall be the arithmetic average
of the per annum market discount rates based upon the closing bids during such
Calendar Period for each of the issues of marketable interest-bearing U.S.
Treasury securities with a maturity of not less than 80 nor more than 100 days
from the date of each such quotation, as chosen and quoted daily for each
business day in New York City (or less frequently if daily quotations shall not
be generally available) to the Corporation by at least three recognized U.S.
Government securities dealers selected by the Corporation.
Except as provided below in this paragraph, the "Ten Year Constant
Maturity Rate" for each Quarterly Dividend Period shall be the arithmetic
average of the two weekly per annum Ten Year Average Yields (or the one weekly
per annum Ten Year Average Yield, if only one such Yield shall be published
during the relevant Calendar Period as provided below), as published weekly by
the Federal Reserve Board during the Calendar Period immediately prior to the
ten calendar days immediately preceding the February 28, May 31, August 31 and
November 30, as the case may be, prior to the Quarterly Dividend Period for
which the dividend rate on the Series B Preferred Stock is being determined. If
the Federal Reserve Board does not publish such a weekly per annum Ten Year
Average Yield during such Calendar Period, then the Ten Year Constant Maturity
Rate for such Dividend Period shall be the arithmetic average of the two weekly
per annum Ten Year Average Yields (or the one weekly per annum Ten Year Average
Yield, if only one such Yield shall be published during the relevant Calendar
Period as provided below), as published weekly during such Calendar Period by
any Federal Reserve Bank or by any U.S. Government department or agency selected
by the Corporation. If a per annum Ten Year Average Yield shall not be
published by the Federal Reserve Board or by any Federal Reserve Bank or by any
U.S. Government department or agency during such Calendar Period, then the Ten
Year Constant Maturity Rate for such Dividend Period shall be the arithmetic
average of the two weekly per annum average yields to maturity (or the one
weekly average yield to maturity, if only one such yield shall be published
during the relevant Calendar Period as provided below) for all of the actively
traded marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) then having maturities of not less than eight nor more than
twelve years, as finally published during such Calendar Period by the Federal
Reserve Board or, if the Federal Reserve Board shall not publish such yields, by
any Federal Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. If the Corporation determines in good faith that
for any reason the Corporation cannot determine the Ten Year Constant Maturity
Rate for any Quarterly Dividend Period as provided above in this paragraph, then
the Ten Year Constant Maturity Rate for such Dividend Period shall be the
arithmetic average of the per annum average yields to maturity based upon the
closing bids during such Calendar Period for each of the issues of actively
traded marketable U.S. Treasury fixed interest rate securities
<PAGE>
(other than Special Securities) with a final maturity date not less than eight
nor more than twelve years from the date of each such quotation, as chosen and
quoted daily for each business day in New York City (or less frequently if daily
quotations shall not be generally available) to the Corporation by at least
three recognized U.S. Government securities dealers selected by the Corporation.
Except as provided below in this paragraph, the "Twenty Year Constant
Maturity Rate" for each Quarterly Dividend Period shall be the arithmetic
average of the two weekly per annum Twenty Year Average Yields (or the one
weekly per annum Twenty Year Average Yield, if only one such Yield shall be
published during the relevant Calendar Period as provided below), as published
weekly by the Federal Reserve Board during the Calendar Period immediately prior
to the ten calendar days immediately preceding the February 28, May 31, August
31 and November 30, as the case may be, prior to the Quarterly Dividend Period
for which the dividend rate on the Series B Preferred Stock is being determined.
If the Federal Reserve Board does not publish such a weekly per annum Twenty
Year Average Yield during such Calendar Period, then the Twenty Year Constant
Maturity Rate for such Dividend Period shall be the arithmetic average of the
two weekly per annum Twenty Year Average Yields (or the one weekly per annum
Twenty Year Average Yield, if only one such Yield shall be published during the
relevant Calendar Period as provided below), as published weekly during such
Calendar Period by any Federal Reserve Bank or by any U.S. Government department
or agency selected by the Corporation. If a per annum Twenty Year Average Yield
shall not be published by the Federal Reserve Board or by any Federal Reserve
Bank or by any U.S. Government department or agency during such Calendar Period,
then the Twenty Year Constant Maturity Rate for such Dividend Period shall be
the arithmetic average of the two weekly per annum average yields to maturity
(or the one weekly average yield to maturity, if only one such yield shall be
published during the relevant Calendar Period as provided below) for all of the
actively traded marketable U.S. Treasury fixed interest rate securities (other
than Special Securities) then having maturities of not less than eighteen nor
more than twenty-two years, as finally published during such Calendar Period by
the Federal Reserve Board or, if the Federal Reserve Board shall not publish
such yields, by any Federal Reserve Bank or by any U.S. Government department or
agency selected by the Corporation. If the Corporation determines in good faith
that for any reason the Corporation cannot determine the Twenty Year Constant
Maturity Rate for any Quarterly Dividend Period as provided above in this
paragraph, then the Twenty Year Constant Maturity Rate for such Dividend Period
shall be the arithmetic average of the per annum average yields to maturity
based upon the closing bids during such Calendar Period for each of the issues
of actively traded marketable U.S. Treasury fixed interest rate securities
(other than Special Securities) with a final maturity date not less than
eighteen nor more than twenty-two years from the date of each such quotation, as
chosen and quoted daily for each business day in New York City (or less
frequently if daily quotations shall not be generally available) to the
Corporation by at least three recognized U.S. Government securities dealers
selected by the Corporation.
The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the
Twenty Year Constant Maturity Rate shall each be rounded to the nearest five
hundredths of a percentage point.
The Applicable Rate with respect to each Quarterly Dividend
<PAGE>
Period will be calculated as promptly as practicable by the Corporation
according to the appropriate method described herein. The mathematical accuracy
of each such calculation will be confirmed in writing by independent accountants
of recognized standing. The Corporation will cause each Applicable Rate to be
published in a newspaper of general circulation in New York City and San
Francisco prior to the commencement of the new Quarterly Dividend Period to
which it applies and will cause notice of such Applicable Rate to be enclosed
with the dividend payment checks next mailed to the holders of the Series B
Preferred Stock.
For purposes of this Section, the term
(i) "Calendar Period" shall mean 14 calendar days;
(ii) "Special Securities" shall mean securities which can, at the
option of the holder, be surrendered at face value in payment of any
Federal estate tax or which provide tax benefits to the holder and are
priced to reflect such tax benefits or which were originally issued at a
deep or substantial discount;
(iii) "Ten Year Average Yield" shall mean the average yield to
maturity for actively traded marketable U.S. Treasury fixed interest rate
securities (adjusted to constant maturities of ten years); and
(iv) "Twenty Year Average Yield" shall mean the average yield to
maturity for actively traded marketable U.S. Treasury fixed interest rate
securities (adjusted to constant maturities of twenty years).
4. Redemption. The Corporation, at its option, may redeem shares of
----------
the Series B Preferred Stock, as a whole or in part, at any time or from time to
time, at a redemption price of $100.00 per share plus accrued and unpaid
dividends thereon to the date fixed for redemption; provided, however, that no
shares of Series B Preferred Stock shall be redeemed hereunder prior to February
28, 1988; and provided, further, that in the event of any such redemption on or
after February 28, 1988 and prior to February 28, 1993, shares of the Series B
Preferred Stock may be redeemed only at a redemption price of $103.00 per share
plus accrued and unpaid dividends thereon to the date fixed for redemption.
If the Corporation shall redeem shares of Series B Preferred Stock,
notice of such redemption shall be given by first class mail, postage prepaid,
mailed not less than 60 nor more than 90 days prior to the redemption date, to
each holder of record of the shares to be redeemed, at such holder's address as
the same appears on the stock register of the Corporation. Each such notice
shall state: (1) the redemption date; (2) the number of shares of Series B
Preferred Stock to be redeemed and, if less than all the shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; (3) the redemption price; (4) the place or places where certificates
for such shares are to be surrendered for payment of the redemption price; and
(5) that dividends on the shares to be redeemed will cease to accrue on such
redemption date. Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in providing
money for the payment of the redemption price) dividends on the shares of the
Series B Preferred Stock so called for redemption shall cease to accrue, and
said
<PAGE>
shares shall no longer be deemed to be outstanding, and all rights of the
holders thereof as stockholders of the Corporation (except the right to receive
from the Corporation the redemption price) shall cease. Upon surrender in
accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such shares shall
be redeemed by the Corporation at the redemption price aforesaid. If less than
all the outstanding shares of Series B Preferred Stock are to be redeemed,
shares to be redeemed shall be selected by the Corporation from outstanding
shares of Series B Preferred Stock not previously called for redemption by lot
or pro rata (as nearly as may be) in any method determined by the Corporation in
its sole discretion to be equitable.
In no event shall the Corporation redeem less than all the outstanding
shares of Series B Preferred Stock pursuant to the first paragraph of this
Section 4 unless full cumulative dividends shall have been paid or declared and
set apart for payment upon all outstanding shares of Series B Preferred Stock
for all past Dividend Periods, and unless all matured obligations of the
Corporation with respect to all sinking funds, retirement funds or purchase
funds for all series of Preferred Stock then outstanding have been met.
5. Shares to be Retired. All shares of Series B Preferred Stock
--------------------
redeemed by the Corporation shall be retired and cancelled and shall be restored
to the status of authorized but unissued shares of Preferred Stock, without
designation as to series, and may thereafter be issued.
6. Conversion or Exchange. The holders of shares of Series B
----------------------
Preferred Stock shall not have any rights herein to convert such shares into or
exchange such shares for shares of any other class or classes or of any other
series of any class or classes of capital stock of the Corporation.
7. Voting. Except as hereinafter in this Section 7 expressly
------
provided or as otherwise required by law, the Series B Preferred Stock shall
have no voting power.
Whenever and as often as dividends payable on any share or shares of
the Preferred Stock at the time outstanding shall be accumulated and unpaid in
an amount equivalent to or exceeding six quarterly dividends (whether or not
declared and whether or not consecutive), the holders of record of the Preferred
Stock of all series shall thereafter have the right, as a single class, to elect
two directors, and, subject to the terms of any outstanding series of Preferred
Stock, the holders of record of the common stock, as a single class, shall have
the right to elect the remaining authorized number of Directors. In any such
election, the holders of shares of Series B Preferred Stock shall be entitled to
cast one vote per share.
Upon the happening of the six dividend defaults hereinabove set forth,
a special meeting of stockholders of the Corporation then entitled to vote shall
be called by the Chairman of the Board or the President or the Secretary of the
Corporation, if requested in writing by the holders of record of not less than
ten percent of the Preferred Stock then outstanding. At such special meeting,
or, if no such special meeting shall have been called, then at the next annual
meeting of
<PAGE>
stockholders, the stockholders of the Corporation then entitled to vote shall
elect, voting as above provided, an entirely new Board of Directors, and the
term of office of the Directors in office at the time of such election shall
expire upon the election of their successors at such meeting; provided, however,
that nothing herein contained shall be construed to be a bar to the re-election
of any Director at such meeting. At all meetings of stockholders at which
holders of Preferred Stock shall be entitled to vote for Directors as a single
class, the holders of a majority of the outstanding shares of each class or
series of capital stock of the Corporation having the right to vote as a single
class shall be necessary to constitute a quorum, whether present in person or by
proxy, for the election by that class or series of its designated Directors. In
order to validate an election of Directors by stockholders voting as a class,
such Directors shall be elected by the vote of at least a plurality of shares
held by such stockholders present or represented at the meeting. At any such
meeting, the election of Directors by stockholders voting as a class shall be
valid notwithstanding that a quorum of other stockholders voting as one or more
classes may not be present or represented at such meeting, and if any
stockholders voting as a class shall elect Directors, the Directors so elected
shall be deemed to be Directors of the Corporation unless and until the other
stockholders entitled to vote as one or more classes shall elect their
Directors.
While class voting is in effect with respect to the Preferred Stock,
any Director elected by holders of Preferred Stock voting as a class may be
removed at any annual or special meeting, by vote of a majority of the
stockholders voting as a class who elected such Director, for any cause deemed
sufficient by such stockholders present at such meeting. In case any vacancy
shall occur among the Directors elected by such stockholders voting as a class,
such vacancy may be filled by the remaining Director so elected, or his
successor then in office, and the Director so elected to fill such vacancy shall
serve until the next meeting of stockholders for the election of Directors.
Such voting rights of the holders of Preferred Stock as a single
class, once effective, shall continue only until all arrears in dividends
(whether or not declared) on the Preferred Stock shall have been paid or
declared and set apart for payment at which time the right of the Preferred
Stock to vote as a single class for the election of Directors, as hereinabove
set forth, shall terminate. Upon such termination, a special meeting of the
stockholders of the Corporation then entitled to vote may be called by the
Chairman of the Board or the President, and shall be called by the Chairman of
the Board or the President or the Secretary of the Corporation if requested in
writing by the holders of record of not less than one percent of the common
stock then outstanding, and at such special meeting, or if no such special
meeting shall have been called then at the next annual meeting of the
stockholders, the stockholders of the Corporation then entitled to vote shall
elect an entirely new Board of Directors and the term of office of the Directors
in office at the time of such election shall expire upon the election of their
successors at such meeting; provided, however, that nothing herein contained
shall be construed to be a bar to the re-election of any such Director at such
meeting.
The consent of the holders of at least two-thirds of the number of
shares of Preferred Stock at the time outstanding, given in person or by proxy,
either in writing or at a meeting of stockholders at
<PAGE>
which the holders of the Preferred Stock shall vote separately as a class
without regard to series, the holders of shares of Series B Preferred Stock
being entitled to cast one vote per share thereon, shall be necessary for
effecting or validating:
(a) any change in the Certificate of Incorporation or certificate
supplemental thereto or By-laws of the Corporation which would materially
and adversely alter or change the preferences, privileges, rights or powers
given to the holders of the Preferred Stock, provided, that if one or more
but not all series of Preferred Stock at the time outstanding are so
affected, only the consent of the holders of at least two-thirds of each
series so affected, voting separately as a class, shall be required; or
(b) the issuance of any shares of any other class of stock of the
Corporation ranking prior to the Preferred Stock.
The term "ranking prior to the Preferred Stock" shall mean and include
all shares of stock of the Corporation in respect of which the rights of the
holders thereof as to the payment of dividends or as to distributions in the
event of a voluntary or an involuntary liquidation, dissolution or winding up of
the Corporation, are given preference over the rights of the holders of the
Preferred Stock.
8. Liquidation Preference. In the event of any liquidation,
----------------------
dissolution or winding up of the Corporation, voluntary or involuntary, the
holders of all shares of Series B Preferred Stock shall be entitled to be paid
in full out of the assets of the Corporation available for distribution to
stockholders, before any distribution of assets shall be made to the holders of
common stock or of any other shares of stock of the Corporation ranking as to
such distribution junior to the Series B Preferred Stock, an amount equal to
$100.00 per share plus an amount equal to any accrued and unpaid dividends
thereon to the date fixed for payment of such distribution. If, upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the amounts payable with respect to the Series B Preferred Stock
and any other shares of stock of the Corporation ranking as to any such
distribution on a parity with the Series B Preferred Stock are not paid in full,
the holders of the Series B Preferred Stock and of such other shares shall share
ratably in any such distribution of assets of the Corporation in proportion to
the full respective preferential amounts to which they are entitled. After
payment to the holders of the Series B Preferred Stock of the full preferential
amounts provided for in this Section 8, the holders of the Series B Preferred
Stock shall be entitled to no further participation in any distribution of
assets by the Corporation.
Consolidation or merger of the Corporation with or into another
corporation or corporations, or a sale, whether for cash, shares of stock,
securities or properties, of all or substantially all of the assets of the
Corporation, shall not be deemed or construed to be a liquidation, dissolution
or winding up of the Corporation within the meaning of this paragraph 8.
9. Limitation on Dividends on Junior Ranking Stock. So long as any
-----------------------------------------------
Series B Preferred Stock shall be outstanding, the Corporation shall not declare
any dividends on the common stock of the Corporation or any other stock of the
Corporation ranking as to dividends or distribution
<PAGE>
of assets junior to the Series B Preferred Stock (the common stock and any such
other stock being herein referred to as "Junior Stock"), or make any payment on
account of, or set apart money for, a sinking or other analogous fund for the
purchase, redemption or other retirement of any shares of Junior Stock, or make
any distribution in respect thereof, whether in cash or property or in
obligations or stock of the Corporation, other than Junior Stock (such
dividends, payments, setting apart and distributions being herein called "Junior
Stock Payments"), unless all of the conditions set forth in the following
subsections A and B shall exist at the date of such declaration in the case of
any such dividend, or the date of such setting apart in the case of any such
fund, or the date of such payment or distribution in the case of any other
Junior Stock Payment:
A. Full cumulative dividends shall have been paid or declared and
set apart for payment upon all outstanding shares of Preferred Stock other than
Junior Stock.
B. The Corporation shall not be in default or in arrears with respect
to any sinking or other analogous fund or any call for tenders obligation or
other agreement for the purchase, redemption or other retirement of any shares
of Preferred Stock other than Junior Stock.
<PAGE>
CUMULATIVE PARTICIPATING PREFERRED STOCK, SERIES E
of
BANKAMERICA CORPORATION
1. Designation. The designation of such series shall be "Cumulative
-----------
Participating Preferred Stock, Series E" (hereinafter referred to as the "Series
E Preferred Stock") and the number of shares constituting such series is seven
million (7,000,000). Such number of shares may be increased or decreased by
resolution of the Board of Directors or the Executive Committee of the Board of
Directors; provided, that no decrease shall reduce the number of shares of
--------
Series E Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series E
Preferred Stock.
2. Dividends. The holders of shares of Series E Preferred Stock, in
---------
preference to the holders of Common Stock, par value $1.5625 per share (the
"Common Stock"), of the Corporation, and of any other stock of the Corporation
ranking as to dividends or distribution of assets junior to the Series E
Preferred Stock (the Common Stock and any such other stock being herein referred
to as "Junior Stock"), shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on February 28, May 31, August 31 and
November 30 of each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series E Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1.00 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, plus 100 times the fair market value (as determined in good faith by
the Board of Directors of the Corporation, whose determination shall be
described in a statement filed with the Secretary of the Corporation and with
each transfer agent for the Series E Preferred Stock, and a brief summary of
which shall be mailed to each holder of Series E Preferred Stock) in cash of the
aggregate per share amount of all non-cash dividends or other distributions,
other than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series E Preferred Stock.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series E Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
<PAGE>
The Corporation shall declare a dividend or distribution on the Series
E Preferred Stock as provided in the preceding paragraph of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Series E Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
Dividends shall begin to accrue and be cumulative on outstanding
shares of Series E Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series E Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Each dividend shall be paid to the holders of record of shares of
Series E Preferred Stock as they appear on the stock register of the Corporation
on such record date, not exceeding 30 days preceding the payment date thereof,
as shall be fixed by the Board of Directors of the Corporation. Dividends on
account of arrears for any past Quarterly Dividend Payment Date may be declared
and paid at any time, without reference to any regular dividend payment date, to
holders of record on such date, not exceeding 45 days preceding the payment date
thereof, as may be fixed by the Board of Directors of the Corporation. If there
shall be outstanding shares of any other series of Preferred Stock ranking on a
parity as to dividends with the Series E Preferred Stock, the Corporation, in
making any dividend payment on account of arrears on the Series E Preferred
Stock or such other series of Preferred Stock, shall make payments ratably upon
all outstanding shares of Series E Preferred Stock and such other series of
Preferred Stock in proportion to the respective amounts of dividends in arrears
upon all such outstanding shares of Series E Preferred Stock and such other
series of Preferred Stock to the date of such dividend payment. No interest, or
sum of money in lieu of interest, shall be payable in respect of any dividend
payment or payments which may be in arrears.
3. Redemption. The Corporation, at its option, may redeem shares of
----------
the Series E Preferred Stock, as a whole or in part, at any time or from time to
time, at a per share redemption price equal to the sum of (a) all accrued and
unpaid dividends thereon to the date fixed for redemption and (b) the higher of
(i) 100 times the Purchase Price (as such term is defined in the Rights
Agreement, dated as of April 11, 1988, between the Corporation and Manufacturers
Hanover Trust Company of California (the "Rights Agreement") and as may be
adjusted from time to time pursuant thereto) of one-hundredth of a share of
Series E Preferred Stock in effect on the date of the notice of such redemption
referred to below, and (ii) the product of the current per share market price of
the Common Stock (as computed pursuant to Section 11(d)(i) of the Rights
Agreement) and the number of votes per share of Series E Preferred Stock that a
holder thereof is then entitled to on all matters submitted to a
<PAGE>
vote of the stockholders of the Corporation, in each case as of the date of the
notice of such redemption referred to below.
If the Corporation shall redeem shares of Series E Preferred Stock,
notice of such redemption shall be given by (i) publication (not less than 30
nor more than 60 days prior to the redemption date) at least once in a newspaper
printed in the English language and of general circulation in the City and
County of San Francisco, State of California (upon any secular day of the week)
and (ii) first class mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the redemption date, to each holder of record of the
shares to be redeemed, at such holder's address as the same appears on the stock
register of the Corporation. The failure to mail such notice to any particular
holder or any defect in such mailing shall not invalidate the redemption of any
shares the holders of which received notice as provided above. Each such notice
shall state: (1) the redemption date; (2) the number of shares of Series E
Preferred Stock to be redeemed and, if less than all the shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; (3) the redemption price; (4) the place or places where certificates for
such shares are to be surrendered for payment of the redemption price; and (5)
that dividends on the shares to be redeemed will cease to accrue on such
redemption date. Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in providing
money for the payment of the redemption price) dividends on the shares of the
Series E Preferred Stock so called for redemption shall cease to accrue, and
said shares shall no longer be deemed to be outstanding, and all rights of the
holders thereof as stockholders of the Corporation (except the right to receive
from the Corporation the redemption price) shall cease. Upon surrender in
accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such shares shall
be redeemed by the Corporation at the redemption price aforesaid. If less than
all the outstanding shares of Series E Preferred Stock are to be redeemed,
shares to be redeemed shall be selected by the Corporation from outstanding
shares of Series E Preferred Stock not previously called for redemption by lot
or pro rata (as nearly as may be) in any method determined by the Corporation in
its sole discretion to be equitable.
In no event shall the Corporation redeem less than all the outstanding
shares of Series E Preferred Stock pursuant to the first paragraph of this
Section 3 unless full cumulative dividends shall have been paid or declared and
set apart for payment upon all outstanding shares of Series E Preferred Stock
for all past Quarterly Dividend Payment Dates, and unless all matured
obligations of the Corporation with respect to all sinking funds, retirement
funds or purchase funds for all series of Preferred Stock then outstanding have
been met.
4. Shares to be Retired. All shares of Series E Preferred Stock
--------------------
redeemed by the Corporation shall be retired and cancelled and shall, upon the
making of all necessary filings with the Secretary of State of Delaware, be
restored to the status of authorized but unissued shares of Preferred Stock,
without designation as to series, and may thereafter be issued.
5. Conversion or Exchange. Subject to Section 8 below, the
----------------------
<PAGE>
holders of shares of Series E Preferred Stock shall not have any rights herein
to convert such shares into or exchange such shares for shares of any other
class or classes or of any other series of any class or classes of capital stock
of the Corporation.
6. Voting. Subject to the provision for adjustment hereinafter set
------
forth, each share of Series E Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the number of votes per share to which holders of shares of
Series E Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Except as otherwise provided herein, in the Certificate of
Incorporation, in any other Certificate of Designation creating a series of
Preferred Stock or any similar stock, or by law, the holders of shares of Series
E Preferred Stock and the holders of shares of Common Stock and any other
capital stock of the Corporation having general voting rights shall vote
together as a single class on all matters submitted to a vote of stockholders of
the Corporation.
In addition to the foregoing, whenever and as often as dividends
payable on any share or shares of the Preferred Stock at the time outstanding
shall be accumulated and unpaid in an amount equivalent to or exceeding six
quarterly dividends (whether or not declared and whether or not consecutive),
the holders of record of the Preferred Stock of all series shall thereafter have
the right, as a single class, to elect two directors, and, subject to the terms
of any outstanding series of Preferred Stock, the holders of record of the
Common Stock and the Series E Preferred Stock, as a single class, shall have the
right to elect the remaining authorized number of Directors. In any election by
the holders of record of the Preferred Stock of all series as a single class,
the holders of shares of Series E Preferred Stock shall be entitled to cast one
vote per share.
Upon the happening of the six dividend defaults hereinabove set forth,
a special meeting of stockholders of the Corporation then entitled to vote shall
be called by the Chairman of the Board or the President or the Secretary of the
Corporation, if requested in writing by the holders of record of not less than
ten percent of the Preferred Stock then outstanding. At such special meeting,
or, if no such special meeting shall have been called, then at the next annual
meeting of stockholders, the stockholders of the Corporation then entitled to
vote shall elect, voting as above provided, an entirely new Board of Directors,
and the term of office of the Directors in office at the time of such election
shall expire upon the election of their successors at such meeting; provided,
however, that nothing herein contained shall be construed to be a bar to the re-
election of any Director at such meeting. At all meetings of stockholders at
which holders of Preferred Stock shall be entitled to vote
<PAGE>
for Directors as a single class, the holders of a majority of the outstanding
shares of each class or series of capital stock of the Corporation having the
right to vote as a single class shall be necessary to constitute a quorum,
whether present in person or by proxy, for the election by that class or series
of its designated Directors. In order to validate an election of Directors by
stockholders voting as a class, such Directors shall be elected by the vote of
at least a plurality of shares held by such stockholders present or represented
at the meeting. At any such meeting, the election of Directors by stockholders
voting as a class shall be valid notwithstanding that a quorum of other
stockholders voting as one or more classes may not be present or represented at
such meeting, and if any stockholders voting as a class shall elect Directors,
the Directors so elected shall be deemed to be Directors of the Corporation
unless and until the other stockholders entitled to vote as one or more classes
shall elect their Directors.
While class voting is in effect with respect to the Preferred Stock,
any Director elected by holders of Preferred Stock voting as a class may be
removed at any annual or special meeting, by vote of a majority of the
stockholders voting as a class who elected such Director, for any cause deemed
sufficient by such stockholders present at such meeting. In case any vacancy
shall occur among the Directors elected by such stockholders voting as a class,
such vacancy may be filled by the remaining Director so elected, or his
successor then in office, and the Director so elected to fill such vacancy shall
serve until the next meeting of stockholders for the election of Directors.
Such voting rights of the holders of Preferred Stock as a single
class, once effective, shall continue only until all arrears in dividends
(whether or not declared) on the Preferred Stock shall have been paid or
declared and set apart for payment at which time the right of the Preferred
Stock to vote as a single class for the election of Directors, as hereinabove
set forth, shall terminate. Upon such termination, a special meeting of the
stockholders of the Corporation then entitled to vote may be called by the
Chairman of the Board or the President, and shall be called by the Chairman of
the Board or the President or the Secretary of the Corporation if requested in
writing by the holders of record of not less than one percent of the Common
Stock then outstanding, and at such special meeting, or if no such special
meeting shall have been called then at the next annual meeting of the
stockholders, the stockholders of the Corporation then entitled to vote shall
elect an entirely new Board of Directors and the term of office of the Directors
in office at the time of such election shall expire upon the election of their
successors at such meeting; provided, however, that nothing herein contained
shall be construed to be a bar to the re-election of any such Director at such
meeting.
The consent of the holders of at least two-thirds of the number of
shares of Preferred Stock at the time outstanding, given in person or by proxy,
either in writing or at a meeting of stockholders at which the holders of the
Preferred Stock shall vote separately as a class without regard to series, the
holders of shares of Series E Preferred Stock being entitled to cast one vote
per share thereon, shall be necessary for effecting or validating:
(a) any change in the Certificate of Incorporation or certificate
supplemental thereto or By-laws of the Corporation which
<PAGE>
would materially and adversely alter or change the preferences,
privileges, rights or powers given to the holders of the Preferred Stock,
provided, that if one or more but not all series of Preferred Stock at the
time outstanding are so affected, only the consent of the holders of at
least two-thirds of each series so affected, voting separately as a class,
shall be required; or
(b) the issuance of any shares of any other class of stock of the
Corporation ranking prior to the Preferred Stock.
The term "ranking prior to the Preferred Stock" shall mean and include
all shares of stock of the Corporation in respect of which the rights of the
holders thereof as to the payment of dividends or as to distributions in the
event of a voluntary or an involuntary liquidation, dissolution or winding up of
the Corporation, are given preference over the rights of the holders of the
Preferred Stock.
7. Liquidation Preference. In the event of any liquidation,
----------------------
dissolution or winding up of the Corporation, voluntary or involuntary, the
holders of all shares of Series E Preferred Stock shall be entitled to be paid
in full out of the assets of the Corporation available for distribution to
stockholders, before any distribution of assets shall be made to the holders of
Common Stock or of any other shares of stock of the Corporation ranking as to
such distribution junior to the Series E Preferred Stock, an amount equal to the
greater of (a) $100.00 per share plus an amount equal to any accrued and unpaid
dividends thereon to the date fixed for payment of such distribution, and (b) an
aggregate amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount to be distributed per share
to holders of shares of Common Stock. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series E Preferred Stock were entitled immediately prior to
such event under the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
If, upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the amounts payable with respect to the Series E
Preferred Stock and any other shares of stock of the Corporation ranking as to
any such distribution on a parity with the Series E Preferred Stock are not paid
in full, the holders of the Series E Preferred Stock and of such other shares
shall share ratably in any such distribution of assets of the Corporation in
proportion to the full respective preferential amounts to which they are
entitled.
Consolidation or merger of the Corporation with or into another
corporation or corporations, or a sale, whether for cash, shares of stock,
securities or properties, of all or substantially all of the assets of the
Corporation, shall not be deemed or construed to be a liquidation, dissolution
or winding up of the Corporation within the meaning of this paragraph 7.
<PAGE>
8. Consolidation, Merger, etc. In case the Corporation shall enter
---------------------------
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series E Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series E Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
9. Limitation on Dividends on Junior Ranking Stock. So long as any
-----------------------------------------------
Series E Preferred Stock shall be outstanding, the Corporation shall not declare
any dividends on Junior Stock, or make any payment on account of, or set apart
money for, a sinking or other analogous fund for the purchase, redemption or
other retirement of any shares of Junior Stock, or make any distribution in
respect thereof, whether in cash or property or in obligations or stock of the
Corporation, other than Junior Stock (such dividends, payments, setting apart
and distributions being herein called "Junior Stock Payments"), unless all of
the conditions set forth in the following subsections A and B shall exist at the
date of such declaration in the case of any such dividend, or the date of such
setting apart in the case of any such fund, or the date of such payment or
distribution in the case of any other Junior Stock Payment:
A. Full cumulative dividends shall have been paid or declared and set
apart for payment upon all outstanding shares of Preferred Stock other than
Junior Stock.
B. The Corporation shall not be in default or in arrears with respect
to any sinking or other analogous fund or any call for tenders obligation or
other agreement for the purchase, redemption or other retirement of any shares
of Preferred Stock other than Junior Stock.
<PAGE>
8.16% CUMULATIVE PREFERRED STOCK, SERIES L
of
BANKAMERICA CORPORATION
1. Designation. The designation of such series shall be 8.16%
-----------
Cumulative Preferred Stock, Series L (hereinafter referred to as the "Series L
Preferred Stock") and the number of shares constituting such series is eight
hundred thousand (800,000). Shares of Series L Preferred Stock shall have a
stated value of $500 per share. The number of authorized shares of Series L
Preferred Stock may be reduced by further resolution duly adopted by the Board
of Directors of the Corporation or the Executive Committee of the Board of
Directors and by the filing of a certificate pursuant to the provisions of the
General Corporation Law of the State of Delaware stating that such reduction has
been so authorized, but the number of authorized shares of Series L Preferred
Stock shall not be increased.
2. Dividends. Quarterly Dividend Periods shall commence on March 1,
---------
June 1, September 1 and December 1 in each year and shall end on and include the
day next preceding the first day of the next Quarterly Dividend Period. Such
dividends shall be cumulative from the respective dates of original issue of
shares of Series L Preferred Stock and shall be payable, when and as declared by
the Board of Directors, on February 28, May 31, August 31 and November 30 of
each year, commencing August 31, 1992. Each such dividend shall be paid to the
holders of record of shares of Series L Preferred Stock as they appear on the
stock register of the Corporation on such record date, not exceeding 30 days
preceding the payment date thereof, as shall be fixed by the Board of Directors
of the Corporation. Dividends on account of arrears for any past Dividend
Periods may be declared and paid at any time, without reference to any regular
dividend payment date, to holders of record on such date, not exceeding 45 days
preceding the payment date thereof, as may be fixed by the Board of Directors of
the Corporation. If there shall be outstanding shares of any other series of
Preferred Stock ranking on a parity as to dividends with the Series L Preferred
Stock, the Corporation, in making any dividend payment on account of arrears on
the Series L Preferred Stock or such other series of Preferred Stock, shall make
payments ratably upon all outstanding shares of Series L Preferred Stock and
such other series of Preferred Stock in proportion to the respective amounts of
dividends in arrears upon all such outstanding shares of Series L Preferred
Stock and such other series of Preferred Stock to the date of such dividend
payment. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments which may be in arrears.
The amount of dividends per share payable for each Quarterly Dividend
Period shall be computed by dividing the Dividend Rate (as defined below) for
such Dividend Period by four and applying such rate against the stated value per
share of the Series L Preferred Stock. Dividends payable on the Series L
Preferred Stock for any period less than a full Quarterly Dividend Period shall
be computed on the basis of a 360-day year consisting of twelve 30-day months.
3. Dividend Rate. The Dividend Rate on the shares of Series L
-------------
Preferred Stock for the period (the "Initial Dividend Period") from the
respective dates of original issue thereof to and including
<PAGE>
August 31, 1992, and for each Quarterly Dividend Period thereafter shall be
8.16% per annum.
4. Redemption. The Corporation, at its option, may, with the prior
----------
consent of the Board of Governors of the Federal Reserve System, if required,
redeem shares of the Series L Preferred Stock, as a whole or in part, at any
time or from time to time on or after July 13, 1997, at $500 per share, plus
accrued and unpaid dividends thereon to the date fixed for redemption.
If the Corporation shall redeem shares of Series L Preferred Stock
pursuant to this Section 4, notice of such redemption shall be given by
publication (not less than 40 nor more than 90 days prior to the redemption
date) at least once in a newspaper printed in the English language and of
general circulation in the City and County of San Francisco, State of California
(upon any secular day of the week) stating such election on the part of the
Corporation and that on the redemption date there will become due and payable
upon each of the shares to be redeemed, at the place or places specified in such
notice, the applicable redemption price therein specified. A similar notice
shall be mailed by first class mail, postage prepaid, not less than 40 nor more
than 90 days prior to the redemption date, to each holder of record of the
shares to be redeemed, at such holder's address as the same appears on the stock
register of the Corporation. Each such notice shall state: (a) the redemption
date; (b) the number of shares of Series L Preferred Stock to be redeemed and,
if less than all the shares held by such holder are to be redeemed, the number
of such shares to be redeemed from such holder; (c) the redemption price; (d)
the place or places where certificates for such shares are to be surrendered for
payment of the redemption price; and (e) that dividends on the shares to be
redeemed will cease to accrue on such redemption date. Notice having been
mailed as aforesaid, from and after the redemption date (unless default shall be
made by the Corporation in providing money for the payment of the redemption
price) dividends on the shares of the Series L Preferred Stock so called for
redemption shall cease to accrue, and said shares shall no longer be deemed to
be outstanding, and all rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the Corporation the redemption
price) shall cease. Upon surrender in accordance with said notice of the
certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors of the Corporation shall so require and the
notice shall so state), such shares shall be redeemed by the Cor poration at the
redemption price aforesaid. If less than all the outstanding shares of Series L
Preferred Stock are to be redeemed, shares to be redeemed shall be selected by
the Corporation from outstanding shares of Series L Preferred Stock not
previously called for redemption by lot or pro rata (as nearly as may be) in any
method determined by the Corporation in its sole discretion to be equitable.
In no event shall the Corporation redeem or purchase any shares of
Series L Preferred Stock pursuant to this Section 4 unless full cumulative
dividends shall have been paid or declared and set apart for payment upon all
outstanding shares of Series L Preferred Stock for all past Dividend Periods,
and unless all matured obligations of the Corporation with respect to all
sinking funds, retirement funds or purchase funds for all series of Preferred
Stock then outstanding have been met.
5. Shares to be Retired. All shares of Series L Preferred
--------------------
<PAGE>
Stock redeemed by the Corporation shall be retired and cancelled and shall be
restored to the status of authorized but unissued shares of Preferred Stock,
without designation as to series, and may thereafter be issued.
6. Conversion or Exchange. The holders of shares of Series L
----------------------
Preferred Stock shall not have any rights herein to convert such shares into or
exchange such shares for shares of any other class or classes or of any other
series of any class or classes of capital stock of the Corporation.
7. Voting. Except as hereinafter in this Section 7 expressly
------
provided or as otherwise required by law, the Series L Preferred Stock shall
have no voting power.
Whenever and as often as dividends payable on any share or shares of
the Preferred Stock at the time outstanding shall be accumulated and unpaid in
an amount equivalent to or exceeding six quarterly dividends (whether or not
declared and whether or not consecutive), the holders of record of the Preferred
Stock of all series shall thereafter have the right, as a single class, to elect
two directors, and, subject to the terms of any outstanding series of Preferred
Stock, the holders of record of the common stock, as a single class, shall have
the right to elect the remain ing authorized number of Directors. In any such
election, the holders of shares of Series L Preferred Stock shall be entitled to
cast one vote per share.
Upon the happening of the six dividend defaults hereinabove set forth,
a special meeting of stockholders of the Corporation then entitled to vote shall
be called by the Chairman of the Board or the President or the Secretary of the
Corporation, if requested in writing by the holders of record of not less than
ten percent of the Preferred Stock then outstanding. At such special meeting,
or, if no such special meeting shall have been called, then at the next annual
meeting of stockholders, the stockholders of the Corporation then entitled to
vote shall elect, voting as above provided, an entirely new Board of Directors,
and the term of office of the Directors in office at the time of such election
shall expire upon the election of their successors at such meeting; provided,
however, that nothing herein contained shall be construed to be a bar to the
reelection of any Director at such meeting. At all meetings of stockholders at
which holders of Preferred Stock shall be entitled to vote for Directors as a
single class, the holders of a majority of the outstanding shares of each class
or series of capital stock of the Corporation having the right to vote as a
single class shall be necessary to constitute a quorum, whether present in
person or by proxy, for the election by that class or series of its designated
Directors. In order to validate an election of Directors by stockholders voting
as a class, such Directors shall be elected by the vote of at least a plurality
of shares held by such stockholders present or represented at the meeting. At
any such meeting, the election of Directors by stockholders voting as a class
shall be valid notwithstanding that a quorum of other stockholders voting as one
or more classes may not be present or represented at such meeting, and if any
stockholders voting as a class shall elect Directors, the Directors so elected
shall be deemed to be Directors of the Corporation unless and until the other
stockholders entitled to vote as one or more classes shall elect their
Directors.
While class voting is in effect with respect to the Preferred
<PAGE>
Stock, any Director elected by holders of Preferred Stock voting as a class may
be removed at any annual or special meeting, by vote of a majority of the
stockholders voting as a class who elected such Director, for any cause deemed
sufficient by such stockholders present at such meeting. In case any vacancy
shall occur among the Directors elected by such stockholders voting as a class,
such vacancy may be filled by the remaining Director so elected, or his
successor then in office, and the Director so elected to fill such vacancy shall
serve until the next meeting of stockholders for the election of Directors.
Such voting rights of the holders of Preferred Stock as a single
class, once effective, shall continue only until all arrears in dividends
(whether or not declared) on the Preferred Stock shall have been paid or
declared and set apart for payment at which time the right of the Preferred
Stock to vote as a single class for the election of Directors, as hereinabove
set forth, shall terminate. Upon such termination, a special meeting of the
stockholders of the Corporation then entitled to vote may be called by the
Chairman of the Board or the President, and shall be called by the Chairman of
the Board or the President or the Secretary of the Corporation if requested in
writing by the holders of record of not less than one percent of the common
stock then outstanding, and at such special meeting, or if no such special
meeting shall have been called then at the next annual meeting of the
stockholders, the stockholders of the Corporation then entitled to vote shall
elect an entirely new Board of Directors and the term of office of the Directors
in office at the time of such election shall expire upon the election of their
successors at such meeting; provided, however, that nothing herein contained
shall be construed to be a bar to the reelection of any such Director at such
meeting.
The consent of the holders of at least two-thirds of the number of
shares of Preferred Stock at the time outstanding, given in person or by proxy,
either in writing or at a meeting of stockholders at which the holders of the
Preferred Stock shall vote separately as a class without regard to series, the
holders of shares of Series L Preferred Stock being entitled to cast one vote
per share thereon, shall be necessary for effecting or validating:
(i) any change in the Certificate of Incorporation or certificate
supplemental thereto or By-laws of the Corporation which would materially
and adversely alter or change the preferences, privileges, rights or powers
given to the holders of the Preferred Stock, provided, that if one or more
but not all series of Preferred Stock at the time outstanding are so
affected, only the consent of the holders of at least two-thirds of each
series so affected, voting separately as a class, shall be required; or
(ii) the issuance of any shares of any other class of stock of the
Corporation ranking prior to the Preferred Stock.
The term "ranking prior to the Preferred Stock" shall mean and include
all shares of stock of the Corporation in respect of which the rights of the
holders thereof as to the payment of dividends or as to distributions in the
event of a voluntary or an involuntary liquidation, dissolution or winding up of
the Corporation, are given preference over the rights of the holders of the
Preferred Stock.
<PAGE>
8. Liquidation Preference. In the event of any liquidation,
----------------------
dissolution or winding up of the Corporation, voluntary or involuntary, the
holders of all shares of Series L Preferred Stock shall be entitled to be paid
in full out of the assets of the Corporation available for distribution to
stockholders, before any distribution of assets shall be made to the holders of
common stock or of any other shares of stock of the Corporation ranking as to
such distribution junior to the Series L Preferred Stock, an amount equal to
$500 per share plus an amount equal to any accrued and unpaid dividends thereon
to the date fixed for payment of such distribution. If, upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
amounts payable with respect to the Series L Preferred Stock and any other
shares of stock of the Corporation ranking as to any such distribution on a
parity with the Series L Preferred Stock are not paid in full, the holders of
the Series L Preferred Stock and of such other shares shall share ratably in any
such distribution of assets of the Corporation in proportion to the full
respective preferential amounts to which they are entitled. After payment to
the holders of the Series L Preferred Stock of the full preferential amounts
provided for in this Section 8, the holders of the Series L Preferred Stock
shall be entitled to no further participation in any distribution of assets by
the Corporation.
Consolidation or merger of the Corporation with or into another
corporation or corporations, or a sale, whether for cash, shares of stock,
securities or properties, of all or substantially all of the assets of the
Corporation, shall not be deemed or construed to be a liquidation, dissolution
or winding up of the Corporation within the meaning of this paragraph 8.
9. Limitation on Dividends on Junior Ranking Stock. So long as any
-----------------------------------------------
Series L Preferred Stock shall be outstanding, the Corporation shall not declare
any dividends on the common stock of the Corporation or any other stock of the
Corporation ranking as to dividends or distribution of assets junior to the
Series L Preferred Stock (the common stock and any such other stock being herein
referred to as "Junior Stock"), or make any payment on account of, or set apart
money for, a sinking or other analogous fund for the purchase, redemption or
other retirement of any shares of Junior Stock, or make any distribution in
respect thereof, whether in cash or property or in obligations or stock of the
Corporation, other than Junior Stock (such dividends, payments, setting apart
and distributions being herein called "Junior Stock Payments"), unless all of
the conditions set forth in the following subsections A and B shall exist at the
date of such declaration in the case of any such dividend, or the date of such
setting apart in the case of any such fund, or the date of such payment or
distribution in the case of any other Junior Stock Payment:
A. Full cumulative dividends shall have been paid or declared and
set apart for payment upon all outstanding shares of Preferred Stock other than
Junior Stock.
B. The Corporation shall not be in default or in arrears with respect
to any sinking or other analogous fund or any call for tenders obligation or
other agreement for the purchase, redemption or other retirement of any shares
of Preferred Stock other than Junior Stock.
<PAGE>
7 7/8% CUMULATIVE PREFERRED STOCK, SERIES M
of
BANKAMERICA CORPORATION
1. Designation. The designation of such series shall be 7 7/8%
-----------
Cumulative Preferred Stock, Series M (hereinafter referred to as the "Series M
Preferred Stock") and the number of shares constituting such series is seven
hundred thousand (700,000). Shares of Series M Preferred Stock shall have a
stated value of $500 per share. The number of authorized shares of Series M
Preferred Stock may be reduced by further resolution duly adopted by the Board
of Directors of the Corporation or the Executive Committee of the Board of
Directors and by the filing of a certificate pursuant to the provisions of the
General Corporation Law of the State of Delaware stating that such reduction has
been so authorized, but the number of authorized shares of Series M Preferred
Stock shall not be increased.
2. Dividends. Quarterly Dividend Periods shall commence on March 1,
---------
June 1, September 1 and December 1 in each year and shall end on and include the
day next preceding the first day of the next Quarterly Dividend Period. Such
dividends shall be cumulative from the respective dates of original issue of
shares of Series M Preferred Stock and shall be payable, when and as declared by
the Board of Directors, on February 28, May 31, August 31 and November 30 of
each year, commencing November 30, 1992. Each such dividend shall be paid to
the holders of record of shares of Series M Preferred Stock as they appear on
the stock register of the Corporation on such record date, not exceeding 30 days
preceding the payment date thereof, as shall be fixed by the Board of Directors
of the Corporation. Dividends on account of arrears for any past Dividend
Periods may be declared and paid at any time, without reference to any regular
dividend payment date, to holders of record on such date, not exceeding 45 days
preceding the payment date thereof, as may be fixed by the Board of Directors of
the Corporation. If there shall be outstanding shares of any other series of
Preferred Stock ranking on a parity as to dividends with the Series M Preferred
Stock, the Corporation, in making any dividend payment on account of arrears on
the Series M Preferred Stock or such other series of Preferred Stock, shall make
payments ratably upon all outstanding shares of Series M Preferred Stock and
such other series of Preferred Stock in proportion to the respective amounts of
dividends in arrears upon all such outstanding shares of Series M Preferred
Stock and such other series of Preferred Stock to the date of such dividend
payment. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments which may be in arrears.
The amount of dividends per share payable for each Quarterly Dividend
Period shall be computed by dividing the Dividend Rate (as defined below) for
such Dividend Period by four and applying such rate against the stated value per
share of the Series M Preferred Stock. Dividends payable on the Series M
Preferred Stock for any period less than a full Quarterly Dividend Period shall
be computed on the basis of a 360-day year consisting of twelve 30-day months.
3. Dividend Rate. The Dividend Rate on the shares of Series M
-------------
Preferred Stock for the period (the "Initial Dividend Period") from the
respective dates of original issue thereof to and including November 30,
<PAGE>
1992, and for each Quarterly Dividend Period thereafter shall be 7 7/8% per
annum.
4. Redemption. The Corporation, at its option, may, with the prior
----------
consent of the Board of Governors of the Federal Reserve System, if required,
redeem shares of the Series M Preferred Stock, as a whole or in part, at any
time or from time to time on or after September 30, 1997, at $500 per share,
plus accrued and unpaid dividends thereon to the date fixed for redemption.
If the Corporation shall redeem shares of Series M Preferred Stock
pursuant to this Section 4, notice of such redemption shall be given by
publication (not less than 40 nor more than 90 days prior to the redemption
date) at least once in a newspaper printed in the English language and of
general circulation in the City and County of San Francisco, State of California
(upon any secular day of the week) stating such election on the part of the
Corporation and that on the redemption date there will become due and payable
upon each of the shares to be redeemed, at the place or places specified in such
notice, the applicable redemption price therein specified. A similar notice
shall be mailed by first class mail, postage prepaid, not less than 40 nor more
than 90 days prior to the redemption date, to each holder of record of the
shares to be redeemed, at such holder's address as the same appears on the stock
register of the Corporation. Each such notice shall state: (a) the redemption
date; (b) the number of shares of Series M Preferred Stock to be redeemed and,
if less than all the shares held by such holder are to be redeemed, the number
of such shares to be redeemed from such holder; (c) the redemption price; (d)
the place or places where certificates for such shares are to be surrendered for
payment of the redemption price; and (e) that dividends on the shares to be
redeemed will cease to accrue on such redemption date. Notice having been
mailed as aforesaid, from and after the redemption date (unless default shall be
made by the Corporation in providing money for the payment of the redemption
price) dividends on the shares of the Series M Preferred Stock so called for
redemption shall cease to accrue, and said shares shall no longer be deemed to
be outstanding, and all rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the Corporation the redemption
price) shall cease. Upon surrender in accordance with said notice of the
certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors of the Corporation shall so require and the
notice shall so state), such shares shall be redeemed by the Cor poration at the
redemption price aforesaid. If less than all the outstanding shares of Series M
Preferred Stock are to be redeemed, shares to be redeemed shall be selected by
the Corporation from outstanding shares of Series M Preferred Stock not
previously called for redemption by lot or pro rata (as nearly as may be) in any
method determined by the Corporation in its sole discretion to be equitable.
In no event shall the Corporation redeem or purchase any shares of
Series M Preferred Stock pursuant to this Section 4 unless full cumulative
dividends shall have been paid or declared and set apart for payment upon all
outstanding shares of Series M Preferred Stock for all past Dividend Periods,
and unless all matured obligations of the Corporation with respect to all
sinking funds, retirement funds or purchase funds for all series of Preferred
Stock then outstanding have been met.
5. Shares to be Retired. All shares of Series M Preferred
--------------------
<PAGE>
Stock redeemed by the Corporation shall be retired and cancelled and shall be
restored to the status of authorized but unissued shares of Preferred Stock,
without designation as to series, and may thereafter be issued.
6. Conversion or Exchange. The holders of shares of Series M
----------------------
Preferred Stock shall not have any rights herein to convert such shares into or
exchange such shares for shares of any other class or classes or of any other
series of any class or classes of capital stock of the Corporation.
7. Voting. Except as hereinafter in this Section 7 expressly
------
provided or as otherwise required by law, the Series M Preferred Stock shall
have no voting power.
Whenever and as often as dividends payable on any share or shares of
the Preferred Stock at the time outstanding shall be accumulated and unpaid in
an amount equivalent to or exceeding six quarterly dividends (whether or not
declared and whether or not consecutive), the holders of record of the Preferred
Stock of all series shall thereafter have the right, as a single class, to elect
two directors, and, subject to the terms of any outstanding series of Preferred
Stock, the holders of record of the common stock, as a single class, shall have
the right to elect the remain ing authorized number of Directors. In any such
election, the holders of shares of Series M Preferred Stock shall be entitled to
cast one vote per share.
Upon the happening of the six dividend defaults hereinabove set forth,
a special meeting of stockholders of the Corporation then entitled to vote shall
be called by the Chairman of the Board or the President or the Secretary of the
Corporation, if requested in writing by the holders of record of not less than
ten percent of the Preferred Stock then outstanding. At such special meeting,
or, if no such special meeting shall have been called, then at the next annual
meeting of stockholders, the stockholders of the Corporation then entitled to
vote shall elect, voting as above provided, an entirely new Board of Directors,
and the term of office of the Directors in office at the time of such election
shall expire upon the election of their successors at such meeting; provided,
however, that nothing herein contained shall be construed to be a bar to the
reelection of any Director at such meeting. At all meetings of stockholders at
which holders of Preferred Stock shall be entitled to vote for Directors as a
single class, the holders of a majority of the outstanding shares of each class
or series of capital stock of the Corporation having the right to vote as a
single class shall be necessary to constitute a quorum, whether present in
person or by proxy, for the election by that class or series of its designated
Directors. In order to validate an election of Directors by stockholders voting
as a class, such Directors shall be elected by the vote of at least a plurality
of shares held by such stockholders present or represented at the meeting. At
any such meeting, the election of Directors by stockholders voting as a class
shall be valid notwithstanding that a quorum of other stockholders voting as one
or more classes may not be present or represented at such meeting, and if any
stockholders voting as a class shall elect Directors, the Directors so elected
shall be deemed to be Directors of the Corporation unless and until the other
stockholders entitled to vote as one or more classes shall elect their
Directors.
While class voting is in effect with respect to the Preferred
<PAGE>
Stock, any Director elected by holders of Preferred Stock voting as a class may
be removed at any annual or special meeting, by vote of a majority of the
stockholders voting as a class who elected such Director, for any cause deemed
sufficient by such stockholders present at such meeting. In case any vacancy
shall occur among the Directors elected by such stockholders voting as a class,
such vacancy may be filled by the remaining Director so elected, or his
successor then in office, and the Director so elected to fill such vacancy shall
serve until the next meeting of stockholders for the election of Directors.
Such voting rights of the holders of Preferred Stock as a single
class, once effective, shall continue only until all arrears in dividends
(whether or not declared) on the Preferred Stock shall have been paid or
declared and set apart for payment at which time the right of the Preferred
Stock to vote as a single class for the election of Directors, as hereinabove
set forth, shall terminate. Upon such termination, a special meeting of the
stockholders of the Corporation then entitled to vote may be called by the
Chairman of the Board or the President, and shall be called by the Chairman of
the Board or the President or the Secretary of the Corporation if requested in
writing by the holders of record of not less than one percent of the common
stock then outstanding, and at such special meeting, or if no such special
meeting shall have been called then at the next annual meeting of the
stockholders, the stockholders of the Corporation then entitled to vote shall
elect an entirely new Board of Directors and the term of office of the Directors
in office at the time of such election shall expire upon the election of their
successors at such meeting; provided, however, that nothing herein contained
shall be construed to be a bar to the reelection of any such Director at such
meeting.
The consent of the holders of at least two-thirds of the number of
shares of Preferred Stock at the time outstanding, given in person or by proxy,
either in writing or at a meeting of stockholders at which the holders of the
Preferred Stock shall vote separately as a class without regard to series, the
holders of shares of Series M Preferred Stock being entitled to cast one vote
per share thereon, shall be necessary for effecting or validating:
(i) any change in the Certificate of Incorporation or certificate
supplemental thereto or By-laws of the Corporation which would materially
and adversely alter or change the preferences, privileges, rights or powers
given to the holders of the Preferred Stock, provided, that if one or more
but not all series of Preferred Stock at the time outstanding are so
affected, only the consent of the holders of at least two-thirds of each
series so affected, voting separately as a class, shall be required; or
(ii) the issuance of any shares of any other class of stock of the
Corporation ranking prior to the Preferred Stock.
The term "ranking prior to the Preferred Stock" shall mean and include
all shares of stock of the Corporation in respect of which the rights of the
holders thereof as to the payment of dividends or as to distributions in the
event of a voluntary or an involuntary liquidation, dissolution or winding up of
the Corporation, are given preference over the rights of the holders of the
Preferred Stock.
<PAGE>
8. Liquidation Preference. In the event of any liquidation,
----------------------
dissolution or winding up of the Corporation, voluntary or involuntary, the
holders of all shares of Series M Preferred Stock shall be entitled to be paid
in full out of the assets of the Corporation available for distribution to
stockholders, before any distribution of assets shall be made to the holders of
common stock or of any other shares of stock of the Corporation ranking as to
such distribution junior to the Series M Preferred Stock, an amount equal to
$500 per share plus an amount equal to any accrued and unpaid dividends thereon
to the date fixed for payment of such distribution. If, upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
amounts payable with respect to the Series M Preferred Stock and any other
shares of stock of the Corporation ranking as to any such distribution on a
parity with the Series M Preferred Stock are not paid in full, the holders of
the Series M Preferred Stock and of such other shares shall share ratably in any
such distribution of assets of the Corporation in proportion to the full
respective preferential amounts to which they are entitled. After payment to
the holders of the Series M Preferred Stock of the full preferential amounts
provided for in this Section 8, the holders of the Series M Preferred Stock
shall be entitled to no further participation in any distribution of assets by
the Corporation.
Consolidation or merger of the Corporation with or into another
corporation or corporations, or a sale, whether for cash, shares of stock,
securities or properties, of all or substantially all of the assets of the
Corporation, shall not be deemed or construed to be a liquidation, dissolution
or winding up of the Corporation within the meaning of this paragraph 8.
9. Limitation on Dividends on Junior Ranking Stock. So long as any
-----------------------------------------------
Series M Preferred Stock shall be outstanding, the Corporation shall not declare
any dividends on the common stock of the Corporation or any other stock of the
Corporation ranking as to dividends or distribution of assets junior to the
Series M Preferred Stock (the common stock and any such other stock being herein
referred to as "Junior Stock"), or make any payment on account of, or set apart
money for, a sinking or other analogous fund for the purchase, redemption or
other retirement of any shares of Junior Stock, or make any distribution in
respect thereof, whether in cash or property or in obligations or stock of the
Corporation, other than Junior Stock (such dividends, payments, setting apart
and distributions being herein called "Junior Stock Payments"), unless all of
the conditions set forth in the following subsections A and B shall exist at the
date of such declaration in the case of any such dividend, or the date of such
setting apart in the case of any such fund, or the date of such payment or
distribution in the case of any other Junior Stock Payment:
A. Full cumulative dividends shall have been paid or declared and
set apart for payment upon all outstanding shares of Preferred Stock other than
Junior Stock.
B. The Corporation shall not be in default or in arrears with respect
to any sinking or other analogous fund or any call for tenders obligation or
other agreement for the purchase, redemption or other retirement of any shares
of Preferred Stock other than Junior Stock.
<PAGE>
8 1/2% CUMULATIVE PREFERRED STOCK, SERIES N
of
BANKAMERICA CORPORATION
1. Designation. The designation of such series shall be 8 1/2%
-----------
Cumulative Preferred Stock, Series N (hereinafter referred to as the "Series N
Preferred Stock") and the number of shares constituting such series is four
hundred seventy-five thousand (475,000). Shares of Series N Preferred Stock
shall have a stated value of $500 per share. The number of authorized shares of
Series N Preferred Stock may be reduced by further resolution duly adopted by
the Board of Directors of the Corporation or the Executive Committee of the
Board of Directors and by the filing of a certificate pursuant to the provisions
of the General Corporation Law of the State of Delaware stating that such
reduction has been so authorized, but the number of authorized shares of Series
N Preferred Stock shall not be increased.
2. Dividends. Quarterly Dividend Periods shall commence on March 1,
---------
June 1, September 1 and December 1 in each year and shall end on and include the
day next preceding the first day of the next Quarterly Dividend Period. Such
dividends shall be cumulative from the respective dates of original issue of
shares of Series N Preferred Stock and shall be payable, when and as declared by
the Board of Directors, on February 28, May 31, August 31 and November 30 of
each year, commencing February 28, 1993. Each such dividend shall be paid to
the holders of record of shares of Series N Preferred Stock as they appear on
the stock register of the Corporation on such record date, not exceeding 30 days
preceding the payment date thereof, as shall be fixed by the Board of Directors
of the Corporation. Dividends on account of arrears for any past Dividend
Periods may be declared and paid at any time, without reference to any regular
dividend payment date, to holders of record on such date, not exceeding 45 days
preceding the payment date thereof, as may be fixed by the Board of Directors of
the Corporation. If there shall be outstanding shares of any other series of
Preferred Stock ranking on a parity as to dividends with the Series N Preferred
Stock, the Corporation, in making any dividend payment on account of arrears on
the Series N Preferred Stock or such other series of Preferred Stock, shall make
payments ratably upon all outstanding shares of Series N Preferred Stock and
such other series of Preferred Stock in proportion to the respective amounts of
dividends in arrears upon all such outstanding shares of Series N Preferred
Stock and such other series of Preferred Stock to the date of such dividend
payment. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments which may be in arrears.
The amount of dividends per share payable for each Quarterly Dividend
Period shall be computed by dividing the Dividend Rate (as defined below) for
such Dividend Period by four and applying such rate against the stated value per
share of the Series N Preferred Stock. Dividends payable on the Series N
Preferred Stock for any period less than a full Quarterly Dividend Period shall
be computed on the basis of a 360-day year consisting of twelve 30-day months.
3. Dividend Rate. The Dividend Rate on the shares of Series N
-------------
Preferred Stock for the period (the "Initial Dividend Period") from the
<PAGE>
respective dates of original issue thereof to and including February 28, 1993,
and for each Quarterly Dividend Period thereafter shall be 8 1/2% per annum.
4. Redemption. The Corporation, at its option, may, with the prior
----------
consent of the Board of Governors of the Federal Reserve System, if required,
redeem shares of the Series N Preferred Stock, as a whole or in part, at any
time or from time to time on or after December 15, 1997, at $500 per share, plus
accrued and unpaid dividends thereon to the date fixed for redemption.
If the Corporation shall redeem shares of Series N Preferred Stock
pursuant to this Section 4, notice of such redemption shall be given by
publication (not less than 40 nor more than 90 days prior to the redemption
date) at least once in a newspaper printed in the English language and of
general circulation in the City and County of San Francisco, State of California
(upon any secular day of the week) stating such election on the part of the
Corporation and that on the redemption date there will become due and payable
upon each of the shares to be redeemed, at the place or places specified in such
notice, the applicable redemption price therein specified. A similar notice
shall be mailed by first class mail, postage prepaid, not less than 40 nor more
than 90 days prior to the redemption date, to each holder of record of the
shares to be redeemed, at such holder's address as the same appears on the stock
register of the Corporation. Each such notice shall state: (a) the redemption
date; (b) the number of shares of Series N Preferred Stock to be redeemed and,
if less than all the shares held by such holder are to be redeemed, the number
of such shares to be redeemed from such holder; (c) the redemption price; (d)
the place or places where certificates for such shares are to be surrendered for
payment of the redemption price; and (e) that dividends on the shares to be
redeemed will cease to accrue on such redemption date. Notice having been
mailed as aforesaid, from and after the redemption date (unless default shall be
made by the Corporation in providing money for the payment of the redemption
price) dividends on the shares of the Series N Preferred Stock so called for
redemption shall cease to accrue, and said shares shall no longer be deemed to
be outstanding, and all rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the Corporation the redemption
price) shall cease. Upon surrender in accordance with said notice of the
certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors of the Corporation shall so require and the
notice shall so state), such shares shall be redeemed by the Cor poration at the
redemption price aforesaid. If less than all the outstanding shares of Series N
Preferred Stock are to be redeemed, shares to be redeemed shall be selected by
the Corporation from outstanding shares of Series N Preferred Stock not
previously called for redemption by lot or pro rata (as nearly as may be) in any
method determined by the Corporation in its sole discretion to be equitable.
In no event shall the Corporation redeem or purchase any shares of
Series N Preferred Stock pursuant to this Section 4 unless full cumulative
dividends shall have been paid or declared and set apart for payment upon all
outstanding shares of Series N Preferred Stock for all past Dividend Periods,
and unless all matured obligations of the Corporation with respect to all
sinking funds, retirement funds or purchase
<PAGE>
funds for all series of Preferred Stock then outstanding have been met.
5. Shares to be Retired. All shares of Series N Preferred Stock
--------------------
redeemed by the Corporation shall be retired and cancelled and shall be restored
to the status of authorized but unissued shares of Preferred Stock, without
designation as to series, and may thereafter be issued.
6. Conversion or Exchange. The holders of shares of Series N
----------------------
Preferred Stock shall not have any rights herein to convert such shares into or
exchange such shares for shares of any other class or classes or of any other
series of any class or classes of capital stock of the Corporation.
7. Voting. Except as hereinafter in this Section 7 expressly
------
provided or as otherwise required by law, the Series N Preferred Stock shall
have no voting power.
Whenever and as often as dividends payable on any share or shares of
the Preferred Stock at the time outstanding shall be accumulated and unpaid in
an amount equivalent to or exceeding six quarterly dividends (whether or not
declared and whether or not consecutive), the holders of record of the Preferred
Stock of all series shall thereafter have the right, as a single class, to elect
two directors, and, subject to the terms of any outstanding series of Preferred
Stock, the holders of record of the common stock, as a single class, shall have
the right to elect the remain ing authorized number of Directors. In any such
election, the holders of shares of Series N Preferred Stock shall be entitled to
cast one vote per share.
Upon the happening of the six dividend defaults hereinabove set forth,
a special meeting of stockholders of the Corporation then entitled to vote shall
be called by the Chairman of the Board or the President or the Secretary of the
Corporation, if requested in writing by the holders of record of not less than
ten percent of the Preferred Stock then outstanding. At such special meeting,
or, if no such special meeting shall have been called, then at the next annual
meeting of stockholders, the stockholders of the Corporation then entitled to
vote shall elect, voting as above provided, an entirely new Board of Directors,
and the term of office of the Directors in office at the time of such election
shall expire upon the election of their successors at such meeting; provided,
however, that nothing herein contained shall be construed to be a bar to the
reelection of any Director at such meeting. At all meetings of stockholders at
which holders of Preferred Stock shall be entitled to vote for Directors as a
single class, the holders of a majority of the outstanding shares of each class
or series of capital stock of the Corporation having the right to vote as a
single class shall be necessary to constitute a quorum, whether present in
person or by proxy, for the election by that class or series of its designated
Directors. In order to validate an election of Directors by stockholders voting
as a class, such Directors shall be elected by the vote of at least a plurality
of shares held by such stockholders present or represented at the meeting. At
any such meeting, the election of Directors by stockholders voting as a class
shall be valid notwithstanding that a quorum of other stockholders voting as one
or more classes may not be present or represented at such meeting, and if any
stockholders voting as a class shall elect Directors, the
<PAGE>
Directors so elected shall be deemed to be Directors of the Corporation unless
and until the other stockholders entitled to vote as one or more classes shall
elect their Directors.
While class voting is in effect with respect to the Preferred Stock,
any Director elected by holders of Preferred Stock voting as a class may be
removed at any annual or special meeting, by vote of a majority of the
stockholders voting as a class who elected such Director, for any cause deemed
sufficient by such stockholders present at such meeting. In case any vacancy
shall occur among the Directors elected by such stockholders voting as a class,
such vacancy may be filled by the remaining Director so elected, or his
successor then in office, and the Director so elected to fill such vacancy shall
serve until the next meeting of stockholders for the election of Directors.
Such voting rights of the holders of Preferred Stock as a single
class, once effective, shall continue only until all arrears in dividends
(whether or not declared) on the Preferred Stock shall have been paid or
declared and set apart for payment at which time the right of the Preferred
Stock to vote as a single class for the election of Directors, as hereinabove
set forth, shall terminate. Upon such termination, a special meeting of the
stockholders of the Corporation then entitled to vote may be called by the
Chairman of the Board or the President, and shall be called by the Chairman of
the Board or the President or the Secretary of the Corporation if requested in
writing by the holders of record of not less than one percent of the common
stock then outstanding, and at such special meeting, or if no such special
meeting shall have been called then at the next annual meeting of the
stockholders, the stockholders of the Corporation then entitled to vote shall
elect an entirely new Board of Directors and the term of office of the Directors
in office at the time of such election shall expire upon the election of their
successors at such meeting; provided, however, that nothing herein contained
shall be construed to be a bar to the reelection of any such Director at such
meeting.
The consent of the holders of at least two-thirds of the number of
shares of Preferred Stock at the time outstanding, given in person or by proxy,
either in writing or at a meeting of stockholders at which the holders of the
Preferred Stock shall vote separately as a class without regard to series, the
holders of shares of Series N Preferred Stock being entitled to cast one vote
per share thereon, shall be necessary for effecting or validating:
(i) any change in the Certificate of Incorporation or certificate
supplemental thereto or By-laws of the Corporation which would materially
and adversely alter or change the preferences, privileges, rights or powers
given to the holders of the Preferred Stock, provided, that if one or more
but not all series of Preferred Stock at the time outstanding are so
affected, only the consent of the holders of at least two-thirds of each
series so affected, voting separately as a class, shall be required; or
(ii) the issuance of any shares of any other class of stock of the
Corporation ranking prior to the Preferred Stock.
<PAGE>
The term "ranking prior to the Preferred Stock" shall mean and include
all shares of stock of the Corporation in respect of which the rights of the
holders thereof as to the payment of dividends or as to distributions in the
event of a voluntary or an involuntary liquidation, dissolution or winding up of
the Corporation, are given preference over the rights of the holders of the
Preferred Stock.
8. Liquidation Preference. In the event of any liquidation,
----------------------
dissolution or winding up of the Corporation, voluntary or involuntary, the
holders of all shares of Series N Preferred Stock shall be entitled to be paid
in full out of the assets of the Corporation available for distribution to
stockholders, before any distribution of assets shall be made to the holders of
common stock or of any other shares of stock of the Corporation ranking as to
such distribution junior to the Series N Preferred Stock, an amount equal to
$500 per share plus an amount equal to any accrued and unpaid dividends thereon
to the date fixed for payment of such distribution. If, upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
amounts payable with respect to the Series N Preferred Stock and any other
shares of stock of the Corporation ranking as to any such distribution on a
parity with the Series N Preferred Stock are not paid in full, the holders of
the Series N Preferred Stock and of such other shares shall share ratably in any
such distribution of assets of the Corporation in proportion to the full
respective preferential amounts to which they are entitled. After payment to
the holders of the Series N Preferred Stock of the full preferential amounts
provided for in this Section 8, the holders of the Series N Preferred Stock
shall be entitled to no further participation in any distribution of assets by
the Corporation.
Consolidation or merger of the Corporation with or into another
corporation or corporations, or a sale, whether for cash, shares of stock,
securities or properties, of all or substantially all of the assets of the
Corporation, shall not be deemed or construed to be a liquidation, dissolution
or winding up of the Corporation within the meaning of this paragraph 8.
9. Limitation on Dividends on Junior Ranking Stock. So long as any
-----------------------------------------------
Series N Preferred Stock shall be outstanding, the Corporation shall not declare
any dividends on the common stock of the Corporation or any other stock of the
Corporation ranking as to dividends or distribution of assets junior to the
Series N Preferred Stock (the common stock and any such other stock being herein
referred to as "Junior Stock"), or make any payment on account of, or set apart
money for, a sinking or other analogous fund for the purchase, redemption or
other retirement of any shares of Junior Stock, or make any distribution in
respect thereof, whether in cash or property or in obligations or stock of the
Corporation, other than Junior Stock (such dividends, payments, setting apart
and distributions being herein called "Junior Stock Payments"), unless all of
the conditions set forth in the following subsections A and B shall exist at the
date of such declaration in the case of any such dividend, or the date of such
setting apart in the case of any such fund, or the date of such payment or
distribution in the case of any other Junior Stock Payment:
A. Full cumulative dividends shall have been paid or
<PAGE>
declared and set apart for payment upon all outstanding shares of Preferred
Stock other than Junior Stock.
B. The Corporation shall not be in default or in arrears with
respect to any sinking or other analogous fund or any call for tenders
obligation or other agreement for the purchase, redemption or other retirement
of any shares of Preferred Stock other than Junior Stock.
<PAGE>
EXHIBIT 3.b
BANKAMERICA CORPORATION
BY-LAWS
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICE. The registered office shall be in the City
of Wilmington, County of New Castle, State of Delaware.
Section 2. OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE OF MEETINGS. All annual meetings of the shareholders
shall be held in the City and County of San Francisco, State of California, at
such place as may be fixed from time to time by the Board of Directors, or at
such other place either within or without the State of Delaware as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting. Special meetings of shareholders may be held at such time and
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. ANNUAL MEETING. Annual meetings of shareholders for the
election of Directors and the transaction of such other business as may be
properly brought before the meeting shall be held in March, April or May of each
year on such business day and at such time as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting.
Section 3. NOTICE OF ANNUAL MEETING. Written notice of the annual meeting
stating the place, date and hour of the meeting shall be given to each
shareholder entitled to vote at such meeting not less than ten nor more than
sixty days before the date of the meeting.
Section 4. SHAREHOLDERS LIST. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before every
meeting of shareholders, a complete list of the shareholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
shareholder and the number of shares registered in the name of each shareholder.
Such list shall be open to the examination of any shareholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at
<PAGE>
the time and place of the meeting during the whole time thereof, and may be
inspected by any shareholder who is present.
Section 5. SPECIAL MEETINGS. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the Chairman of the Board or the
President and shall be called by the Chairman of the Board or the President or
Secretary at the request in writing of a majority of the Board of Directors, or
at the request in writing of shareholders owning a majority in amount of the
entire capital stock of the Corporation issued and outstanding and entitled to
vote. Such request shall state the purpose or purposes of the proposed meeting.
Section 6. NOTICE OF SPECIAL MEETINGS. Written notice of a special
meeting stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called, shall be given not less than ten nor
more than fifty days before the date of the meeting, to each shareholder
entitled to vote at such meeting.
Section 7. BUSINESS. Business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
Section 8. QUORUM AND ADJOURNMENT. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
shareholders for the transaction of business except as otherwise provided by
statute or by the Certificate of Incorporation. If, however, such quorum shall
not be present or represented at any meeting of the shareholders, the
shareholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each shareholder of
record entitled to vote at the meeting.
Section 9. ORGANIZATION. At every meeting of the shareholders the
Chairman of the Board shall preside. In the absence of such officer, any other
officer of the rank of President; Vice Chairman of the Board; President of the
Global Retail Bank or Global Wholesale Bank, or similar division; Vice Chairman;
Executive Vice President or Senior Vice President present shall call such
meeting to order and preside. The Secretary, or in his or her absence, the
appointee of the presiding officer of the meeting shall act as Secretary of the
meeting.
Section 10. VOTING OF SHAREHOLDERS. When a quorum is present or
represented at any meeting, the vote of the holders of a majority of the stock
having voting power present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one upon which by
express provision of statute or of the Certificate of Incorporation a different
vote is required in which case such express provision shall govern and control
the decision of such question.
Each shareholder shall at every meeting of the shareholders be entitled to
one vote in person or by proxy for each share of the capital stock
<PAGE>
having voting power held by such shareholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
Section 11. JUDGES OF ELECTION. The Board of Directors may at any time
appoint one or more persons to serve as judges of election at any meeting of
shareholders with respect to the votes of shareholders at such meeting. If any
judge appointed is absent or refuses to act, a majority of the judges, if
present, may act. If a majority of the judges is not present, the presiding
officer of the meeting may appoint one or more persons to serve as judges for
the meeting. The judges appointed to act at any meeting of the shareholders
shall perform their duties faithfully and impartially, and shall notify the
Secretary of the Corporation in writing of the votes cast at such meeting by the
shareholders.
Section 12. NOTICE OF SHAREHOLDER BUSINESS AT ANNUAL MEETING. At an
annual meeting of the shareholders only such business shall be conducted as
shall have been properly brought before the meeting or any adjournment thereof
(a) by or at the direction of the Board of Directors or (b) by any shareholder
of the Corporation entitled to vote at the meeting who complies with the notice
procedures set forth in this Section. For business to be properly brought
before an annual meeting by a shareholder, the shareholder must have given
timely and complete notice thereof in writing to the Secretary of the
Corporation. To be timely, a shareholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than ninety days nor more than one hundred-twenty days prior to the meeting
and this window period shall not be effected by any adjournment of the meeting;
provided, however, that if less than forty days' notice of the date of the
- -------- -------
meeting is given to shareholders, notice by the shareholder to be timely must be
received not later than the close of business on the tenth day following the day
on which public announcement of the date of such meeting is first made.
("Public announcement" means disclosure in a press release, national news
service or in a document publicly filed by the Corporation with the Securities
and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities
Exchange Act of 1934, as amended). A shareholder's notice to the Secretary
shall be complete provided it sets forth as to each matter the shareholder
proposes to bring before the annual meeting (a) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (b) the name and address, as
they appear on the Corporation's books, of the shareholder proposing such
business, (c) the class and number of shares of the Corporation's stock which
are owned by the shareholder, any material interest of the shareholder in such
business and (d) if the shareholder intends to solicit proxies in support of
such shareholder's proposal, a representation to that effect; provided, however,
-----------------
that compliance by such shareholder with the notice provisions and other
requirements in this Section shall not create a duty of the Corporation to
include such shareholder's business or proposal in the Corporation's proxy
statement or proxy, and notwithstanding such compliance the Corporation shall
retain such discretion as it has to omit such business or proposal from such
proxy statement or proxy or both. Notwithstanding anything in these By-laws to
the contrary, no business shall be conducted at an annual meeting (i) except in
accordance with the procedures set forth in this Section or (ii) if the
shareholder solicits proxies in support of such shareholder's proposal made the
representation required by clause (d) of the preceding sentence. The Chairman
of an annual meeting shall, if the facts warrant, determine and declare to the
meeting that any business proposed at the meeting was not properly brought
before the meeting
<PAGE>
or any adjournment thereof in accordance with the provisions of this Section,
and if he or she should so determine, he or she shall so declare to the meeting
and any such business shall not be transacted.
Section 13. NOTICE OF SHAREHOLDER NOMINEES. Only persons who are properly
nominated in accordance with the procedures set forth in this Section shall be
eligible for election as Directors. Nominations of persons for election to the
Board of Directors of the Corporation may be made at a meeting of shareholders
or any adjournment thereof (a) by or at the direction of the Board of Directors
or (b) by any shareholder of the Corporation entitled to vote for the election
of Directors at the meeting who has complied with the notice procedures set
forth in this Section. Such nominations, other than those made by or at the
direction of the Board of Directors, shall be made pursuant to timely and
complete notice in writing to the Secretary of the Corporation. To be timely, a
shareholder's notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than ninety days nor
more than one hundred-twenty days prior to the meeting and this window period
shall not be effected by any adjournment of the meeting; provided, however, that
-------- -------
if less than forty days' notice of the date of the meeting is given to
shareholders, notice by the shareholder to be timely must be so received not
later than the close of business on the tenth day following the day on which
public announcement of the date of such meeting is first made. ("Public
announcement" is defined in Section 12 herein). A shareholder's notice shall be
complete provided it sets forth (a) as to each person whom the shareholder
proposes to nominate for election or re-election as a Director, (i) the name,
age, business address and residence address of the person, (ii) the principal
occupation or employment of the person, (iii) the class and number of shares of
capital stock of the corporation which are owned directly or beneficially by the
person, (iv) a statement as to the person's citizenship, and (v) such person's
written consent to serve as a director if elected; (b) as to the shareholder
giving the notice (i) the name and address, as they appear on the Corporation's
books, of such shareholder and (ii) the class and number of shares of the
Corporation's stock which are owned by such shareholder and (c) if the
shareholder intends to solicit proxies in support of such shareholder's
nominee(s), a representation to that effect; provided, however, that compliance
-----------------
by a shareholder with the notice provisions and other requirements in this
Section shall not create a duty of the Corporation to include the shareholder's
nominee in the Corporation's proxy statement or proxy if the shareholder's
nominee is not nominated by the Board of Directors, and the Corporation shall
retain any discretion it has to omit the nominee from the Corporation's proxy
statement and proxy. At the request of the Board of Directors, any person
nominated by the Board of Directors for election as a Director shall furnish to
the Secretary of the Corporation that information required to be set forth in a
shareholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a Director of the Corporation unless nominated
in accordance with the procedures set forth in this Section. The Chairman of
the meeting shall, if the facts warrant, determine and declare to the meeting
that a nomination made at the meeting or any adjournment thereof was not made in
accordance with the provisions of this Section, with law or rules applicable to
the meeting, or if the shareholder solicits proxies in support of such
shareholder's nominee(s) without such shareholder having made the representation
required by clause (c) of this Section, and if he or she should so determine, he
or she shall so declare to the meeting and the nomination shall be disregarded.
<PAGE>
ARTICLE III
DIRECTORS
Section 1. NUMBER, ELECTION AND TERM. The number of Directors which shall
constitute the whole Board shall be not less than three or more than thirty-
five. The first Board shall consist of three Directors. Thereafter, within the
limits above specified, the number of Directors shall be determined by
resolution of the Board of Directors or by the shareholders at the annual
meeting. The Directors shall be elected at the annual meeting of the
shareholders, except as provided in Section 2 of this Article III, and each
Director elected shall hold office until his or her successor is elected and
qualified or until his or her earlier resignation or removal. Directors need
not be shareholders.
Section 2. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Vacancies and newly
created directorships resulting from any increase in the authorized number of
Directors may be filled by a majority of the Directors then in office, though
less than a quorum, or by a sole remaining Director, and the Directors so chosen
shall hold office until the next annual election and until their successors are
duly elected and shall qualify or until their earlier resignations or removals.
If there are no Directors in office, then an election of Directors may be held
in the manner provided by statute.
Section 3. RESIGNATIONS. Any Director of the Corporation may resign at
any time by giving written notice to the Chairman of the Board or President or
to the Secretary of the Corporation. The resignation of any Director shall take
effect at the date of receipt of such notice or at any later date specified
therein; and unless otherwise specified therein the acceptance of such
resignation by the Board of Directors shall not be necessary to make it
effective.
Section 4. GENERAL POWERS. The business of the Corporation shall be
managed by or under the direction of its Board of Directors which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by statute or by the Certificate of Incorporation or by these By-laws
directed or required to be exercised or done by the shareholders.
Section 5. COMPENSATION OF DIRECTORS. Fees and expenses payable to
Directors shall be in such amounts as shall be determined by the Board of
Directors, except that no Director of the Corporation who receives any salary as
an officer or employee thereof shall receive any per diem or other compensation
for attending any meeting of the Board of Directors or of the Executive
Committee or of any other committee.
Section 6. ADVISORY DIRECTORS. The Board of Directors may appoint such
number of Advisory Directors as shall be determined by the Board from time to
time. Such Advisory Directors shall serve at the pleasure of the Board of
Directors and shall have such rights and functions as the Board shall determine.
Advisory Directors shall receive such compensation for their services as may be
fixed by the Board. No Advisory Director who receives a salary as an officer or
employee of the Corporation or any of its subsidiaries shall receive
compensation for attending any meeting of the Board of Directors or of any
committee of the Board.
<PAGE>
ARTICLE IV
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. PLACE OF MEETINGS. The Board of Directors of the Corporation
may hold meetings, both regular and special, either within or without the State
of Delaware.
Section 2. ORGANIZATIONAL MEETING. The Board of Directors shall meet for
the purpose of organization, the election of officers and the transaction of
other business, on the same day as each annual meeting of shareholders at such
place as may be designated by the presiding officer of such meeting, or as may
be otherwise provided by vote of the shareholders at such meeting. Notice of
such meeting shall not be necessary.
Section 3. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without notice at such time and at such place as shall from time to
time be determined by the Board.
Section 4. SPECIAL MEETINGS. Special meetings of the Board may be called
by the Chairman of the Board or a Vice Chairman of the Board or the President on
two days' notice to each Director, either personally or by mail or by telegram;
special meetings shall be called by the Chairman of the Board or a Vice Chairman
of the Board or the President or the Secretary in like manner and on like notice
on the written request of any three Directors.
Section 5. QUORUM. At all meetings of the Board a majority of the
Directors shall constitute a quorum for the transaction of business and the act
of a majority of the Directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors the
Directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 6. ACTION BY WRITTEN CONSENT. Unless otherwise restricted by the
Certificate of Incorporation or these By-laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board or committee, as the
case may be, consent thereto in writing. The written consents shall be filed
with the minutes of proceedings of the Board or committee.
Section 7. TELEPHONE PARTICIPATION IN MEETINGS. Members of the Board of
Directors or any committees thereof may participate in a meeting of the Board of
Directors or of such committees by means of conference telephone or other
communications equipment by means of which all persons participating can hear
each other, and such participation shall constitute presence in person at such
meeting.
ARTICLE V
COMMITTEES
Section 1. EXECUTIVE COMMITTEE. During the intervals between
<PAGE>
meetings of the Board, all powers and authority of the Board regarding the
management of the business and affairs of the Corporation shall be exercised by
the Executive Committee of the Board; except that the committee shall have no
power:
(a) To amend the Certificate of Incorporation (except that the committee
may, to the extent authorized in a resolution adopted by the Board
providing for the issuance of shares of stock, fix the designations
and any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
Corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the
same or any other class or classes of stock of the Corporation or fix
the number of shares of any series of stock or authorize the increase
or decrease of the shares of any series).
(b) To amend the By-laws of the Corporation.
(c) To recommend to the shareholders of the Corporation the sale, lease
or exchange of all or substantially all of the Corporation's property
and assets.
(d) To adopt an agreement of merger or consolidation.
(e) To recommend to the shareholders of the Corporation the dissolution
of the Corporation or a revocation of a dissolution.
(f) To declare a dividend.
(g) To authorize the issuance of stock, except that the committee shall
have the power to authorize the issuance of common stock of the
Corporation in one transaction or a series of related transactions
(including, without limitation, pursuant to a shelf registration),
provided that the number of shares of common stock so authorized
shall not exceed 5% of the number of shares of common stock issued
and outstanding immediately before such authorization.
(h) To appoint or remove the Chairman of the Board or the President of
the Corporation.
The committee shall consist of such Directors as the Board may from time
to time appoint by resolution passed by a majority of the whole Board.
The committee shall have the power and authority to adopt a certificate of
ownership and merger in connection with the merger of a parent and one or more
subsidiary corporations.
Section 2. OFFICE OF THE CHAIRMAN. During intervals between meetings of
the Executive Committee, the Office of the Chairman shall exercise the power and
authority of the Executive Committee to the extent permitted by law and subject
to the final sentence of this Section 2. The Office of the Chairman shall
consist of such Directors or officers as the Board may from time to time appoint
by resolution passed by a majority of the whole Board. The Office of the
Chairman shall be subject to the limitations on delegation of authority set
forth in Section 12 of this Article V and such limits as the
<PAGE>
Board may establish from time to time by resolution.
Section 3. AUDITING AND EXAMINING COMMITTEE. The Auditing and Examining
Committee shall provide assistance to the Board in meeting its responsibilities
regarding the adequacy of internal controls, the quality and integrity of
regulatory and financial accounting and reporting and the effectiveness of the
internal and external auditing and examining functions of the Corporation and
its subsidiaries.
In carrying out its duties the committee shall:
. monitor areas of significant risk, including credit risk, market risk,
liquidity risk, cross border risk, operational risk, and compliance;
. monitor the adequacy of the Corporation's internal controls through
reviewing reports of regulatory examinations of the Corporation,
management letters, and other assessments of the adequacy of internal
controls from the independent accountants and internal auditors, together
with any proposed responses by management of the Corporation;
. review the Corporation's annual report and other principal periodic
financial reports to the public and reports to regulatory agencies
(including the adequacy of any of the foregoing reports' supporting
processes), in all cases to the extent deemed appropriate by the
committee;
. review significant accounting policy and reporting issues;
. recommend to the Board the firm to be employed by the Corporation as its
independent auditors, and review and make recommendations to the Board
regarding the terms and scope of such firm's engagement, and monitor its
performance and independence;
. annually review and approve the scope of the auditing and credit
examination functions of the Corporation and monitor their performance;
. review with the Chief Executive Officer any performance reports and
compensation recommendations to be made to the Executive Personnel and
Compensation Committee for the General Auditor and the Director of Credit
Examination Services;
. review and take such other actions as may be appropriate with respect to
reports and other requirements under the Federal Deposit Insurance
Corporation Improvement Act of 1991;
. inquire into such matters and review such reports and other documents
regarding subsidiaries as it deems appropriate;
. take such action as the committee deems appropriate to encourage free and
open communication among the Board, the committee, the independent
auditors and the officers of the Corporation responsible for internal
audit, credit examination, regulatory/financial accounting and reporting,
and internal controls, including the scheduling of periodic executive
sessions with the independent auditors and members of management deemed
appropriate by the committee.
<PAGE>
The committee shall also provide assistance to the Board with respect to
the fiduciary activities of subsidiaries. The committee shall:
. review reports of examination of the fiduciary activities of any
subsidiary which has been directed to the committee by the Board or by
regulatory authorities;
. monitor the internal fiduciary audit function and its findings for
subsidiaries;
. review reports from the Corporation's independent auditors with respect
to fiduciary activities of subsidiaries;
. have authority to make recommendations to the Board with respect to
fiduciary activities of subsidiaries as a result of audit and examination
reviews;
The committee shall also provide assistance to the Board in meeting its
fiduciary responsibilities with respect to the employee benefit plans of the
Corporation subject to the Employee Retirement Income Security Act of 1974, as
amended (ERISA). In carrying out its duties the committee shall:
. review the performance of the Employee Benefits Administrative Committee
and the Employee Benefits Investment Committee and any other fiduciary
appointed by the Board for the Corporation's employee benefit plans
subject to ERISA and review audit reports on such plans;
The committee may employ, at the Corporation's expense, independent
accountants, outside counsel and other experts as it deems necessary, and shall
have all additional powers necessary to carry out the foregoing functions and
such other functions as may be assigned by the Board from time to time.
The committee shall consist of such members as the Board may from time to
time appoint by resolution passed by a majority of the whole Board. At least
two members of the committee shall have significant executive, professional,
educational, or regulatory experience in financial, auditing, accounting, or
banking matters as shall be determined by the Board.
No member of the committee shall be, or shall have been within one year
prior to serving as a member of the committee, an officer or employee of the
Corporation or any of its subsidiaries or affiliates, and no member shall have
any relationship that, in the opinion of the Board, would interfere with the
member's exercise of independent judgment as a member of the committee,
including any significant direct or indirect credit or other relationships with
the Corporation or its subsidiaries, the termination of which likely would
materially and adversely affect the Corporation's financial condition or results
of operations.
Section 4. EXECUTIVE PERSONNEL AND COMPENSATION COMMITTEE. The Executive
Personnel and Compensation Committee shall have responsibility for, and shall
review and approve, the compensation, including salary and perquisites, of the
Corporation's executive officers, as designated for Federal securities law
purposes by the Board from time to time, and such other members of the senior
management of the Corporation as determined by the committee from time to time
by resolution. The committee shall also make recommendations to the
Corporation's subsidiaries as to the compensation of
<PAGE>
such members of senior management of the subsidiaries as determined by the
committee from time to time by resolution.
The committee shall also have responsibility for the administration of the
Corporation's short-term and long-term incentive plans and deferred compensation
programs established for the Executive Officers and other senior management of
the Corporation and its subsidiaries (incentive plans). The Committee shall
approve or review the designation of participants in incentive plans, the
principles and procedures used in determining grants and awards under the plans,
and with respect to grants or awards of the Company's equity securities, the
specific grants and awards within such categories of recipients as designated by
the committee from time to time by resolution. The committee shall also
recommend to the full Board such amendments or revisions to incentive plans, and
shall take such other actions with respect to incentive plans, as deemed
appropriate by the committee.
The committee shall also advise management regarding executive succession
planning and the selection, development and performance of the Executive
Officers and other senior management of the Corporation and its subsidiaries as
determined by the committee from time to time.
The committee shall have all additional powers necessary to carry out its
responsibilities and such other duties as may be assigned by the Board from time
to time.
The committee shall consist of such Directors as the Board may from time
to time appoint by resolution passed by a majority of the whole Board.
No member of the committee shall be an active officer of the Corporation
or any of its subsidiaries, and no member shall have any relationship that, in
the opinion of the Board, would interfere with the member's exercise of
independent judgment as a member of the committee.
Section 5. NOMINATING COMMITTEE. The Nominating Committee shall
recommend to the Board criteria for the selection of candidates to serve on the
Board; evaluate all proposed candidates; recommend to the Board nominees to fill
vacancies on the Board; and recommend to the Board prior to the annual meeting
of shareholders a slate of nominees for election to the Board by the
shareholders of the Corporation at the annual meeting.
The committee may also review and make recommendations to the Executive
Committee or the Board with respect to the Corporation's overall compensation
program for Directors, including salary, perquisites, deferred compensation
plans, stock or stock option plans or other incentive plans, and retirement
plans.
In carrying out its duties, the committee shall seek possible candidates
for the Board and otherwise aid in attracting qualified candidates to the Board.
The committee shall be available to the Chairman of the Board and the Chief
Executive Officer and other members of the Board for consultation concerning
candidates for the Board. The committee shall periodically review, assess and
make recommendations to the Board with regard to the size and composition of the
Board. The committee shall have all additional powers necessary to carry out
its responsibilities and such other duties as may be assigned by the Board from
time to time.
The committee shall consist of such Directors as the Board may from
<PAGE>
time to time appoint by resolution passed by a majority of the whole Board.
No member of the committee shall be an active officer of the Corporation
or any of its subsidiaries and no member shall have any relationship that, in
the opinion of the Board, would interfere with the member's exercise of
independent judgment as a member of the committee.
Section 6. PUBLIC POLICY COMMITTEE. The Public Policy committee shall
advise and make recommendations to the Board and management of the Corporation
and its subsidiaries concerning matters of public and social policy. The
committee shall identify and monitor the social, political and environmental
trends and issues that could affect the corporation's or its subsidiaries'
performance and the related interests of employees, shareholders, customers, and
the general public; evaluate and advise the Board and management on long range
plans and programs for adjusting operations to those trends and issues; provide
Community Reinvestment Act (CRA) oversight to ensure that the CRA activities of
all banking subsidiaries of the Corporation reflect the Corporation's commitment
to outstanding performance; and recommend to the Board and management, as
appropriate, action on specific public policy issues, and advise the Board and
management as to the committee's evaluation of related policies, practices and
procedures.
The committee shall have all additional powers necessary to carry out its
responsibilities and such other duties as may be assigned by the Board from time
to time.
The committee shall consist of such Directors as the Board may from time
to time appoint by resolution passed by a majority of the whole Board.
Section 7. OTHER COMMITTEES. The Board may designate one or more other
committees, each committee to consist of one or more members as the Board
determines. The Board may designate one or more persons as alternate members of
any such committee who may replace any absent or disqualified member at any
meeting of the committee. Any such committee shall have and may exercise such
powers as may be specified in the resolution creating such committee, including,
to the extent authorized in a resolution adopted by the Board providing for the
issuance of shares of stock, the power to fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the Corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
Corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series. Each committee shall have
such name as may be determined from time to time by the Board. The Board may
change the members of any committee, fill vacancies and discharge any committee,
with or without cause, at any time.
Section 8. MEETING REQUIREMENTS. The Board shall designate one member of
each committee to serve as chairman of the committee. Except as otherwise
stated in these By-laws or a resolution of the Board, a number equal to a
majority of the members of a committee shall be deemed to constitute a quorum
for actions of the committee. If a quorum is not present at any meeting of a
committee, the committee members present may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present. Except as otherwise stated in these By-laws
<PAGE>
or in a resolution of the Board, the vote of a majority of the members of a
committee present at a meeting at which a quorum is present shall be necessary
for action to be taken by the committee, and each committee shall hold regular
and special meetings at times and places and upon notice as the committee may
determine. In the absence of any other notice requirements, meetings of a
committee may be called by the chairman of the committee or the Secretary, and
must be called by the chairman of the committee or the Secretary upon the
request of any two members of the committee, on at least 24 hours' notice to
each committee member before the hour appointed for holding such meeting.
Notice shall be given personally, or by leaving the notice at the member's place
of business or residence, or by mailing the notice in San Francisco or Los
Angeles, with the postage thereon fully prepaid, addressed to the member at his
or her last known place of business or residence, or by telegraphing or
telecopying the notice to the member at his or her last known place of business
or residence. The method of notice of a special meeting shall be entered in the
minutes of the special meeting, and the approval of the minutes at any
subsequent meeting of the committee shall be conclusive upon the question of
service. Personal notice includes telephone notice to the individual.
Section 9. ACTION BY WRITTEN CONSENT. Unless otherwise restricted by
these By-laws, any action required or permitted to be taken at any meeting of
any committee may be taken without a meeting, if all members of the committee
consent to the action in writing. The written consents shall be filed in the
minute book of the committee.
Section 10. TELEPHONE PARTICIPATION IN MEETINGS. Members of a committee
may participate in a meeting of the committee by means of conference telephone
or other communications equipment by means of which all persons participating
can hear each other, and such participation shall constitute presence in person
at the meeting.
Section 11. SUBCOMMITTEES. The provisions of this Section 11 with
respect to subcommittees shall be effective only to the extent permitted by
Delaware law. Subject to the foregoing, and except as otherwise stated in these
By-laws or a resolution of the Board, each committee may appoint and discharge
subcommittees and may delegate to such subcommittees any of the power and
authority of the committee, subject to such restrictions as the committee may
determine. The committee may authorize such subcommittees to appoint their own
subcommittees and to delegate any of their power and authority. Each
subcommittee shall have such members as the committee shall appoint, provided
that at least one member of the committee shall be a member of the subcommittee.
The name of each subcommittee shall be determined by the committee or
subcommittee which appoints it. Each committee and subcommittee may designate
one or more Directors or officers as alternate members of any subcommittee, who
may replace any specified or unspecified member who is absent or disqualified at
any meeting of the subcommittee. Each subcommittee shall be subject to the same
procedural requirements as the committee or subcommittee which appointed it,
including but not limited to the requirements set forth in this Article V for
notices, quorums, action by written consent, and telephone participation in
meetings. Each subcommittee shall report its actions at the next practicable
meeting of the committee or subcommittee for its review and any action it deems
appropriate.
Section 12. DELEGATION OF AUTHORITY. The Board of Directors and each
committee and subcommittee may delegate authority to officers and employees of
<PAGE>
the Corporation, to the fullest extent permitted by law and subject to any
restrictions and limitations the Board of Directors, the committee, or the
subcommittee, as the case may be, deems appropriate. This power shall include
delegation to committees or subcommittees whose members may include officers of
the Corporation, provided however, that discretion reserved under Delaware law
to the Board of Directors or a committee established by the Board of Directors
may be exercised only by the Board of Directors or a Board committee established
by a majority of the whole Board of Directors.
Section 13. REPORTS TO THE BOARD. Except as otherwise stated in these
By-laws or a resolution of the Board, each committee shall keep minutes of its
proceedings and shall report its actions and, at least on a quarterly basis, the
actions of its subcommittees at the next practicable Board meeting for its
review and any action it deems appropriate. Any action of the Board with
respect to the report shall be recorded in the minutes of the meeting of the
Board, as well as in the minute book of the committee.
ARTICLE VI
OFFICERS
Section 1. NUMBER AND TITLES. The officers of the Corporation may be,
and to the extent required by law shall be: a Chairman of the Board, a
President, one or more Vice Chairmen of the Board, one or more Presidents of
divisions, one or more Vice Chairmen, one or more Executive Vice Presidents, one
or more Senior Vice Presidents, one or more Vice Presidents, one or more
Assistant Vice Presidents, a Secretary, one or more Assistant Secretaries, a
Treasurer, one or more Assistant Treasurers, and such other officers as the
Board may by resolution create, or as may be appointed in accordance with
Section 2 of this Article.
The Board of Directors shall designate one officer of the Corporation as
the Chief Executive Officer and may in its discretion confer additional
functional titles, including but not limited to Chief Operating Officer and
Chief Financial Officer.
Section 2. APPOINTMENT, TERM OF OFFICE. The officers shall be appointed
by the Board of Directors and shall serve at the pleasure of the Board, which
may demote, suspend, remove or dismiss any officer with or without cause or
notice at any time. However, any such action shall be without prejudice to any
rights of such officer under any written contract addressing employment issues
executed by an officer of the Corporation authorized to execute such a contract.
Each officer shall hold office until a successor is elected and qualified or
until the officer's earlier resignation or removal.
Section 3. COMPENSATION. The compensation of all officers and other
employees of the Corporation shall be fixed by the Board of Directors or by a
committee appointed or officers designated for that purpose or in accordance
with procedures established by the Corporation's human resources or personnel
function.
Section 4. AUTHORITY, DUTIES, FIDELITY BOND. One person may hold more
than one office, except that the offices of President and Secretary and of
Chairman of the Board and Secretary may not be held by the same person.
<PAGE>
When the signature or approval of two officers is required, a person holding two
offices shall act only as one signer or approver. The duties and authority of
the officers of the Corporation, other than as set forth in these By-laws, may
be prescribed and established by the Board of Directors or by the Executive
Committee. Each officer shall perform the duties imposed upon the officer by
law, these By-laws, the Board of Directors or the Executive Committee. Except as
otherwise set forth in these By-laws or by the Board of Directors or the
Executive Committee, each officer shall have such authority and duties as
usually are incident to the title and office held. Authority to act on behalf of
the Corporation may be delegated to officers to the extent permitted by these
By-laws, including, without limitation, Sections 2, 11 and 12 of Article V
hereof, except to the extent such delegation is prohibited or limited by
Delaware law. The Board of Directors may provide for such bond and fidelity
insurance covering the officers of the Corporation and for the faithful and
honest discharge of their duties as they may determine.
Section 5. THE CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the shareholders and the Board of Directors and shall
have such other duties and authority as are set forth in these By-laws or may be
assigned by the Board of Directors.
Section 6. THE VICE CHAIRMEN OF THE BOARD. The Board of Directors may
appoint one or more Vice Chairmen of the Board. Each Vice Chairman of the Board
shall have such duties and authority as may be assigned by the Board of
Directors or by the officer to whom such Vice Chairman of the Board reports. If
more than one Vice Chairman of the Board is appointed, the Board may designate
one such Vice Chairman of the Board as Senior Vice Chairman of the Board.
Section 7. THE PRESIDENT. The President shall have such duties and
authority as are set forth in these By-laws or may be assigned by the Board of
Directors or by the Chairman of the Board.
Section 8. VICE CHAIRMEN AND DIVISION PRESIDENTS. The Board of Directors
may appoint one or more Vice Chairmen and one or more Presidents of divisions of
the Corporation. Each Vice Chairman and each division President shall have such
duties and authority as may be assigned by the Board of Directors or by the
officer to whom such Vice Chairman or division President reports.
Section 9. THE VICE PRESIDENTS. The Board of Directors may appoint one
or more Vice Presidents. The Board may create categories of Vice Presidents,
including but not limited to Executive Vice Presidents, Senior Vice Presidents
and Assistant Vice Presidents. The Board of Directors, the Chairman of the
Board or the President may designate seniority of ranking among categories of
Vice Presidents. Each Vice President shall have such duties and authority as
may be assigned by the Board of Directors or by the officer to whom such Vice
President reports.
Section 10. THE SECRETARY. The Secretary shall have charge and custody
of the corporate seal, records and Minute Books of the Corporation, shall keep
correct written minutes of all meetings of shareholders and Directors, and shall
give or cause to be given notice of all meetings of the shareholders and of the
Board of Directors in accordance with these By-laws and as required by law. The
duties of the Secretary may be performed
<PAGE>
by any Assistant Secretary.
Section 11. THE CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
shall have general executive supervision of the business and affairs of the
Corporation.
Section 12. THE CHIEF OPERATING OFFICER. The Chief Operating Officer
shall have such duties and authority as may be assigned by the Chief Executive
Officer, to whom the Chief Operating Officer shall report.
Section 13. THE CHIEF FINANCIAL OFFICER. The Chief Financial Officer
shall be the principal financial officer of the Corporation.
ARTICLE VII
CAPITAL STOCK--CERTIFICATES OF STOCK
Section 1. CERTIFICATES. The shares of the Corporation shall be
represented by certificates, provided that the Board of Directors of the
Corporation may provide by resolution or resolutions that some or all of any or
all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock represented
by certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in the name of the Corporation by
the Chairman of the Board of Directors, or the President or a Vice Chairman of
the Board of Directors, or a Vice Chairman, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation,
representing the number of shares registered in certificate form. Any or all of
the signatures on the certificate may be a facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he or she were such officer, transfer
agent or registrar at the date of issue.
Section 2. LOST, STOLEN, MUTILATED OR DESTROYED CERTIFICATES. The Board
of Directors, a committee of the Board or an officer of the Corporation may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost, stolen, mutilated or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen,
mutilated or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors, a committee of the Board or an officer of
the Corporation may, as a matter of discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen, mutilated or
destroyed certificate or certificates, or such owner's legal representative, to
advertise the same in such manner as shall be required and give the Corporation
a bond in such sum as may be directed as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost, stolen, mutilated or destroyed.
Section 3. TRANSFERS OF STOCK. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly
<PAGE>
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
Section 4. FIXING RECORD DATE. In order that the Corporation may
determine the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of shareholders of record entitled to notice of
or to vote at a meeting of shareholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 5. REGISTERED SHAREHOLDERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as the owner of shares,
and shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of Delaware.
Section 6. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the Certificate of
Incorporation.
ARTICLE VIII
INDEMNIFICATION
Section 1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that such person, or another
person of whom such person is the legal representative, is or was a Director,
officer, or employee of the Corporation or is or was serving at the request of
the Corporation as a director, officer, or employee of, or in some other
representative capacity for, another corporation or a partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged action in an
official capacity as a Director, officer, or employee or in any other capacity
while serving as a Director, officer, or employee, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be amended, against
all expense, liability and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts to be paid in
<PAGE>
settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a Director, officer, or employee and shall inure to the benefit of such
person's heirs, executors and administrators; provided, however, that except as
-------- -------
provided in Section 2 hereof with respect to proceedings seeking to enforce
rights to indemnification, the Corporation shall indemnify any such person
seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Article shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
--------
however, that, if the Delaware General Corporation Law so requires, the payment
- -------
of such expenses incurred by a Director or officer in such person's capacity as
a Director or officer (and not in any other capacity in which service was or is
rendered by such person while a Director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such Director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such Director or
officer is not entitled to be indemnified under this Article or otherwise.
Section 2. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section 1
of this Article is not paid in full by the Corporation within ninety days after
a written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because the claimant has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
Section 3. NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, By-law, agreement, vote of
stockholders or disinterested Directors or otherwise.
Section 4. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any Director, officer, or employee of the
Corporation serving in any capacity on behalf of the Corporation or at its
<PAGE>
request for any other entity to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be amended, whether
or not the Corporation would have the power to indemnify such person against
such expense, liability or loss under the Delaware General Corporation Law.
ARTICLE IX
NOTICES
Section 1. FORM OF NOTICES. Whenever, under the provisions of the
statutes or of the Certificate of Incorporation or of these By-laws, notice is
required to be given to any Director or shareholder, it shall not be construed
to mean personal notice, but such notice may be given in writing, by mail,
addressed to such Director or shareholder, at his or her address as it appears
on the records of the Corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be deposited in the
United States mail. Notice to Directors may also be given by telegram.
Section 2. WAIVER OF NOTICE. Whenever any notice is required to be given
by law or by the Certificate of Incorporation or these By-laws, a waiver thereof
in writing, signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE X
EMERGENCY
Section 1. APPLICATION. This Article shall operate during any emergency
resulting from any disaster or other emergency condition when a quorum of the
Board of Directors or a Board committee cannot readily be convened.
Section 2. MEETINGS OF BOARD OR COMMITTEE. A meeting of the Board of
Directors or Board committee may be called by any officer or Director by giving
notice to the Directors or committee members who can be reached by any means the
person calling the meeting deems feasible.
Section 3. CONDUCT OF BUSINESS. During any emergency, the quorum
requirements for all meetings of the Board of Directors and any Board committee
shall be one-fourth of the members.
(a) If no Board of Directors meeting can be held because a quorum cannot
be assembled, then those Directors who can assemble may, by majority vote,
reduce the Board of Directors to not less than five Directors and may elect
emergency Directors.
(b) If only one Director can be found, then that Director may appoint
emergency Directors.
(c) If no Director can be found, then the Chief Executive Officer or
Acting Chief Executive Officer may appoint emergency Directors.
<PAGE>
Section 4. SUCCESSION. During any emergency when the Chief Executive
Officer becomes incapacitated, cannot be located, or otherwise is unable to
perform his or her duties, succession to the powers of the Chief Executive
Officer as Acting Chief Executive Officer shall occur in the following order:
Chairman of the Board,
President,
Vice Chairman of the Board,
President, Global Retail Bank*,
President, Global Wholesale Bank*,
Vice Chairman*,
any Executive Vice President.
* Titles marked with asterisk shall be considered equal in rank for
purposes of this provisions.
Priority within rank shall be set by seniority in the ranking office. If
seniority in office dates from the same day, then seniority based on total
length of service shall be determinative.
Notwithstanding the foregoing, the Board of Directors during an emergency
may appoint or replace any Acting Chief Executive Officer, or may change the
priority of succession, as the Board determines.
Section 5. AUTHORITY. During any emergency the Chief Executive Officer
or Acting Chief Executive Officer shall have all authority that officer deems
necessary to protect the interests of the Corporation, may appoint emergency
officers, and may delegate authority to them.
Section 6. NO LIABILITY. No officer, Director or employee acting in
accordance with any emergency By-laws or resolutions shall be liable except for
willful misconduct.
Section 7. EFFECT ON BY-LAWS. To the extent not inconsistent with this
emergency By-law, the By-laws of the Corporation shall remain in effect during
any emergency. Upon termination of the emergency, this By-law shall cease to be
operative and authority to act as an officer or Director shall be determined by
the other By-laws, except that Directors and officers elected or appointed
pursuant to this By-law shall remain Directors or officers to the extent that
vacancies have been caused by death or incapacity of regular Directors or
officers until their successors are appointed or elected.
Section 8. TERMINATION OF EMERGENCY. Any emergency condition which
causes this By-law to become operative shall be deemed terminated whenever one
of the following conditions is met:
(a) The Directors and emergency Directors determine by majority vote at a
meeting that the emergency condition is over; or
(b) A majority of the Directors elected or appointed pursuant to the
regular By-laws holds a meeting and determines the emergency condition is
over.
<PAGE>
ARTICLE XI
MISCELLANEOUS
Section 1. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 2. SEAL. In the execution on behalf of the Corporation of any
instrument, writing, notice or paper, it shall not be necessary to affix the
corporate seal of the Corporation thereon, and any such instrument, document,
writing, notice or paper when executed without said seal affixed thereon shall
be of the same force and effect and as binding on the Corporation as if said
corporate seal had been affixed thereon in the first instance.
Section 3. AMENDMENTS. These By-laws may be altered or repealed at any
regular meeting of the shareholders or of the Board of Directors or at any
special meeting of the shareholders or of the Board of Directors if notice of
such alteration or repeal be contained in the notice of such special meeting.
<PAGE>
EXHIBIT 10.a
[LOGO OF BANKAMERICA CORPORATION]
BANKAMERICA CORPORATION
1992 MANAGEMENT STOCK PLAN
AS ADOPTED MARCH 2, 1992 AND
AMENDED THROUGH APRIL 28, 1997
<PAGE>
BANKAMERICA CORPORATION
1992 MANAGEMENT STOCK PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE I
GENERAL......................................................... 1
1.1 Background of Plan........................................ 1
1.2 Purpose of the Plan....................................... 1
1.3 Definitions............................................... 1
1.4 Administration of Plan.................................... 5
1.5 Eligibility to Receive Grants and Awards.................. 6
1.6 Types of Grants and Awards Under Plan..................... 6
1.7 Limitation on Available Shares............................ 7
1.8 Effective Date and Term of Plan........................... 8
1.9 Limitation on Options and SARs Awardable to Any
Single Participant........................................ 8
ARTICLE II
INCENTIVE STOCK OPTIONS AND NON-QUALIFIED STOCK OPTIONS......... 8
2.1 Grant of Stock Options.................................... 8
2.2 Award Agreements.......................................... 9
2.3 Option Price.............................................. 9
2.4 Option Period............................................. 9
2.5 Limitation on ISOs........................................ 10
2.6 Manner of Paying Option Price............................. 10
2.7 Exercise of Option........................................ 10
2.8 Cancellation of SARs...................................... 10
2.9 Cancellation and Regrant of Options....................... 10
ARTICLE III
STOCK APPRECIATION RIGHTS...................................... 11
3.1 Grant of Stock Appreciation Rights........................ 11
3.2 Form and Timing of Payment................................ 11
3.3 Cancellation of Related Options........................... 11
ARTICLE IV
RESTRICTED STOCK AND RESTRICTED STOCK UNITS..................... 12
4.1 Introduction.............................................. 12
4.2 Award of Restricted Stock and Restricted Stock
Units..................................................... 12
4.3 Minimum Restrictions on Disposition....................... 12
4.4 Optional Restrictions..................................... 13
4.5 Termination of Employment of Restricted
Stockholder for Gross Misconduct.......................... 13
</TABLE>
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<TABLE>
<CAPTION>
Page
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<S> <C>
4.6 Termination of Employment of Restricted
Stockholder not Involving Gross Misconduct................ 14
4.7 Registration and Escrow................................... 14
4.8 Payment in Respect of Restricted Stock Units.............. 15
4.9 Dividends on Restricted Stock............................. 15
4.10 Voting Rights............................................. 15
ARTICLE V
OTHER STOCK-BASED AWARDS........................................ 15
5.1 Other Stock-Based Awards.................................. 15
ARTICLE VI
MISCELLANEOUS................................................... 16
6.1 Notices................................................... 16
6.2 Amendments of Plan........................................ 16
6.3 Leaves of Absence......................................... 17
6.4 Dilution and Other Adjustments............................ 17
6.5 General Restriction....................................... 17
6.6 Change in Control......................................... 18
6.7 Withholding Taxes......................................... 19
6.8 Non-Assignability......................................... 19
6.9 No Right to Employment.................................... 20
6.10 Rights as Shareholder.................................... 20
6.11 Entire Plan.............................................. 20
6.12 Governing Law............................................ 20
6.13 Delegation............................................... 20
6.14 Foreign Employees........................................ 21
</TABLE>
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<PAGE>
BANKAMERICA CORPORATION
1992 MANAGEMENT STOCK PLAN
ARTICLE I
GENERAL
1.1 Background of Plan. BankAmerica Corporation hereby establishes the
BankAmerica Corporation 1992 Management Stock Plan (the "Plan"). The Plan
provides for the grant of stock options on BankAmerica Corporation Common Stock,
and for the grant of restricted stock, restricted stock units, stock
appreciation rights, and other stock-based awards. The Plan is the successor to
the BankAmerica Corporation 1987 Management Stock Plan.
1.2 Purpose of the Plan. The purpose of the Plan is to provide contingent
financial incentive to key executive officers of BankAmerica Corporation and its
present and future Subsidiaries (as defined below) and other employees whose
participation in the Plan is deemed to be in the best interests of BankAmerica
Corporation. The Plan will offer competitive levels of incentive compensation
related to long-term corporate financial performance to those key officers and
other employees of the Company who, by virtue of their position and efforts,
contribute to or substantially influence the financial success of BankAmerica
Corporation over multiple-year periods. The Plan is also intended as a means of
increasing officer shareholdings, thereby strengthening the commonality of
interest between BankAmerica shareholders and key officers and other employees
in the Company's management, and as an aid in attracting, retaining and
motivating key officers and other employees of outstanding abilities and
specialized skills.
1.3 Definitions. As used in the Plan and the related Award Agreements,
the following terms, when written with initial capital letters, will have the
meanings stated below:
(a) Award means any grant or award of an Option, Restricted Stock,
Restricted Stock Unit, SAR or Other Stock-Based Award under the Plan.
(b) Award Agreement means any written agreement between BankAmerica
and an employee of the Company pursuant to which a grant or award is made
under the Plan. The Committee shall determine the provisions of each Award
Agreement subject to the provisions hereof.
(c) BankAmerica means BankAmerica Corporation, a Delaware corporation.
1
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(d) Board means Board of Directors of BankAmerica.
(e) Change in Control means that one of the following events has
occurred:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (i) the then
outstanding shares of common stock of BankAmerica (the "Outstanding
BankAmerica Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of BankAmerica entitled to vote
generally in the election of directors (the "Outstanding BankAmerica
Voting Securities"); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not constitute a
Change of Control: (A) any acquisition directly from BankAmerica, (B)
any acquisition by BankAmerica, (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or (D) any acquisition by any corporation pursuant to a transaction
which complies with clauses (A), (B) and (C) of subsection (iii)
below.
(ii) Individuals who, as of August 7, 1995, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to August 7, 1995 whose election, or
nomination for election by BankAmerica's shareholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board.
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all
of the assets of BankAmerica or its principal Subsidiary (a "Business
Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding BankAmerica Common Stock and
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<PAGE>
Outstanding BankAmerica Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 70% (80% in the case of any Award made prior to February 5, 1996)
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of
such transaction owns BankAmerica or all or substantially all of
BankAmerica'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 BankAmerica Common Stock and Outstanding BankAmerica
Voting Securities, as the case may be, (provided, however, that, for
the 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 BankAmerica Common Stock
or Outstanding BankAmerica 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 from such Business Combination or any employee benefit plan
(or related trust) of the Company or such corporation resulting from
such Business Combination) beneficially owns, directly or indirectly,
20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or
the combined voting power of the then outstanding voting securities of
such corporation unless such Person owned 20% or more of the
Outstanding BankAmerica Common Stock or Outstanding BankAmerica 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 (or, in the case of BankAmerica's principal
Subsidiary, the corresponding board of directors) at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination.
3
<PAGE>
(iv) Approval by the shareholders of BankAmerica of a complete
liquidation or dissolution of BankAmerica.
(f) Committee means the Executive Personnel and Compensation Committee
of the Board.
(g) Common Stock means shares of BankAmerica's common stock, $1.5625
par value per share.
(h) Company means BankAmerica and its Subsidiaries, collectively.
(i) The Fair Market Value of a share of Common Stock on any date means
the average of the high and low sales prices of a share of Common Stock as
reflected in the report of consolidated 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 or in any other publication selected
by the Committee; provided, however, that if shares of Common Stock shall
not have been publicly traded for more than ten days immediately preceding
such date, then the fair market value of a share of Common Stock shall be
determined by the Committee in such manner as it may deem appropriate.
(j) Major Combination means a merger, acquisition or other business
combination in which the number of shares of Common Stock outstanding as of
the close of business on the effective date of the combination is at least
10% greater than the number of shares of Common Stock outstanding prior to
the effective date of the combination.
(k) 1987 Plan means the plan adopted by the Board of Directors of
BankAmerica Corporation on April 6, 1987, as amended, pursuant to which
BankAmerica Corporation has issued non-qualified stock options, incentive
stock options, performance stock options, and restricted stock to key
officers and other employees of BankAmerica and to other individuals whose
participation in the 1987 Plan was deemed to be in the best interests of
BankAmerica.
(l) Option means an option to purchase shares of the Common Stock, and
shall be one of two kinds: (i) Incentive Stock Options ("ISOs") and (ii)
Non-Qualified Stock Option ("NQSOs"). The Company intends the ISOs shall
meet the requirements of Section 422A of the Internal Revenue Code and the
regulations thereunder applicable to incentive stock options, and that
NQSOs shall not meet such requirements.
4
<PAGE>
(m) Optionee means the holder of an Option.
(n) Other Stock-Based Award means an Award granted pursuant to Section
5.1 of the Plan.
(o) Participant means an officer or employee designated to receive a
grant or award under the Plan.
(p) Restricted Stock means Common Stock issued or delivered pursuant
to Article IV with the restrictions set forth therein.
(q) Restricted Stock Unit means any right granted pursuant to Article
IV that is denominated in shares of Common Stock.
(r) Retirement means, with respect to grants and awards made on or
after August 2, 1993, the last day of employment with BankAmerica or one
of its subsidiaries prior to the employee's retirement at normal retirement
age under a retirement program of BankAmerica or one of its Subsidiaries;
and, with respect to grants and awards made before August 2, 1993, the last
day of employment with BankAmerica or one of its subsidiaries prior to the
employee's retirement under a retirement program of BankAmerica or one of
its subsidiaries.
(s) Stock Appreciation Right ("SAR") has the meaning set forth in
Section 3.1.
(t) Subsidiary means any corporation of which BankAmerica owns,
directly or indirectly, twenty percent or more of the voting stock.
(u) Window Period means the time period described in Section 3.2
hereof.
1.4 Administration of Plan. (a) The Plan shall be administered by the
Committee. The Committee shall consist of at least three members of the Board,
none of whom shall be, while serving on the Committee, eligible to receive a
grant or award under the Plan or under any other plan of the Company or its
affiliates under which the participants are entitled to acquire Common Stock,
stock options, restricted stock, restricted stock units, and related rights,
stock appreciation rights or other stock-based awards of the Company or any of
its affiliates. Members of the Committee shall serve at the pleasure of the
Board. Notwithstanding the foregoing, all grants and awards under the Plan to
the Chief Executive Officer of BAC shall be approved or ratified by the Board.
5
<PAGE>
(b) Subject to the provisions of the Plan, the Committee shall have
sole, final, and conclusive authority to determine:
(i) the employees to whom Awards shall be made;
(ii) the number of shares of Common Stock to be optioned,
granted or awarded to each such employee;
(iii) whether and to what extent an Optionee may use already-
owned shares of Common Stock to exercise Options;
(iv) the restrictions to be imposed on each share of Restricted
Stock and on Restricted Stock Units awarded pursuant to Article IV of
this Plan, which shall not be less than the minimum restrictions set
forth therein;
(v) which Options granted shall be Incentive Stock Options, and
which shall be Non-Qualified Stock Options;
(vi) the price to be paid for the shares upon the exercise of
each Option, which shall be not less than 100% of the Fair Market
Value per share, as determined by the Committee, of the Common Stock
at the time of granting the Option;
(vii) the period within which each Option shall be exercised;
(viii) the terms and conditions of each Award Agreement
between BankAmerica and an employee to whom the Committee has made an
Award, which, however, shall be in accordance with the provisions of
the Plan; and
(ix) subject to the provisions of Section 6.13, the Committee
shall have the power, authority, and sole discretion to construe,
interpret and administer the Plan. The Committee's decisions
construing, interpreting and administering the Plan shall be
conclusive and binding on all parties.
1.5 Eligibility to Receive Grants and Awards. Employees of BankAmerica or
of any of its Subsidiaries who shall, in the judgment of the Committee be
qualified by position, training or ability to contribute substantially to the
progress of BankAmerica, shall be eligible to receive grants and awards under
the Plan.
1.6 Types of Grants and Awards Under Plan. Grants and awards under the
Plan may be in the form of any one or more of
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<PAGE>
the following: (i) Incentive Stock Options, (ii) Non-Qualified Stock Options,
(iii) Stock Appreciation Rights, (iv) Restricted Stock Units, (v) Restricted
Stock or (vi) Other Stock-Based Awards.
1.7 Limitation on Available Shares. For each calendar year from and
including 1995 a number of shares of Common Stock in an amount of up to one and
one-half percent (1.5%) of the number of shares of Common Stock outstanding as
reported in the annual report to shareholders of BankAmerica for the preceding
year shall become available for delivery with respect to Awards under the Plan,
provided, however, that as of the effective date of any Major Combination (as
- -------- -------
defined in Section 1.3) the number of shares available for delivery in that year
with respect to Awards under the Plan shall be increased to one and one-half
percent (1.5%) of the number of shares of Common Stock outstanding as of the
close of business on the effective date of that Major Combination. Shares of
Common Stock delivered under the Plan may be original issue shares, shares
purchased in the open market or otherwise or other treasury stock.
In addition, (a) any shares of Common Stock which as of the effective date
of the Plan are reserved for delivery under the 1987 Plan and which are not
thereafter delivered, and (b) any shares of Common Stock available for delivery
under the Plan in previous years but not actually delivered, shall be added to
the aggregate number of shares of Common Stock available for delivery in that
calendar year under the Plan; provided, however, that no more than 30 percent
-------- -------
(30%) of the shares of Common Stock available for delivery under the Plan in any
calendar year shall be delivered in respect of Restricted Stock or Restricted
Stock Units. Notwithstanding the foregoing, but subject to adjustment as
provided in Section 6.4, no more than 5,000,000 shares shall be cumulatively
available under the Plan for delivery upon the exercise of ISOs. The Committee
shall have no obligation to grant or award all or any portion of the shares
available for delivery in any year. The Board may, by resolution, limit the
number of shares that may be available for delivery with respect to Awards under
the Plan in any calendar year to a number of shares lower than would otherwise
be available for delivery hereunder.
Shares of Common Stock subject to Awards under the Plan that for any reason
are cancelled or terminated, or expire, shall again be available for delivery
under the Plan.
Shares of Restricted Stock and Restricted Stock Units that for any reason
are reacquired by BankAmerica pursuant hereto shall again be available for
delivery under the Plan; provided, however, that shares of Restricted Stock or
-------- -------
Restricted Stock Units as to which dividends or payments equivalent to dividends
have been paid to or reinvested for the account of the Restricted Stockholder
prior to reacquisition by BankAmerica shall not again
7
<PAGE>
be available for delivery under the Plan after such reacquisition.
Notwithstanding the foregoing, neither (i) shares of Common Stock
transferred or relinquished to the Company upon the exercise of an Option or in
satisfaction of any withholding obligation, nor (ii) shares of Common Stock
subject to an Award denominated in shares of Common Stock but settled by the
payment of cash in accordance with the Plan, shall again be available for
delivery under the Plan.
1.8 Effective Date and Term of Plan. (a) The Plan shall become
effective on March 2, 1992 and the Committee may, in its discretion, make grants
and awards to eligible key officers and other employees of the Company as of
that date, subject, however, to the approval of the Plan by the shareholders of
BankAmerica at the 1992 annual meeting of shareholders. In the event the Plan
is not approved at such meeting, the Plan and all grants and awards hereunder
shall be void, and the Company shall have no obligation to any recipients of
such grants and awards.
(b) The Committee may make grants and awards under the Plan beginning
March 2, 1992 and during each subsequent year until such time as the Plan may be
terminated by the Board in its sole discretion, or as hereinafter provided.
(c) Unless the shareholders of BankAmerica shall approve an extension
or renewal of the Plan for such new or additional term as they may determine, no
grants and awards shall be made after March 2, 2002. However, all grants and
awards made under the Plan prior to such date shall remain in effect until such
grants and awards shall have been satisfied, terminated, or paid out, or expire,
in accordance with the Plan and the terms of such grants and awards.
1.9 Limitation on Options and SARs Awardable to Any Single Participant.
The maximum number of shares of Common Stock underlying Options and SARs that
may be awarded under the Plan to any single Participant during the period from
March 2, 1992, the effective date of the Plan, through March 2, 2002, is
10,000,000. The minimum price at which each Option is exercisable and the
minimum grant price of each SAR are specified in Sections 2.3 and 3.1,
respectively, of the Plan.
ARTICLE II
INCENTIVE STOCK OPTIONS AND NON-QUALIFIED STOCK OPTIONS
2.1 Grant of Stock Options. The Committee may, from time to time and
subject to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, grant to any eligible employee Incentive Stock Options
("ISOs" or "Options")
8
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and/or Non-Qualified Stock Options ("NQSOs" or "Options") (as these terms are
defined in Section 1.3) to purchase, for cash and/or for already-owned shares of
Common Stock, such number of shares of Common Stock as the Committee shall
determine.
2.2 Award Agreements. The grant of an ISO or NQSO shall be evidenced by a
written Award Agreement in such form as the Committee may from time to time
determine in accordance with the provisions of the Plan, executed by
BankAmerica. Each Award Agreement pursuant to which Options are granted shall
state the number of shares of Common Stock subject to the Option, the Option
price, the Option Period, and any limitations on the Option, the restrictions on
assigning and transferring the Option described in Section 6.8, the manner of
payment for shares of Common Stock, and such other terms as the Committee shall
determine.
2.3 Option Price. The purchase price per share of Common Stock which the
Optionee must deliver upon the exercise of an ISO or NQSO shall be fixed by the
Committee, but shall not be less than 100% of the Fair Market Value of a share
of Common Stock on the date the Option is granted.
2.4 Option Period. (a) Each Option granted as an ISO or NQSO shall
become exercisable in part or in full at such time or times as the Committee may
determine and specify in each Award Agreement; provided, however, that no Option
-------- -------
will be exercisable before the date six months after the date the Option was
granted and no ISO shall be exercisable after the expiration of 10 years from
the date the ISO was granted.
(b) Each Award Agreement shall set forth the extent to which the
Optionee shall have the right to exercise the Option following the Optionee's
retirement, death or termination of the Optionee's employment with the Company
(including termination that, pursuant to the Award Agreement, may be deemed to
occur upon a change in ownership of the Optionee's employer such that the
Optionee's employer ceases to be BankAmerica or one of its Subsidiaries). Such
provisions shall be determined in the sole discretion of the Committee and need
not be uniform among all Options issued pursuant to the Plan.
(c) The Committee may determine in its sole discretion from time to
time to permit the Optionee to purchase all shares of Common Stock covered by
the Optionee's Options, upon or after the Optionee's death, retirement, or
termination of employment with the Company (including termination that, in the
sole discretion of the Committee, may be deemed to occur upon a change in
ownership of the Optionee's employer such that the Optionee's employer ceases to
be BankAmerica or one of its Subsidiaries), without regard to whether the
Options were fully exercisable upon
9
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death, retirement or termination of employment under the terms of the Award
Agreements with respect to such Options.
2.5 Limitation on ISOs. Notwithstanding any other provisions in the Plan
or in any ISO agreement, to the extent the aggregate Fair Market Value
(determined at the time the option is granted) of stock with respect to which
ISOs granted after December 31, 1986 are exercisable for the first time by an
Optionee during any calendar year under all plans of BankAmerica and its
subsidiaries exceeds $100,000, such options shall be treated as NQSOs. This
rule shall be applied by taking options into account in the order in which they
were granted so that options with the earliest grant date will receive ISO
treatment.
No ISO shall be granted to any person who at the time owns more than ten
percent of total combined voting power of all classes of stock of BankAmerica or
of any Subsidiaries.
2.6 Manner of Paying Option Price. On exercise of each ISO or NQSO, the
Option Price shall be paid as follows: (a) in cash, (b) in already-owned shares
of Common Stock, or (c) in some combination of cash and shares, as specified in
the Award Agreement or as otherwise permitted by the Committee. Already-owned
shares of Common Stock must have been owned by the Optionee at the time of
exercise for at least the period of time specified in the Award Agreement, and
shall be valued at their Fair Market Value on the date of exercise.
2.7 Exercise of Option. The Committee shall establish, and shall set
forth in each Award Agreement, the procedures governing the exercise of an ISO
or NQSO. In general, subject to such specific provisions, an ISO or NQSO shall
be exercised as follows:
(a) the Optionee shall deliver written notice that he or she intends
to exercise the Option to the Company department or officer designated in
the Award Agreement;
(b) the Optionee shall pay the full Option Price at the time of
exercise, according to Section 2.6 above; and
(c) as soon as practicable after receipt of such notice and payment,
the Company shall direct BankAmerica's transfer agent to register the
shares of Common Stock in the name of the Optionee.
2.8 Cancellation of SARs. Each Award Agreement shall specify whether the
exercise of an ISO or NQSO with respect to a share of Common Stock shall cancel
any SAR related to such share.
2.9 Cancellation and Regrant of Options. The Committee may cancel
particular NQSOs and regrant to the same Optionee NQSOs to
10
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purchase the same or a different number of shares of Common Stock, only (i) with
the consent of the Optionee, and (ii) if the Option Price for the NQSOs so
regranted is no less than the higher of (A) the Option Price for the NQSOs so
cancelled, or (B) the Fair Market Value of the Common Stock on the date of
regrant.
ARTICLE III
STOCK APPRECIATION RIGHTS
3.1 Grant of Stock Appreciation Rights. The Committee is hereby
authorized to grant Stock Appreciation Rights ("SARs") to Participants. The
terms and conditions of the SARs shall be as provided in the Award Agreement
with respect to such SARs. Each Award Agreement shall specify the grant price,
term, methods of exercise, methods of settlement, disposition of the SARs on
retirement, death or termination of employment of the holder of the SARs, and
such other terms and conditions of the SARs as shall be determined by the
Committee. The Committee may impose such conditions or restrictions on the
exercise of any SAR as it may deem appropriate. SARs may be granted either alone
or in tandem with grants of Options under the Plan. SARs granted in tandem with
Options are referred to herein as "Tandem SARs".
The Committee shall not grant an SAR in tandem with an ISO unless, pursuant
to applicable law and rules and regulations of the Internal Revenue Service, the
SAR may be attached to the ISO without causing the ISO to fail to meet the
requirements of Section 422A of the Internal Revenue Code.
Subject to the terms of the Plan and the applicable Award Agreement, an SAR
shall confer on the holder thereof a right to receive payment (the "SAR Value"),
upon exercise thereof, equal to the excess of (i) the Fair Market Value of one
share of Common Stock on the date of exercise over (ii) the grant price of the
SAR as specified by the Committee, which shall be not less than the Fair Market
Value of one share of Common Stock on the date of grant of the SAR.
3.2 Form and Timing of Payment. (a) Exercise of Tandem SARs for Cash or
Common Stock. Tandem SARs exercised during the Window Period described below
shall be payable only in cash, and Tandem SARs exercised outside the Window
Period shall be payable only in shares of Common Stock. A "Window Period" is a
period (i) beginning on the third business day following the date of public
release of BankAmerica's quarterly or annual summary statements of revenues and
earnings and (ii) ending on the twelfth business day following such date.
(b) Amount of Cash Payable on Exercise of Tandem SARs. When Tandem
SARs are exercised during the Window Period, the
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Optionee shall receive a cash amount equal to (i) the number of Tandem SARs
exercised multiplied by (ii) the difference between (A) the highest Fair Market
Value of one share of Common Stock as of any day during the Window Period, and
(B) the Option Price specified for the related Option.
(c) Number of Shares Issuable or Deliverable on Exercise of Tandem
SARs. When Tandem SARs are exercised outside the Window Period, the Optionee
shall receive the number of whole shares of Common Stock equal to (i) the
aggregate SAR Value (as defined in Section 3.1) of the Tandem SARs exercised
divided by (ii) the Fair Market Value (as defined in Section 1.3) on the date of
exercise. The Company shall deliver cash in lieu of fractional shares.
3.3 Cancellation of Related Options. Each Award Agreement shall specify
whether the exercise of an SAR shall cancel any NQSO to which it relates, to the
extent of the exercise. Any exercise of an SAR with respect to an ISO must be
made in accordance with Section 3.1.
ARTICLE IV
RESTRICTED STOCK AND RESTRICTED STOCK UNITS
4.1 Introduction. BankAmerica has outstanding shares of restricted stock
granted under the 1987 Plan, the BankAmerica Corporation Restricted Stock Bonus
Plan (the "Bonus Plan") and the BankAmerica Corporation Management Incentive
Stock Plan ("MISP"). Restricted stock already granted under the 1987 Plan, the
Bonus Plan and the MISP will continue to be held under the terms of those plans,
except as provided in Section 1.7 of this Plan. Only grants of Restricted Stock
and Restricted Stock Units made on or after the effective date of this new Plan
shall be governed by the terms of this Article IV.
4.2 Award of Restricted Stock and Restricted Stock Units. The Committee
may, from time to time and subject to the provisions of the Plan and such other
terms and conditions as the Committee may prescribe, award shares of Common
Stock or Restricted Stock Units to be held under the restrictions set forth in
this Article to any eligible employee (the "Restricted Stockholder"). If an
eligible employee has been employed less than six months, any award of
Restricted Stock shall only be made from Common Stock which is held as treasury
stock by BankAmerica.
4.3 Minimum Restrictions on Disposition. A Restricted Stockholder may
not, under any circumstances, voluntarily dispose
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of any of the Restricted Stock or Restricted Stock Units prior to the first to
occur of the following events:
(a) the date on which the Restricted Stockholder completes the period
of continuous service, which shall not be less than one year, with the
Company following the award date specified by the Committee for such award;
(b) delivery of the Restricted Stock to the Restricted Stockholder
following a Committee determination pursuant to Section 6.6 hereof in
connection with a Change in Control;
(c) the Restricted Stockholder's retirement or death; or
(d) delivery of the Restricted Stock to the Restricted Stockholder
following his or her termination of employment prior to retirement or death
pursuant to a determination by the Committee under Section 4.6.
The limitations in this Section 4.3 will hereinafter be referred to as the
"minimum restrictions."
4.4 Optional Restrictions. In addition to the minimum restrictions, the
Committee may impose additional restrictions ("optional restrictions") upon the
Restricted Stockholder's voluntary disposition of the Restricted Stock or
Restricted Stock Units, either at the time the Committee makes an award of such
Restricted Stock or Restricted Stock Units or at any subsequent time before the
minimum restrictions expire. The Committee may impose optional restrictions
(such as, without limitation, permitting such disposition and release only in
installments over a period of years) as it may deem in the best interests of the
Restricted Stockholder, or in the case of the Restricted Stockholder's death, of
the heirs or legatees who become entitled to such Restricted Stock or Restricted
Stock Units by the applicable laws of inheritance or under the terms of the
Restricted Stockholder's will.
4.5 Termination of Employment of Restricted Stockholder for Gross
Misconduct. If a Restricted Stockholder's services are terminated for cause for
gross misconduct, all shares of Restricted Stock and Restricted Stock Units
awarded to any Restricted Stockholder under this Plan shall be forfeited, and
the Committee shall direct such shares of Restricted Stock and Restricted Stock
Units to be transferred and delivered to BankAmerica. Gross misconduct
includes, but is not limited to, acts of dishonesty, such as theft,
embezzlement, and falsification of the Company's records with intent to deceive;
breach of trust; knowing violation of rules established by the Company; and any
crime determined by the Company to result in termination of employment.
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4.6 Termination of Employment of Restricted Stockholder not Involving
Gross Misconduct.
(a) Should a Restricted Stockholder who was employed by the Company at
the date of grant terminate his or her employment with the Company prior to (i)
the date on which he or she completes the period of continuous service for the
Company following the award date specified by the Committee for such award, or
(ii) his or her death or retirement, or
(b) should the Company terminate his or her employment for any reason
other than for a cause set forth in Section 4.5 above,
BankAmerica shall reacquire all the Restricted Stock and Restricted Stock Units
without the payment of consideration in any form to such Restricted Stockholder
and the Restricted Stockholder shall unconditionally forfeit any right, title or
interest to such Restricted Stock and Restricted Stock Units, unless the
Committee, up to 90 days after such termination, determines in its sole
discretion to permit the Restricted Stockholder to (i) retain all or any part of
the Restricted Stock, and/or (ii) to waive in whole or in part any or all
remaining restrictions on Restricted Stock Units, and to deliver shares of
Common Stock to the Restricted Stockholder in respect of such Restricted Stock
Units. Upon direction of the Committee, all forfeited Restricted Stock and
Restricted Stock Units shall be transferred and delivered to BankAmerica.
Termination of a Restricted Stockholder's employment with the Company shall be
deemed to include a change in ownership of the Restricted Stockholder's employer
such that the Restricted Stockholder's employer ceases to be BankAmerica or one
of its Subsidiaries.
4.7 Registration and Escrow. Any Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event that any stock certificate is issued
in respect of shares of Restricted Stock granted under the Plan, such
certificate shall be registered in the name of the Restricted Stockholder and
shall either bear an appropriate legend referring to the terms, conditions and
restrictions applicable to such Restricted Stock, or, at the direction of the
Committee, be held by Bank of America National Trust and Savings Association
(the "Bank") (or another escrow agent appointed by the Committee) in escrow
subject to delivery to the Restricted Stockholder or to BankAmerica at such
times and in such amounts as the Committee shall direct under the terms of the
Plan. When an employee accepts an award of Restricted Stock pursuant to the
Plan, he or she thereby grants an irrevocable power of attorney to the Bank or
any other escrow agent appointed by the Committee to cause the transfer and
delivery to BankAmerica of any such Restricted Stock
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which the Committee shall direct to be so transferred and delivered pursuant
hereto.
4.8 Payment in Respect of Restricted Stock Units.
(a) Each Restricted Stock Unit shall represent one share of Common
Stock, and shall, at the time and to the extent it becomes vested, be payable by
the delivery of one share of Common Stock. The Committee is authorized to grant
Restricted Stock Units under which the Restricted Stockholder shall be entitled
to receive payments equivalent to dividends with respect to a number of shares
of Common Stock determined by the Committee, and the Committee may determine
that such amounts (if any) shall be paid to the Restricted Stockholder in cash
from time to time, or be deemed to have been reinvested in additional shares of
Common Stock or additional Restricted Stock Units, or otherwise reinvested.
Restricted Stock Units shall have no voting rights.
(b) The Committee may, in its discretion, provide that payment to the
Restricted Stockholder in respect of Restricted Stock Units shall be deferred
until such date or dates, not later than the Restricted Stockholder's death,
retirement or other termination of employment with the Company, as the
Restricted Stockholder may elect. Any such election shall be filed in writing
with the Committee in accordance with such rules and regulations, including any
time periods within which such election shall be made, as the Committee may
specify.
4.9 Dividends on Restricted Stock. Even while the Restricted Stock is
held in escrow, the Committee may determine that all dividends BankAmerica pays
on the Restricted Stock shall be delivered directly to the Restricted
Stockholder, not the escrow account.
4.10 Voting Rights. Even while the Restricted Stock is held in escrow,
the Committee may determine that the Restricted Stockholder shall have the same
voting rights with respect to the Restricted Stock as those provided to other
shareholders of Common Stock.
ARTICLE V
OTHER STOCK-BASED AWARDS
5.1 Other Stock-Based Awards. The Committee is hereby authorized to grant
to Participants such awards that are denominated or payable in, valued in whole
or in part by reference to, or otherwise based on or related to, shares of
Common Stock (including, without limitation, securities convertible into shares
of Common Stock) as are deemed by the Committee to be consistent with the
purposes of the Plan;
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provided, however, that such grants must comply with Rule 16b-3 promulgated by
- -------- -------
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and applicable law, except that Options may be transferable to
the extent permitted by, and in accordance with the provisions of, Section 6.8
of the Plan. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine the terms and conditions of such
awards. Shares of Common Stock or other securities delivered pursuant to a
purchase right granted under this Section 5.1 shall be purchased for such
consideration, which may be paid by such method or methods and in such form or
forms, including, without limitation, cash, shares of Common Stock, other
securities, other awards, or other property, or any combination thereof, as the
Committee shall determine, the value of which consideration, as established by
the Committee, shall not be less than the Fair Market Value of such shares of
Common Stock or other securities as of the date such purchase right is granted.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, or otherwise delivered by hand or messenger, addressed
(a) if to the Company, at
BankAmerica Corporation
1 South Van Ness Avenue, 7th Floor
San Francisco, CA 94103
Attn: c/o Bank of America NT&SA
Executive Product Services #3005
(b) if to the Participant, at the last address shown on the Company's
personnel records, or
(c) to such address as either the Company or the Participant shall
later designate by notice to the other.
6.2 Amendments of Plan. BankAmerica may, at any time and from time to
time, modify, amend, suspend or terminate the Plan in any respect by action of
the Board or by written amendment executed by a duly authorized officer of
BankAmerica. Notwithstanding the above, however, any modification, amendment,
suspension or termination of the Plan shall not affect a Participant's rights to
a grant or award previously made, except as provided in Section 1.8(a), or
except with his or her consent.
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6.3 Leaves of Absence. The Committee shall be entitled to make such
rules, regulations and determinations as it deems appropriate under the Plan in
respect of any leave of absence from the Company taken by the recipient of any
grant or award under the Plan. Without limiting the generality of the
foregoing, the Committee shall be entitled to determine (a) whether or not any
such leave of absence shall be treated as a termination of employment with the
Company within the meaning of the Plan and (b) the impact, if any, of any such
leave of absence on grants and awards under the Plan.
6.4 Dilution and Other Adjustments. In the event that the Committee shall
determine that any dividend or other distribution (whether in the form of cash,
shares of Common Stock, other securities, or other property), recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation, split-
up, spin-off, combination, repurchase, or exchange of shares of Common Stock or
other securities of BankAmerica, issuance of warrants or other rights to
purchase shares of Common Stock or other securities of BankAmerica, or other
similar corporate transaction or event, affects the Common Stock, such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such manner as it
shall deem equitable, adjust any or all of (i) the number and type of shares of
Common Stock which thereafter may be made the subject of Awards, (ii) the number
and type of shares of Common Stock (or other securities or property) subject to
outstanding Awards, and (iii) the grant, purchase or exercise price with respect
to any Award, or, if deemed appropriate, make provision for a cash payment to
the holder of an outstanding Award; provided, however, in each case, that with
-------- -------
respect to Awards of ISOs no such adjustment shall be authorized to the extent
that such authority would cause the Plan to violate Section 422A of the Internal
Revenue Code or any successor provision thereto; and provided further that the
-------- -------
number of shares of Common Stock subject to any Award denominated in shares of
Common Stock shall always be a whole number.
6.5 General Restriction. Each grant and award under the Plan shall be
subject to the requirement that, if at any time the Committee shall determine
that (a) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any state
or federal law, (b) the consent or approval of any government regulatory body,
or (c) an agreement by the recipient of a grant or award with respect to the
disposition of shares of Common Stock, is necessary or desirable as a condition
of, or in connection with, the making of a grant or award or the issue, delivery
or purchase of shares of Common Stock thereunder, then such grant or award shall
not be consummated in whole or in part
17
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unless such listing, registration, qualification, consent, approval or agreement
shall have been effected or obtained free of any conditions not acceptable to
the Committee.
6.6 Change in Control. If BankAmerica undergoes a Change in Control (as
defined in Section 1.3(e)), the following shall apply:
(a) Except as provided in subsection (b) below, (i) all outstanding
Options and SARs shall be immediately exercisable in full and (ii) all
Restricted Stock, Restricted Stock Units, and Other Stock-Based Awards
shall be immediately released free from all restrictions and shall be
delivered or paid, as the case may be, to the Participant as soon as
practicable following the Change in Control.
(b)(i) The Performance Share Units awarded on November 7, 1994 (and
any subsequent awards of Performance Share Units) under the BankAmerica
Corporation 1992 MSP Performance Share Program shall vest in the time or
times specified in Section 4.1 of the Performance Share Program whether or
not the Participant continues in employment with the Company. However,
following a Change in Control, the Committee shall no longer have
discretion to not vest Performance Share Units after the end of the term of
the Award if BAC ranks 1 or 2 in total shareholder return relative to its
peer banks for the term of the Award.
(b)(ii) In the event (i) any Award has been made to a person who, at
the time of a Change in Control is an officer or director of BankAmerica,
as such terms are defined in Section 16 of the Securities Exchange Act of
1934 and the rules of the Securities and Exchange Commission thereunder,
and (ii) such Award has not satisfied the applicable minimum vesting
provisions of the Plan, this Section 6.6 shall apply to such Award
immediately after the satisfaction of any such applicable minimum vesting
period, whether or not the person remains an employee of the Company at
that time.
(c) Except as provided in the following sentence (and, if applicable,
the expiration of the minimum vesting period in (b)), in the event a
Participant terminates employment with the Company following a Change in
Control, his or her Options and SARs shall remain exercisable for a period
of three years following termination of employment, not to exceed the
original term of the Option or SAR. The preceding sentence shall not apply
to an incentive stock option unless the option agreement gives the
Committee discretion to permit the incentive stock option to remain
exercisable following termination of the optionholder's employment, in
which case the incentive stock option shall
18
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be exercisable for three months following termination of employment without
further Committee action.
(d) Section 6.7 of the Plan regarding payment of withholding taxes
shall remain applicable.
6.7 Withholding Taxes. The Company shall have the right to deduct from
any settlement of an Award made under the Plan, including the delivery or
vesting of shares, an amount sufficient to cover withholding required by law for
any federal, state or local taxes or to take such other action as may be
necessary to satisfy any such withholding obligations. The Committee may permit
shares to be used to satisfy required tax withholding and such shares shall be
valued at the Fair Market Value as of the settlement date of the applicable
award.
6.8 Non-Assignability. Except as provided below, no Participant shall
have the right to alienate, assign, encumber, hypothecate or pledge his or her
interest in any Award under the Plan, voluntarily or involuntarily, and any
attempt to so dispose of any such interest prior to payment thereof shall be
void.
Any Participant who is an Executive Officer (as defined below) shall have
the right, subject to the conditions specified in the following paragraph, to
irrevocably transfer to Immediate Family Members (as defined below) Options
granted at any time under the Plan to any such Participant ("Executive Officer
Participant"). As used in the Plan and the related Award Agreements, the
following terms, when written with initial capital letters, shall have the
meanings stated below:
(a) The term Executive Officer means an Executive Officer designated
by the Board for federal securities law purposes, provided such officer is
also a member of the Managing Committee of Bank of America NT&SA.
(b) The term Immediate Family Members means (i) the children,
grandchildren or spouse of an Executive Officer Participant or (ii) a trust
for the benefit of such family members.
As conditions to such transferability of any Options, (i) the Executive
Officer Participant may not receive any consideration for the transfer; (ii) the
Award Agreements pursuant to which such Options are granted, or amendments to
the Award Agreements with respect to previously granted Options, in each case
approved by the Committee, must specify the actual extent to which such Options
may be transferred, all in accordance with the terms of the Plan; and (iii) the
Options so transferred must continue to be subject to the same terms and
conditions that were applicable to such Options prior to their transfer.
19
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The transferee of any Options transferred in accordance with the terms and
conditions of the Plan shall have the right to exercise such Options and to have
the shares of Common Stock covered by such Options registered in the name of
such transferee, as though such transferee were the Optionee for purposes of
Section 2.7 of the Plan.
Notwithstanding anything contained in this Section 6.8, the Company shall
have the right to offset from any unpaid or deferred Award any amounts due and
owing from the Participant to the extent permitted by law; provided, however,
-------- -------
that with respect to any Options that are transferred in accordance with the
terms and conditions of the Plan, such right shall cease upon the transfer.
6.9 No Right to Employment. Nothing in the Plan nor in any agreement
entered into pursuant to the Plan shall confer upon any Participant the right to
continue in the employment of the Company, nor affect any right which the
Company may have to terminate the employment of such person.
6.10 Rights as Shareholder. No Participant shall have rights as a
shareholder with respect to shares of Common Stock awarded to him or her unless
and until the certificates for such shares are delivered to him or her. The
Committee may determine that Restricted Stockholders have full voting rights
with respect to Restricted Stock, as provided in Section 4.9 hereof.
6.11 Entire Plan. This document is a complete statement of the Plan. As
of its effective date this document supersedes all prior plans, representations
and proposals, written or oral, relating to its subject matter, except as
otherwise provided in Section 1.7 hereof. The Company shall not be bound by or
liable to any person for any representation, promise or inducement made by any
employee or agent of it which is not embodied in this document.
6.12 Governing Law. The Plan shall be construed and enforced in accordance
with California law.
6.13 Delegation. The Committee may delegate to one or more officers of the
Company or any of its Subsidiaries, or to a committee of such officers, the
authority, subject to such terms and limitations as the Committee shall
determine, to make grants and awards to, or to cancel, modify, waive rights with
respect to, alter, discontinue, suspend, or terminate grants or awards held by,
officers or employees of the Company, who are not officers or directors of the
Company for purposes of Section 16 of the Securities Exchange Act of 1934, as
amended.
20
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6.14 Foreign Employees. In order to facilitate the making of any grant or
award under the Plan, the Committee may provide for such special terms for
grants and awards to participants who are foreign nationals or who are employed
by the Company or any Subsidiary outside of the United States of America as the
Committee may consider necessary or appropriate to accommodate differences in
local law, policy or custom. Moreover, the Committee may approve such
supplements to or amendments, restatements, or alternative versions of the Plan
including supplements, amendments or alternative versions providing for Other
Stock-Based Awards as it may consider necessary or appropriate for such
purposes, without thereby affecting the terms of the Plan as in effect for any
other purpose. No such special terms, supplements, amendments or restatements,
however, shall include any provisions that are inconsistent with the terms of
the Plan as then in effect unless the Plan could have been amended to eliminate
such inconsistency without further approval by the shareholders of BankAmerica.
The resolution amending Sections 1.3(e) and 6.6 provided that no
modification, suspension, amendment or termination of the Plan may be made which
would adversely affect the rights of any employee or former employee under the
amendment with respect to any stock option, stock appreciation right, restricted
stock unit or other stock based award granted under the Plan prior to the date
of such modification, suspension, amendment or termination.
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EXHIBIT 10.b
[Logo of BankAmerica Corporation]
1987 MANAGEMENT STOCK PLAN
As adopted April 6, 1987
and amended through
April 28, 1997
<PAGE>
BANKAMERICA CORPORATION
1987 MANAGEMENT STOCK PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE I
General..................................................................... 1
1.1 Background of Plan................................................ 1
1.2 Purpose of Plan................................................... 1
1.3 Definitions....................................................... 1
1.4 Administration of Plan............................................ 4
1.5 Eligibility to Receive Grants and Awards.......................... 5
1.6 Types of Grants and Awards Under Plan............................. 6
1.7 Limitation on Available Shares.................................... 6
1.8 Effective Date and Term of Plan................................... 6
ARTICLE II
Incentive Stock Options and Non-Qualified Stock Options..................... 7
2.1 Grant of Stock Options............................................ 7
2.2 Stock Option Agreements........................................... 7
2.3 Option Price...................................................... 7
2.4 Option Period..................................................... 7
2.5 Limitation on ISOs................................................ 8
2.6 Manner of Paying Option Price..................................... 8
2.7 Exercise of Option................................................ 8
2.8 Cancellation of SARs.............................................. 9
2.9 Cancellation and Regrant of Non-Qualified Stock Options........... 9
2.10 Retirement of Optionee at Age Sixty-Five or Later................ 9
2.11 Early Retirement of Optionee..................................... 9
2.12 Termination on Leave of Absence or Extraordinary Circumstances... 10
2.13 Termination of Employment of Optionee............................ 10
2.14 Death of Optionee................................................ 11
ARTICLE III
Performance Stock Options................................................... 11
3.1 Grant of Performance Stock Options................................ 11
3.2 Stock Option Agreements........................................... 12
3.3 Option Price...................................................... 12
3.4 Option Period..................................................... 12
3.5 Dividend Equivalent Credit........................................ 12
3.6 Granting of Dividend Equivalent Credits........................... 13
</TABLE>
i
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<TABLE>
<S> <C>
3.7 Manner of Paying Option Price..................................... 13
3.8 Exercise of Options............................................... 13
3.9 Surrender of Performance Stock Options............................ 14
3.10 Payments from the DEC Account.................................... 14
3.11 Cancellation of SARs............................................. 15
3.12 Cancellation and Regrant of Performance Stock Options............ 15
3.13 Retirement of Optionee at Age Sixty-Five or Later................ 15
3.14 Early Retirement of Optionee..................................... 15
3.15 Termination on Leave of Absence or Extraordinary Circumstances... 16
3.16 Termination of Employment of Optionee............................ 16
3.17 Death of Optionee................................................ 16
ARTICLE IV
Stock Appreciation Rights................................................... 17
4.1 Grant of Stock Appreciation Rights................................ 17
4.2 Agreements Evidencing SARs........................................ 17
4.3 Exercise of SARs.................................................. 17
4.4 Amount of Payment................................................. 17
4.5 Form and Timing of Payment........................................ 18
4.6 Cancellation of Related Options................................... 18
4.7 Termination of Employment of Optionee............................. 18
4.8 Death of Optionee................................................. 18
ARTICLE V
Restricted Stock............................................................ 19
5.1 Introduction...................................................... 19
5.2 Award of Restricted Stock......................................... 19
5.3 Minimum Restrictions on Disposition of Stock Awards............... 19
5.4 Optional Restrictions............................................. 20
5.5 Termination of Employment of Restricted Stockholder for
Gross Misconduct.................................................. 20
5.6 Termination of Employment of Restricted Stockholder not
Involving Gross Misconduct........................................ 20
5.7 Escrow............................................................ 21
5.8 Dividends on Restricted Stock..................................... 21
5.9 Voting Rights..................................................... 21
ARTICLE VI
Miscellaneous............................................................... 21
6.1 Notices........................................................... 21
6.2 Amendments of Plan................................................ 22
6.3 Leaves of Absence................................................. 22
</TABLE>
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<TABLE>
<S> <C>
6.4 Dilution and Other Adjustments.............................. 22
6.5 General Restriction......................................... 22
6.6 Change in Control........................................... 22
6.7 Withholding Taxes........................................... 23
6.8 Non-Assignability........................................... 23
6.9 No Right to Employment...................................... 24
6.10 Rights as Shareholder...................................... 24
6.11 Entire Plan................................................ 24
6.12 Governing Law.............................................. 24
</TABLE>
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BANKAMERICA CORPORATION
1987 MANAGEMENT STOCK PLAN
ARTICLE I
GENERAL
1.1 BACKGROUND OF PLAN. BankAmerica Corporation hereby establishes the
BankAmerica Corporation 1987 Management Stock Plan (the "Plan"). The Plan
provides for the grant of three types of stock options on BankAmerica
Corporation Common Stock, and for the grant of restricted stock. The Plan is
the successor to the BankAmerica Corporation Management Incentive Stock Plan.
1.2 PURPOSE OF PLAN. The purpose of the Plan is to provide contingent
financial incentive to key executive officers of BankAmerica Corporation and its
present and future Subsidiaries (as defined in Section 1.3(m)) and other
individuals whose participation in the Plan is deemed to be in the best
interests of BankAmerica Corporation. The Plan will offer competitive levels of
incentive compensation related to long-term corporate financial performance to
those key officers and other employees of the Company and other individuals who,
by virtue of their position and efforts, contribute to or substantially
influence the financial success of BankAmerica Corporation over multiple-year
periods. The Plan is also intended as a means of increasing officer
shareholdings, thereby strengthening the commonality of interest between
BankAmerica shareholders and key officers and other employees in the Company's
management, and as an aid in attracting, retaining and motivating key officers
and other employees of outstanding abilities and specialized skills.
1.3 DEFINITIONS. As used in the Plan and the related Stock Option
Agreements, the following terms, when written with initial capital letters, will
have the meanings stated below:
(a) BankAmerica means BankAmerica Corporation, a Delaware
corporation.
(b) Board means Board of Directors of BankAmerica.
(c) Change in Control means that one of the following events has
occurred:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (i) the then
outstanding shares of common stock of BankAmerica (the "Outstanding
BankAmerica Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of
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BankAmerica entitled to vote generally in the election of directors
(the "Outstanding BankAmerica Voting Securities"); provided, however,
that for purposes of this subsection (a), the following acquisitions
shall not constitute a Change of Control: (i) any acquisition
directly from BankAmerica (ii) any acquisition by BankAmerica, (iii)
any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (A),
(B) and (C) of subsection (iii) below.
(ii) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by BankAmerica's shareholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board.
(iii) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets
of BankAmerica or its principal Subsidiary (a "Business Combination"),
in each case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding BankAmerica Common
Stock and Outstanding BankAmerica Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly,
more than 80% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a
result of such transaction owns BankAmerica or all or substantially
all of BankAmerica'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 BankAmerica Common Stock and Outstanding BankAmerica
Voting Securities, as the case may be, (provided, however, that, for
the 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 BankAmerica Common Stock
or Outstanding BankAmerica 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
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outstanding common stock and voting power 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 Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation unless such Person owned 20% or more of the Outstanding
BankAmerica Common Stock or Outstanding BankAmerica 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 (or, in the case of BankAmerica's principal Subsidiary, the
corresponding board of directors) at the time of the execution of the
initial agreement, or of the action of the Board, providing for such
Business Combination.
(iv) Approval by the shareholders of BankAmerica of a complete
liquidation or dissolution of BankAmerica.
(d) Committee means the Executive Personnel and Compensation
Committee of the Board.
(e) Common Stock means shares of BankAmerica's common stock, $1.5625
par value per share.
(f) Company means BankAmerica and its Subsidiaries, collectively.
(g) Dividend Equivalent Credit ("DEC") and Dividend Equivalent Credit
Account ("DEC Account") have the meanings set forth in Section 3.5.
(h) The Fair Market Value of a share of Common Stock on any date
means the average of the high and low sales prices of a share of Common
Stock as reflected in the report of consolidated 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 or in any other publication
selected by the Committee; provided, however, that if shares of Common
Stock shall not have been publicly traded for more than ten days
immediately preceding such date, then the fair market value of a share of
Common Stock shall be determined by the Committee in such manner as it may
deem appropriate.
(i) Management Incentive Stock Plan ("MISP") means the plan adopted
by the Board of Directors of BankAmerica Corporation on December 6, 1982,
as amended, pursuant to which BankAmerica Corporation has issued non-
qualified stock options, incentive stock options, performance stock
options, and restricted stock to key officers
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and other employees of BankAmerica.
(j) Option means an option to purchase shares of the Common Stock,
and shall be one of three kinds: (i) Incentive Stock Options ("ISOs") and
(ii) Non-Qualified Stock Option ("NQSOs"), granted pursuant to Article II;
and (iii) Performance Stock Options ("PSOs") granted pursuant to Article
III. The Company intends the ISOs shall meet the requirements of Section
422A of the Internal Revenue Code and the regulations thereunder applicable
to incentive stock options, and that NQSOs and PSOs shall not meet such
requirements.
(k) Optionee means the holder of an Option.
(l) Restricted Stock means Common Stock issued or delivered pursuant
to Article V with the restrictions set forth in Sections 5.3 and 5.4.
(m) Retirement (including Early Retirement) means the last day of
employment with the BankAmerica or one of its Subsidiaries prior to the
employee's retirement under a retirement program of BankAmerica or one of
its Subsidiaries.
(n) Stock Appreciation Right ("SAR") has the meaning set forth in
Section 4.1.
(o) Stock Option Agreement means any written agreement between
BankAmerica and an employee of the Company or other individual pursuant to
which an Option is granted. The Committee shall determine the terms of
each Stock Option Agreement subject to the provisions of Section 2.2 with
respect to ISOs and NQSOs, and to the provisions of Section 3.2 with
respect to PSOs.
(p) Subsidiary means any corporation of which BankAmerica owns,
directly or indirectly, twenty percent or more of the voting stock.
(q) Window Period means the time period described in Section 4.5(a)
hereof.
(r) Section 16 means Section 16 of the Securities Exchange Act of
1934 and the rules thereunder.
1.4 Administration of Plan. (a) The Plan shall be administered by the
Committee. The Committee shall consist of at least three members of the Board,
none of whom shall be, while serving on the Committee, eligible to receive a
grant or award under the Plan or under any other plan of the Company or its
affiliates under which the participants are entitled to acquire Common Stock,
stock options, restricted stock, and related rights, or stock appreciation
rights of the Company or any of its affiliates. Members of the Committee shall
serve at the pleasure of the Board.
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(b) Subject to the provisions of the Plan, the Committee shall have
sole, final, and conclusive authority to determine:
(i) the employees and other individuals to whom Options,
Restricted Stock, and related rights, shall be granted or awarded;
(ii) the number of shares of Common Stock to be optioned,
granted or awarded to each such employee or other individual;
(iii) whether and to what extent an Optionee may use already-
owned shares of Common Stock to exercise Options;
(iv) the restrictions to be imposed on each share of Restricted
Stock awarded pursuant to Article V of this Plan, which shall not be less
than the minimum restrictions set forth in Section 5.3;
(v) which Options granted shall be Incentive Stock Options,
which shall be Non-Qualified Stock Options, and which shall be Performance
Stock Options;
(vi) the price to be paid for the shares upon the exercise of
each Option, which shall be not less than 100% of the Fair Market Value per
share, as determined by the Committee, of the Common Stock at the time of
granting the Option;
(vii) the period within which each Option shall be exercised;
(viii) the terms and conditions of each Stock Option Agreement
between BankAmerica and an employee or other individual to whom the
Committee has granted an Option, which, however, shall be in accordance
with the provisions of the Plan; and
(ix) the Committee shall have the power, authority, and sole
discretion to construe, interpret and administer the Plan. The Committee's
decisions construing, interpreting and administering the Plan shall be
conclusive and binding on all parties.
1.5 ELIGIBILITY TO RECEIVE GRANTS AND AWARDS. Employees of BankAmerica or
of any of its Subsidiaries who shall, in the judgment of the Committee be
qualified by position, training or ability to contribute substantially to the
progress of BankAmerica, shall be eligible to receive grants and awards under
the Plan. The Committee may also make grants and awards to such other
individuals whose participation in the Plan is determined to be in the best
interest of BankAmerica, provided that the shares of Common Stock to be received
by such individuals are eligible to be registered on Securities and Exchange
Commission Form S-8 (or any successor to such form) under the rules and
regulations in effect at the time of grant or award.
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1.6 TYPES OF GRANTS AND AWARDS UNDER PLAN. Grants and awards under the
Plan may be in the form of any one or more of the following: (i) Incentive Stock
Options, (ii) Non-Qualified Stock Options, (iii) Performance Stock Options, (iv)
Stock Appreciation Rights, and (v) Restricted Stock.
1.7 LIMITATION ON AVAILABLE SHARES. The maximum number of shares of
Common Stock that shall be available for issuance or delivery under the Plan
with respect to grants and awards made under the Plan on or after April 6, 1987
shall be 7,706,037, plus a maximum of 4,605,338 shares either as of April 6,
1987 subject to outstanding options, or outstanding as restricted stock, granted
under the BankAmerica Corporation Management Incentive Stock Plan as described
in the final paragraph of this Section 1.7. The number of shares available
under the Plan may be, in whole or in part, authorized but unissued shares of
Common Stock or issued shares of Common Stock that have been reacquired by
BankAmerica. Shares of Common Stock shall be issued or delivered upon the
exercise of Options, and may be issued or delivered in payment of Dividend
Equivalent Credits, Stock Appreciation Rights, and Restricted Stock awards in
the discretion of the Committee.
Any shares of Common Stock subject to an Option which for any reason is
cancelled (including shares subject to an Option which is cancelled upon the
exercise of related SARs) or terminated without having been exercised, or which
expires, shall again be available for issuance or delivery under the Plan.
Any shares of Restricted Stock that for any reason are reacquired by
BankAmerica pursuant to Section 5.5 or 5.6, shall again be available for
delivery under the Plan.
Finally, any shares of Common Stock subject to an MISP option that for any
reason is cancelled (including shares subject to an MISP option which is
cancelled upon the exercise of related SARs) or terminated without having been
exercised, or which expires, and any shares of MISP Restricted Stock that for
any reason are reacquired by BankAmerica pursuant to Section 5.5 or 5.6 of the
MISP, shall again be available for issuance or delivery under this Plan.
1.8 EFFECTIVE DATE AND TERM OF PLAN. (a) The Plan shall become effective
on April 6, 1987 and the Committee may, in its discretion, make grants and
awards to eligible key officers and other employees of the Company as of that
date, subject, however, to the approval of the Plan by the shareholders of
BankAmerica at the 1987 annual meeting of shareholders. In the event the Plan
is not approved at such meeting, the Plan and all grants and awards hereunder
shall be void, and the Company shall have no obligation to any recipients of
such grants and awards.
(b) The Committee may make grants and awards under the Plan beginning
April 6, 1987 and during each subsequent year until such time as the Plan may be
terminated by the Board in its sole discretion, or as hereinafter provided.
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(c) Unless the shareholders of BankAmerica shall approve an extension
or renewal of the Plan for such new or additional term as they may determine, no
grants and awards shall be made after April 5, 1997. However, all grants and
awards made under the Plan prior to such date shall remain in effect until such
grants and awards shall have been satisfied, terminated, or paid out, or expire,
in accordance with the Plan and the terms of such grants and awards.
ARTICLE II
INCENTIVE STOCK OPTIONS AND NON-QUALIFIED STOCK OPTIONS
2.1 GRANT OF STOCK OPTIONS. The Committee may, from time to time and
subject to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, grant to any eligible employee or other individual
Incentive Stock Options ("ISOs" or "Options") and/or Non-Qualified Stock Options
("NQSOs" or "Options") (as these terms are defined in Section 1.3), to purchase,
for cash and/or for already-owned shares of Common Stock, such number of shares
of Common Stock as the Committee shall determine.
2.2 STOCK OPTION AGREEMENTS. The grant of an ISO or NQSO shall be
evidenced by a written Stock Option Agreement in such form as the Committee may
from time to time determine in accordance with the provisions of the Plan,
executed by BankAmerica. Each Stock Option Agreement shall state the number of
shares of Common Stock subject to the Option, the Option price, the Option
Period, any limitations on the Option, the restrictions on assigning and
transferring the Option described in Section 6.8, the manner of payment for
shares of Common Stock, and such other terms as the Committee shall determine.
2.3 OPTION PRICE. The purchase price per share of Common Stock which the
Optionee must deliver upon the exercise of an ISO or NQSO shall be fixed by the
Committee, but shall not be less than 100% of the Fair Market Value of a share
of Common Stock on the date the Option is granted.
2.4 OPTION PERIOD. Each Option granted as an ISO or NQSO shall become
exercisable in part or in full at such time or times as the Committee may
determine and specify in each Stock Option Agreement; provided, however, that no
Option will be exercisable before the date six months after the date the Option
was granted, nor after the first to occur of the following dates:
(a) ten years after the date the Option is granted;
(b) in the case of ISOs, three months after the date of the Optionee's
retirement;
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(c) in the case of NQSOs, three years after the date of the Optionee's
retirement;
(d) three years after death of the Optionee; and
(e) except as provided in Sections 2.4(a) through 2.4(d) above,
termination of the Optionee's employment with the Company, unless the
Committee, in its sole discretion, decides otherwise, in which case the
Committee shall have discretion both (i) to accelerate the exercisability
of any Option (held by an Optionee who is not subject to Section 16) which
would not otherwise become exercisable by the termination of the Optionee's
employment under the terms of the relevant Stock Option Agreement, and (ii)
to extend the exercisability of any exercisable Option (including an Option
that became exercisable pursuant to Section 2.4(e)(i), above) beyond the
termination of the Optionee's employment.
2.5 LIMITATION ON ISOS. Notwithstanding any other provisions in the Plan
or in any ISO agreement, to the extent the aggregate Fair Market Value
(determined at the time the option is granted) of stock with respect to which
ISOs granted after December 31, 1986 are exercisable for the first time by an
Optionee during any calendar year exceeds $100,000, under this Plan and under
all plans of BankAmerica and its subsidiaries, such options shall be treated as
NQSOs. This rule shall be applied by taking options into account in the order
in which they were granted so that options with the earliest grant date will
receive ISO treatment.
No ISO shall be granted to any person who at the time owns more than ten
percent of total combined voting power of all classes of stock of BankAmerica or
of any Subsidiaries.
2.6 MANNER OF PAYING OPTION PRICE. On exercise of each ISO or NQSO, the
Option Price shall be paid as follows: (a) in cash, (b) in already-owned shares
of Common Stock, or (c) in some combination of cash and shares, as specified in
the Stock Option Agreement or as otherwise permitted by the Committee. Already-
owned shares of Common Stock must have been owned by the Optionee at the time of
exercise for at least the period of time specified in the Stock Option
Agreement, and shall be valued at their Fair Market Value on the date of
exercise.
2.7 EXERCISE OF OPTION. The Committee shall establish, and shall set
forth in each Stock Option Agreement, the procedures governing the exercise of
an ISO or NQSO. In general, subject to such specific provisions, an ISO or NQSO
shall be exercised as follows:
(a) the Optionee shall deliver written notice that he or she intends
to exercise the Option to the Company department or officer designated in
the Stock Option Agreement;
(b) the Optionee shall pay the full Option Price at the time of
exercise, according to Section 2.6 above; and
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(c) as soon as practicable after receipt of such notice and payment, the
Company shall direct BankAmerica's transfer agent to register the shares of
Common Stock in the name of the Optionee.
2.8 CANCELLATION OF SARS. The exercise of an ISO or NQSO with respect to
a share of Common Stock shall cancel any SAR related to such share.
2.9 CANCELLATION AND REGRANT OF NON-QUALIFIED STOCK OPTIONS. With the
consent of the Optionee of a NQSO, the Committee in its sole discretion may
cancel particular NQSOs, and regrant to the same Optionee NQSOs to purchase the
same or a different number of shares of Common Stock. The Committee shall
regrant NQSOs on such terms as it may determine in its sole discretion, provided
that the Option Price shall be not less than the Fair Market Value of the Common
Stock on the date of regrant.
2.10 RETIREMENT OF OPTIONEE AT AGE SIXTY-FIVE OR LATER. Upon retirement
at age sixty-five or later, the Optionee (other than an individual not employed
by the Company at the date of grant) shall become immediately entitled to
purchase:
(1) all shares of Common Stock covered by Optionee's NQSOs and,
(2) shares of Common Stock covered by Optionee's ISOs subject to the
rules set forth in the first sentence of Section 2.5
without regard to whether the NQSOs or ISOs were fully exercisable at the
retirement date under the terms of the Stock Option Agreements and the Plan.
The Optionee may purchase any or all of the shares he or she is entitled to
purchase at any time or times during the period, if any, beginning on the date
the Option first becomes exercisable and ending on the first to occur of the
following dates:
(a) the end of the Option Period as provided in Section 2.4
above;
(b) in the case of ISOs, three months after the date of the
Optionee's retirement.
2.11 EARLY RETIREMENT OF OPTIONEE. Upon retirement prior to age sixty-
five, the Optionee (other than an individual not employed by the Company at the
date of grant) may
(a) exercise any Option to the extent such Option was exercisable on
the retirement date; or
(b) within the sole discretion of the Committee, become immediately
entitled to purchase:
(1) all shares of Common Stock covered by Optionee's NQSOs and,
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(2) shares of Common Stock covered by Optionee's ISOs subject to rules set
forth in the first sentence of Section 2.5
without regard to whether the NQSOs or ISOs were fully exercisable at the
retirement date under the terms of the Stock Option Agreements and the Plan.
The Optionee may purchase any or all of the shares he or she is entitled to
purchase at any time or times during the period, if any, beginning on the date
the Option first becomes exercisable and ending on the first to occur of the
following dates:
(a) the end of the Option Period as provided in Section 2.4 above;
(b) in the case of ISOs, three months after the date of the Optionee's
early retirement; and
(c) in the case of NQSOs, three years after the date of the Optionee's
early retirement.
2.12 TERMINATION ON LEAVE OF ABSENCE OR EXTRAORDINARY CIRCUMSTANCES. With
respect to Optionees who were employed by the Company on the date of grant, upon
termination of the Optionee's employment with the Company by reason of (a) leave
of absence treated as termination of employment pursuant to Section 6.3 or (b)
extraordinary circumstances, as determined by the sole discretion of the
Committee, the Optionee may exercise any ISO or NQSO to the extent such Option
was exercisable on the date of termination of employment at any time or times up
to and including the first to occur of the following dates:
(i) the end of the Option Period as provided in Section 2.4 above;
and
(ii) three months after the date of the Optionee's termination.
2.13 TERMINATION OF EMPLOYMENT OF OPTIONEE. With respect to Optionees who
were employed by the Company on the date of grant, except as provided in
Sections 2.4(e), 2.10, 2.11, 2.12 and 2.14, all ISOs and NQSOs shall become non-
exercisable upon termination of the Optionee's employment with the Company.
Termination of an Optionee's employment with the Company shall be deemed to
include a change in ownership of the Optionee's employer such that the
Optionee's employer ceases to be BankAmerica or one of its Subsidiaries,
PROVIDED, HOWEVER, that at any time within thirty (30) days prior to such a
change in ownership, or within ninety (90) days after termination of the
Optionee's employment with the Company, within the sole discretion of the
Committee, the Optionee may become immediately entitled to purchase:
(1) all shares of Common Stock covered by Optionee's NQSOs and,
(2) shares of Common Stock covered by Optionee's ISOs subject to
the rules set forth in the first sentence of Section 2.5
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without regard to whether the NQSOs or ISOs were fully exercisable immediately
prior to termination under the terms of the Stock Option Agreements and the
Plan.
2.14 DEATH OF OPTIONEE. If any Optionee entitled to exercise an ISO or
NQSO
(a) terminates employment with the Company by reason of death, or
(b) dies after termination of employment with the Company and during
the Option Period, or
(c) with respect to an individual who was not employed by the Company
at the date of grant, dies during the Option Period
(A) the Optionee's estate and/or (B) a person who acquires the right to exercise
such Option by bequest or inheritance, may
(a) exercise such Option to the extent of the number of shares of
Common Stock which could have been purchased by the Optionee on the date of
death; or
(b) within the sole discretion of the Committee, become immediately
entitled to purchase:
(1) all shares of Common Stock covered by Optionee's NQSOs and,
(2) shares of Common Stock covered by Optionee's ISOs subject to
the rules set forth in the first sentence of Section 2.5
without regard to whether the NQSOs or ISOs were fully exercisable at the date
of death under the terms of the Stock Option Agreements and the Plan. The
shares covered by the Options may be purchased at any time or times during the
period, if any, beginning on the date the Option first becomes exercisable and
ending on the first to occur of the following dates:
(a) the end of the Option Period as provided in Section 2.4 above; and
(b) three years following the date of the Optionee's death.
ARTICLE III
PERFORMANCE STOCK OPTIONS
3.1 GRANT OF PERFORMANCE STOCK OPTIONS. The Committee may, from time to
time and subject to the provisions of the Plan and such other terms and
conditions as the
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Committee may prescribe, grant to any eligible employee or other individual
Performance Stock Options ("PSOs" or "Options") (as these terms are defined in
Section 1.3) to purchase, for cash and/or for already-owned shares of Common
Stock, such number of shares of Common Stock as the Committee shall determine.
3.2 STOCK OPTION AGREEMENTS. The grant of a PSO shall be evidenced by a
written Stock Option Agreement in such form as the Committee may from time to
time determine in accordance with the provisions of the Plan, executed by
BankAmerica. Each Stock Option Agreement shall state the number of shares of
Common Stock subject to the Option, the Option Price, the Option Period, any
limitations on the Option, the restrictions on assigning and transferring the
Option described in Section 6.8, the manner of payment for shares of Common
Stock, and such other terms as the Committee shall determine.
3.3 OPTION PRICE. The purchase price per share of Common Stock which the
Optionee must deliver upon the exercise of a PSO shall be fixed by the
Committee, but shall not be less than 100% of the Fair Market Value of a share
of Common Stock on the date the Option is granted.
3.4 OPTION PERIOD. Each Option granted as a PSO shall become exercisable
in part or in full at such time or times as the Committee may determine and
specify in each Stock Option Agreement; provided, however, that no PSO will be
exercisable before the date six months after the date the Option was granted,
nor after the first to occur of the following dates:
(a) ten years after the date the Option is granted;
(b) three years after the date of the Optionee's retirement;
(c) three years after death of the Optionee; and
(d) except as provided in Sections 3.4(a) through 3.4(c) above,
termination of the Optionee's employment with the Company, unless the
Committee, in its sole discretion, decides otherwise, in which case the
Committee shall have discretion both (i) to accelerate the exercisability
of any Option (held by an Optionee who is not subject to Section 16) which
would not otherwise become exercisable by the termination of the Optionee's
employment under the terms of the relevant Stock Option Agreement, and (ii)
to extend the exercisability of any exercisable Option (including an Option
that became exercisable pursuant to Section 3.4(d)(i), above) beyond the
termination of the Optionee's employment.
3.5 DIVIDEND EQUIVALENT CREDIT. A Dividend Equivalent Credit ("DEC") is
the amount credited to the account of an Optionee (the "DEC Account") equal to a
percentage designated by the Committee in each Stock Option Agreement, of the
dividends per share paid by BankAmerica on its Common Stock. The Committee
shall maintain one DEC
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Account with respect to each outstanding Stock Option Agreement for PSOs.
Amounts credited to the DEC Account shall be measured in terms of shares of
Common Stock (the "Share Equivalents"), although the DEC Accounts shall be
wholly unfunded until the amounts credited are paid out pursuant to Sections
3.8, 3.9 and 3.10 below.
DECs shall be credited as of any date on which BankAmerica pays dividends
on its Common Stock. DECs shall be credited in the form of the number of Share
Equivalents equal to
(a) the product of (i) the number of shares with respect to which a
DEC is being credited pursuant to Section 3.6 below, multiplied by (ii) the
dollar amount of the dividends per share paid on that date, all multiplied
by (iii) the percentage specified in the Stock Option Agreement
DIVIDED BY
(b) the Fair Market Value of one share of Common Stock on the date
the related dividends are paid.
Except as provided in Section 3.12, the balance in any DEC Account shall be
reduced to zero upon cancellation of the related PSO(s).
3.6 GRANTING OF DIVIDEND EQUIVALENT CREDITS. The Committee shall, subject
to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, grant the Optionee one DEC with respect to (a) each
share of Common Stock subject to a PSO outstanding and unexercised as of the
record date for the related dividend whether or not such PSO is then exercisable
under the Plan and the Stock Option Agreement, and (b) each Share Equivalent
previously credited to the Optionee's DEC Account, as those terms are defined in
Section 3.5. However, after the Optionee's employment with the Company is
terminated, no portion of any dividend paid by BankAmerica on its Common Stock
shall be credited to the Optionee's DEC Account(s).
3.7 MANNER OF PAYING OPTION PRICE. On exercise of each PSO, the Option
Price shall be paid as follows: (a) in cash, (b) in already-owned shares of
Common Stock, or (c) in some combination of cash and shares, as specified in the
Stock Option Agreement or as otherwise permitted by the Committee. Already-
owned shares of Common Stock must have been owned by the Optionee at the time of
exercise for at least the period of time specified in the Stock Option
Agreement, and shall be valued at their Fair Market Value on the date of
exercise.
3.8 EXERCISE OF OPTIONS. The Committee shall establish, and shall set
forth in each Stock Option Agreement, the procedures governing the exercise of a
PSO. In general, subject to such specific provisions, a PSO shall be exercised
as follows:
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(a) the optionee shall deliver written notice that he or she intends
to exercise the Option to the Company department or officer designated in
the Stock Option Agreement;
(b) the Optionee shall pay the full Option Price at the time of
exercise, according to Section 3.7 above; and
(c) as soon as practicable after receipt of such notice and payment,
the Company shall
(i) direct BankAmerica's transfer agent to register the shares
of Common Stock in the name of the Optionee, and
(ii) deliver to the Optionee all or that portion of the related
DEC Account which equals (A) the total DEC Account, multiplied by (B)
the quotient of (1) the number of PSOs being exercised, divided by (2)
the total number of PSOs then outstanding under the Stock Option
Agreement,
all payable according to Section 3.10 below.
3.9 SURRENDER OF PERFORMANCE STOCK OPTIONS. At any time when (a) the
Option Price of a PSO exceeds the Fair Market Value of the Common Stock and (b)
all PSOs granted pursuant to the same Stock Option Agreement are fully
exercisable, the Optionee may surrender all but not less than all of his or her
PSOs by delivering written notice to the Company department or officer
designated in the Stock Option Agreement, without payment of the Option Price.
As soon as practicable after receipt of such notice, the Company shall deliver
to the Optionee the greater of the following:
(a) the "Net Underwater Amount," equal to (i) the total DEC Account
reduced by (ii) the difference between (A) the aggregate Option Price of
the PSOs surrendered, and (B) the aggregate Fair Market Value on the date
of surrender of the Common Stock issuable or deliverable with respect to
the PSOs surrendered; and
(b) a percentage, determined by the Committee and specified in the
Stock Option Agreement, of the related DEC Account. Payments of the DEC
Accounts shall be made according to Section 3.10 below.
3.10 PAYMENTS FROM THE DEC ACCOUNT. Amounts payable to the Optionee from
his or her DEC Account upon exercise of PSOs or the related SARs or surrender of
PSOs may be paid either (a) in shares of Common Stock; (b) in cash; or (c) in
some combination of shares and cash, as determined by the Committee, PROVIDED
THAT at any time when the Option constitutes Stock Appreciation Rights pursuant
to Article IV of the Plan, (i) if the Optionee exercises the SAR or surrenders
the related PSO during the Window Period described in Section 4.5(a), the DEC
Account shall be paid out in cash and valued as provided in Section
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4.5(b), and (ii) if the Optionee exercises the SAR or surrenders the related PSO
at any time outside that Window Period, the DEC Account shall be paid out in
shares of Common Stock and valued as provided in Section 4.5(c).
3.11 CANCELLATION OF SARS. The exercise of a PSO with respect to a share
of Common Stock shall cancel any SAR related to such share.
3.12 CANCELLATION AND REGRANT OF PERFORMANCE STOCK OPTIONS. With the
consent of the holder of a Performance Stock Option, the Committee in its sole
discretion may cancel particular PSOs, and regrant to the same Optionee PSOs to
purchase the same or a different number of shares of Common Stock. The
Committee shall regrant PSOs on such terms as it may determine in its sole
discretion, provided (a) that the Option Price shall not be less than the Fair
Market Value of the Common Stock on the date of regrant, and (b) that the DEC
Account shall not thereby become payable in whole or in part to the Optionee.
The Committee may, in its sole discretion, provide that some or all of the DEC
Account maintained with respect to the PSOs cancelled may be immediately
credited to the PSOs which are regranted.
3.13 RETIREMENT OF OPTIONEE AT AGE SIXTY-FIVE OR LATER. Upon retirement
at age sixty-five or later, the Optionee (other than an individual not employed
by the Company at the date of grant) shall become immediately entitled to
purchase all shares of Common Stock covered by the PSO without regard to whether
the Option was fully exercisable at the retirement date under the terms of the
Plan and the Stock Option Agreement. The Optionee may purchase any or all of
the shares he or she is entitled to purchase at any time or times up to and
including the first to occur of the following dates:
(a) the end of the Option Period as provided in Section 3.4 above;
and
(b) three years after the Optionee's retirement.
3.14 EARLY RETIREMENT OF OPTIONEE. Upon early retirement prior to age
sixty-five, the Optionee (other than an individual not employed by the Company
at the date of grant) may
(a) exercise any Option to the extent such Option was exercisable on
the retirement date; or
(b) within the sole discretion of the Committee, become immediately
entitled to purchase all shares of Common Stock covered by the Option
without regard to whether the PSO was fully exercisable at the retirement
date under the terms of the Plan and the Stock Option Agreement.
The Optionee may purchase any or all of the shares he or she is entitled to
purchase at any time or times up to and including the first to occur of the
following dates:
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(a) the end of the Option Period as provided in Section 3.4 above;
and
(b) three years after the date of the Optionee's early retirement.
3.15 TERMINATION ON LEAVE OF ABSENCE OR EXTRAORDINARY CIRCUMSTANCES. With
respect to Optionees who were employed by the Company on the date of grant, upon
termination of the Optionee's employment with the Company by reason of (a) leave
of absence treated as termination of employment pursuant to Section 6.3 or (b)
extraordinary circumstances, as determined in the sole discretion of the
Committee, the Optionee may exercise any Option to the extent such Option was
exercisable on the date of termination of employment at any time or times up to
and including the first to occur of the following dates:
(a) the end of the Option Period as provided in Section 3.4 above;
and
(b) three months after the date of the Optionee's termination.
3.16 TERMINATION OF EMPLOYMENT OF OPTIONEE. With respect to Optionees who
were employed by the Company at the date of grant, except as provided in
Sections 3.4(d), 3.13, 3.14, 3.15 and 3.17, all Options shall become non-
exercisable upon termination of the Optionee's employment with the Company.
Termination of an Optionee's employment with the Company shall be deemed to
include a change in ownership of the Optionee's employer such that the
Optionee's employer ceases to be BankAmerica or one of its Subsidiaries,
PROVIDED, HOWEVER, that at any time within thirty (30) days prior to such a
change in ownership or within ninety (90) days after termination of the
Optionee's employment with the Company, within the sole discretion of the
Committee, the Optionee may become immediately entitled to purchase all shares
of Common Stock covered by the Option without regard to whether the Option would
be fully exercisable at the effective date of the change in ownership under the
terms of the Plan and the Stock Option Agreement.
3.17 DEATH OF OPTIONEE. If an Optionee entitled to exercise a PSO
(a) terminates employment with the Company by reason of death, or
(b) dies after termination of employment with the Company and during
the Option Period, or
(c) with respect to an individual who was not employed by the Company
on the date of grant, dies during the Option Period,
(A) the Optionee's estate and/or (B) a person who acquires the right to exercise
such Option by bequest or inheritance, may
(a) exercise such Option to the extent of the number of shares of
Common Stock which could have been purchased by the Optionee on the date of
death; or
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(b) within the sole discretion of the Committee, become immediately
entitled to purchase all shares of Common Stock covered by the Option
without regard to whether the Option was fully exercisable at the date of
death under the terms of the Plan and the Stock Option Agreement at any
time or times up to and including the first to occur of the following
dates:
(a) the end of the Option Period as provided in Section 3.4
above; and
(b) three years following the date of the Optionee's death.
ARTICLE IV
STOCK APPRECIATION RIGHTS
4.1 GRANT OF STOCK APPRECIATION RIGHTS. The Committee may in its sole
discretion grant Stock Appreciation Rights ("SARs") in tandem with Options. The
Committee may also grant Options without SARs.
Except as provided in Section 4.5(c) below, an SAR shall represent the
right to receive payment (the "SAR Value") equal to the amount, if any, by which
(a) the Fair Market Value of one share of Common Stock on the date of exercise
of the SAR exceeds (b) the Option Price of one share of Common Stock which is
subject to the SAR's related Option.
The Committee shall not grant an SAR with respect to an ISO unless,
pursuant to applicable law and rules and regulations of the Internal Revenue
Service, the SAR may be attached to the ISO without causing the ISO to fail to
meet the requirements of Section 422A of the Internal Revenue Code.
4.2 AGREEMENTS EVIDENCING SARS. SARs granted under the Plan shall be
included in the written Stock Option Agreement between BankAmerica and the
Optionee.
4.3 EXERCISE OF SARS. An Optionee who has been granted SARs may, from
time to time, elect to exercise one or more SARs and thereby become entitled to
receive payment in the amount and from and within the time determined pursuant
to Sections 2.4 and 3.4. An SAR shall be exercisable only to the same extent and
subject to the same conditions as the Option related thereto is exercisable.
The Committee may, in its discretion, prescribe additional conditions on the
exercise of any SAR.
4.4 AMOUNT OF PAYMENT. Upon the exercise of each SAR, the Optionee shall
be entitled to receive
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(a) payment of the amount represented by the SAR, together with
(b) all or that portion of the DEC Account which equals the product
of (i) the total DEC Account, multiplied by (ii) the quotient of (A) the
number of SARs being exercised, divided by (B) the total number of related
PSOs then outstanding under the related Option.
4.5 FORM AND TIMING OF PAYMENT. (a) Exercise of SARs for Cash or Common
Stock. SARs exercised during the Window Period described below shall be payable
only in cash, and SARs exercised outside the Window Period shall be payable only
in shares of Common Stock. A "Window Period" is a period (i) beginning on the
third business day following the date of public release of BankAmerica's
quarterly and annual summary statements of revenues and earnings and (ii) ending
on the twelfth business day following such date.
(b) Amount of Cash Payable on Exercise of Sars. When SARs are
exercised during the Window Period, the Optionee shall receive a cash amount
equal to (i) the number of SARs exercised multiplied by (ii) the difference
between (A) the highest Fair Market Value of one share of Common Stock as of any
day during the Window Period, and (B) the Option Price specified for the related
Option.
(c) Number of Shares Issuable or Deliverable on Exercise of Sars.
When SARs are exercised outside the Window Period, the Optionee shall receive
the number of whole shares of Common Stock equal to (i) the aggregate SAR Value
(as defined in Section 4.1) of the SARs exercised divided by (ii) the Fair
Market Value (as defined in Section 1.3) on the date of exercise. The Company
shall deliver cash in lieu of fractional shares.
4.6 CANCELLATION OF RELATED OPTIONS. The exercise of an SAR shall cancel
any NQSO or PSO to which it relates, to the extent of the exercise. Any
exercise of an SAR with respect to an ISO must be made in accordance with
Section 4.1.
4.7 TERMINATION OF EMPLOYMENT OF OPTIONEE. Except as provided in Section
4.8 below, in the event that the holder of an SAR ceases to be employed with the
Company for any reason, his or her SAR shall be exercisable only to the same
extent and upon the same conditions that the Option related thereto is
exercisable only until the sooner of (a) six months after the date he or she
ceases to be an officer or director as defined in Section 16, and (b) the end of
the Option Period of the related Options.
4.8 DEATH OF OPTIONEE. In the event that the holder of an SAR dies, his
or her SAR shall terminate, and only the related Option shall be exercisable,
pursuant to Sections 2.14 and 3.17.
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ARTICLE V
RESTRICTED STOCK
5.1 INTRODUCTION. BankAmerica has outstanding shares of restricted stock
granted under the BankAmerica Corporation Restricted Stock Bonus Plan (the
"Bonus Plan") and the MISP. Restricted stock already granted under the Bonus
Plan and the MISP will continue to be held under the terms of those plans,
except as provided in Section 1.7 of this Plan. Only grants of Restricted Stock
made on or after the effective date of this new Plan shall be governed by the
terms of this Article V.
5.2 AWARD OF RESTRICTED STOCK. The Committee may, from time to time and
subject to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, award shares of Common Stock to be held under the
restrictions set forth in this Article to any eligible employee or other
individual. If an eligible employee has been employed less than six months, any
award shall only be made from Common Stock which is held as treasury stock by
BankAmerica. BankAmerica shall issue or deliver shares of registered Restricted
Stock awarded hereunder in the name of the employee or other individual
concerned (the "Restricted Stockholder").
5.3 MINIMUM RESTRICTIONS ON DISPOSITION OF STOCK AWARDS. With respect to
a Restricted Stockholder who was employed by the Company on the date of grant,
the Restricted Stockholder may not, under any circumstances, voluntarily dispose
of any of the Restricted Stock prior to the first to occur of the following
events:
(a) the date on which the Restricted Stockholder completes the period
of continuous service with the Company following the award date specified
by the Committee for such award;
(b) delivery of the Restricted Stock to the Restricted Stockholder
following a Committee determination pursuant to Section 6.6 hereof in
connection with a Change in Control;
(c) the Restricted Stockholder's retirement or death; or
(d) delivery of the Restricted Stock to the Restricted Stockholder
following his or her termination of employment prior to retirement or
death.
With respect to any other individual, the Restricted Stockholder may not, under
any circumstances, voluntarily dispose of any of the Restricted Stock prior to
the first to occur of the following events:
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(a) the date on which the individual satisfies the conditions
specified in the grant;
(b) the Restricted Stockholder's death.
The limitations in this Section 5.3 will hereinafter be referred to as the
"minimum restrictions."
5.4 OPTIONAL RESTRICTIONS. In addition to the minimum restrictions, the
Committee may impose additional restrictions ("optional restrictions") upon the
Restricted Stockholder's voluntary disposition and release from escrow of the
Restricted Stock, either at the time the Committee makes an award of such
Restricted Stock or at any subsequent time before the minimum restrictions
expire. The Committee may impose optional restrictions (such as, without
limitation, permitting such disposition and release only in installments over a
period of years) as it may deem in the best interests of the Restricted
Stockholder, or in the case of the Restricted Stockholder's death, of the heirs
or legatees who become entitled to such Restricted Stock by the applicable laws
of inheritance or under the terms of the Restricted Stockholder's will.
5.5 TERMINATION OF EMPLOYMENT OF RESTRICTED STOCKHOLDER FOR GROSS
MISCONDUCT. If a Restricted Stockholder's services are terminated for cause for
gross misconduct, all shares awarded to any Restricted Stockholder under this
Plan shall be forfeited, and the Committee shall direct such shares to be
transferred and delivered to BankAmerica. Gross misconduct includes, but is not
limited to, acts of dishonesty, such as theft, embezzlement, and falsification
of the Company's records with intent to deceive; breach of trust; knowing
violation of rules established by the Company; and any crime determined by the
Company to result in termination of employment.
5.6 TERMINATION OF EMPLOYMENT OF RESTRICTED STOCKHOLDER NOT INVOLVING
GROSS MISCONDUCT.
(a) Should a Restricted Stockholder who was employed by the Company
at the date of grant terminate his or her employment with the Company prior
to (i) the date on which he or she completes the period of continuous
service for the Company following the award date specified by the Committee
for such award, or (ii) his or her death or retirement: or
(b) Should the Company terminate his or her employment for any reason
other than for a cause set forth in Section 5.5 above,
BankAmerica shall reacquire all the Restricted Stock without the payment of
consideration in any form to such Restricted Stockholder and the Restricted
Stockholder shall unconditionally forfeit any right, title or interest to such
Restricted Stock, unless the Committee, within 90 days of such termination,
determines in its sole discretion to permit the Restricted Stockholder to retain
all or any part of the Restricted Stock. Upon direction of the
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Committee, all forfeited Restricted Stock shall be transferred and delivered to
BankAmerica. Termination of a Restricted Stockholder's employment with the
Company shall be deemed to include a change in ownership of the Restricted
Stockholder's employer such that the Restricted Stockholder's employer ceases to
be BankAmerica or one of its Subsidiaries.
5.7 ESCROW. In order to administer the restrictions set forth in Sections
5.3, 5.4, 5.5 and 5.6 above, the certificates evidencing Restricted Stock,
although issued in the name of the Restricted Stockholder, shall be held by Bank
of America National Trust and Savings Association (the "Bank") in escrow subject
to delivery to the Restricted Stockholder or to BankAmerica at such times and in
such amounts as the Committee shall direct under the terms of this Plan. When
an employee or other individual accepts an award of Restricted Stock pursuant to
the Plan, he or she thereby grants an irrevocable power of attorney to the Bank
to cause the transfer and delivery to BankAmerica of any of such Restricted
Stock which the Committee shall direct to be so transferred and delivered
pursuant to Sections 5.5 and 5.6 above.
5.8 DIVIDENDS ON RESTRICTED STOCK. Even while the Restricted Stock is
held in escrow, all dividends BankAmerica pays on the Restricted Stock shall be
delivered directly to the Restricted Stockholder, not the escrow account.
5.9 VOTING RIGHTS. Even while the Restricted Stock is held in escrow, the
Restricted Stockholder shall have the same voting rights with respect to the
Restricted Stock as those provided to other shareholders of Common Stock.
ARTICLE VI
MISCELLANEOUS
6.1 NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, or otherwise delivered by hand or messenger, addressed
(a) if to the Company, at
BankAmerica Corporation
555 California Street
San Francisco, CA 94104
Attn: c/o Bank of America NT&SA
Executive Product Services #3005
Corporate Human Resources
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(b) if to the Optionee, at the last address shown on the Company's
personnel records, or
(c) to such address as either the Company or the Optionee shall later
designate by notice to the other.
6.2 AMENDMENTS OF PLAN. The Board may, at any time and from time to time,
modify, amend, suspend or terminate the Plan in any respect. Notwithstanding
the above, however, any modification, amendment, suspension or termination of
the Plan shall not affect an Optionee's or Restricted Stockholder's rights to a
grant or award previously made, except as provided in Section 1.8(a), or except
with his or her consent.
6.3 LEAVES OF ABSENCE. The Committee shall be entitled to make such
rules, regulations and determinations as it deems appropriate under the Plan in
respect of any leave of absence from the Company taken by the recipient of any
grant or award under the Plan. Without limiting the generality of the
foregoing, the Committee shall be entitled to determine (a) whether or not any
such leave of absence shall be treated as a termination of employment with the
Company within the meaning of the Plan and (b) the impact, if any, of any such
leave of absence on grants and awards under the Plan.
6.4 DILUTION AND OTHER ADJUSTMENTS. In the event of any change in the
outstanding Common Stock by reason of a stock dividend or stock split,
recapitalization, merger, consolidation, exchange of shares or other similar
corporate change, then the Committee may appropriately adjust the aggregate
number of shares of Common Stock which is available for issuance or delivery
under the Plan (as set forth in Section 1.7), the number of shares of Common
Stock subject to Options and SARs granted under the Plan, the number of Share
Equivalents credited to DEC Accounts pursuant to Section 3.5, the Option Price
of Options granted under the Plan, the number of shares of Restricted Stock held
in escrow pursuant to Section 5.7, and any and all other matters deemed
appropriate by the Committee.
6.5 GENERAL RESTRICTION. Each grant and award under the Plan shall be
subject to the requirement that, if at any time the Committee shall determine
that (a) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any state
or federal law, (b) the consent or approval of any government regulatory body,
or (c) an agreement by the recipient of a grant or award with respect to the
disposition of shares of Common Stock, is necessary or desirable as a condition
of, or in connection with, the making of a grant or award or the issue, delivery
or purchase of shares of Common Stock thereunder, then such grant or award shall
not be consummated in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
6.6 CHANGE IN CONTROL. If BankAmerica undergoes a Change in Control (as
defined in Section 1.3(c)), the following shall apply:
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(a)(i) All outstanding Options and related SARs shall be immediately
exercisable in full; (ii) all DEC Accounts related to any PSOs shall be
paid in full as soon as practicable following the Change in Control; and
(iii) all Restricted Stock shall be immediately released free from all
restrictions and shall be delivered to the Restricted Stockholder as soon
as practicable following the Change in Control.
(b) Except as provided in the following sentence, in the event an
employee terminates employment with the Company following a Change in
Control, his or her Options and related SARs shall remain exercisable for a
period of three years following termination of employment, not to exceed
the original term of the Option or related SAR. The preceding sentence
shall not apply to an incentive stock option unless the option agreement
gives the Committee discretion to permit the incentive stock option to
remain exercisable following termination of the optionholder's employment,
in which case the incentive stock option shall be exercisable for three
months following termination of employment without further Committee
action.
(c) [intentionally left blank]
(d) The Company shall have the right to deduct from any settlement of
any Option, SAR or Restricted Stock an amount sufficient to cover
withholding required by law for any federal, state or local taxes, of to
take such other action as may be necessary to satisfy any such withholding
obligation.
6.7 WITHHOLDING TAXES. Whenever the Company proposes to deliver shares of
Common Stock under the Plan, the Company shall have the right to require the
individual who is to receive the shares to remit to the Company, prior to the
delivery of any certificate or certificates for such shares, an amount
sufficient to satisfy any federal, state and/or local withholding tax
requirements. Whenever, under the Plan, payments are to be made in cash, such
payments shall be net of an amount sufficient to satisfy any federal, state
and/or local withholding tax requirements.
6.8 NON-ASSIGNABILITY. No Optionee or Restricted Stockholder shall have
the right to alienate, assign, encumber, hypothecate or pledge his or her
interest in any award under the Plan, voluntarily or involuntarily, and any
attempt to so dispose of any such interest prior to payment thereof shall be
void. Notwithstanding the preceding sentence, the Company shall have the right
to offset from any unpaid or deferred award any amounts due and owing from the
Optionee or Restricted Stockholder to the extent permitted by law.
6.9 NO RIGHT TO EMPLOYMENT. Nothing in the Plan nor in any agreement
entered into pursuant to the Plan shall confer upon any Optionee or Restricted
Stockholder the right to continue in the employment of the Company, nor affect
any right which the Company may have to terminate the employment of such person.
6.10 RIGHTS AS SHAREHOLDER. No Optionee shall have rights as a
shareholder with
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respect to shares of Common Stock awarded to him or her unless and until the
certificates for such shares are delivered to him or her. Restricted
Stockholders have full voting rights with respect to Restricted Stock, as
outlined in Section 5.9 hereof.
6.11 ENTIRE PLAN. This document is a complete statement of the Plan. As
of its effective date this document supersedes all prior plans, representations
and proposals, written or oral, relating to its subject matter, except as
otherwise provided in Section 1.7 hereof. The Company shall not be bound by or
liable to any person for any representation, promise or inducement made by any
employee or agent of it which is not embodied in this document.
6.12 GOVERNING LAW. The Plan shall be construed and enforced in
accordance with California law.
The resolution amending Sections 1.3(c) and 6.6 provided that no
modification, suspension, amendment or termination of the Plan may be made which
would adversely affect the rights of any employee or former employee under the
amendment with respect to any stock option, stock appreciation right, restricted
stock unit or other stock based award granted under the Plan prior to the date
of such modification, suspension, amendment or termination.
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EXHIBIT 10.c
CONTINENTAL BANK CORPORATION
1991 EQUITY PERFORMANCE INCENTIVE PLAN
As amended
Last Amended April 28, 1997
<PAGE>
CONTINENTAL BANK CORPORATION
1991 EQUITY PERFORMANCE INCENTIVE PLAN
1. PURPOSE. The purpose of this Plan is to promote the long-term
financial interests of the Company by (i) rewarding key employees of the Company
or one or more of its Affiliates for their contributions to the success of the
Company; (ii) attracting and encouraging long service by key employees
possessing outstanding abilities; (iii) providing key employees with additional
incentives in the form of Incentive Stock Options, Non-Qualified Stock Options,
Stock Appreciation Rights and Restricted Stock Units; and (iv) furthering the
identity of interests of key employees with those of the Company's stockholders
through opportunities for interested stock ownership and awards based on
corporate stock performance.
2. DEFINITIONS.
"Affiliate" means a corporation, partnership, joint venture or other entity
in which the Company has an ownership interest.
"Award" means an award of Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock or Restricted Stock Units
under the Plan.
"Award Agreement" means an agreement entered into between the Company and a
Participant, setting forth the terms and conditions applicable to an award
granted to the Participant.
"Board of Directors" or "Board" means the Board or Directors of the
Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"Committee" means the Human Resources Committee or the Board of Directors,
or such other committee as may be designated by the Board of Directors and so
constituted as to permit the Plan to comply with Rule 16b-3 under the Exchange
Act or any successor rule or regulation.
"Common Stock" means the Company's common stock, $4.00 par value per share.
"Company" means Continental Bank Corporation, a Delaware corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
"Fair Market Value" means, as of any given date, the mean of the highest
and lowest market prices of the Common Stock, or other security for which Fair
Market Value is being determined,
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as reported on the composite tape of New York Stock Exchange issues (or such
other reporting system as shall be selected by the Committee) on such date or,
if no sale of Common Stock or such other security is reported for such date, the
next preceding day for which there was a reported sale. If such Common Stock or
other security is not traded on the New York Stock Exchange, the Fair Market
Value shall be such amount as shall be reasonably determined by the Committee.
"Incentive Stock Option" means any Stock Option intended to meet the
requirements of an "incentive stock option" within the meaning of Section 422 of
the Code, or any successor Code section.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Participant" means an employee of the Company or its Affiliates who is
designated as a Participant in the Plan by the Committee pursuant to Section 4
below.
"Plan" means the Continental Bank Corporation 1991 Equity Performance
Incentive Plan, as set forth herein and as amended from time to time.
"Restricted Stock" means Common Stock which has been awarded to a
Participant subject to the restrictions referred to in Section 9 below, so long
as such restrictions are in effect.
"Restricted Stock Unit" means a right to receive a payment determined by
the price of Common Stock as described in Section 10 below.
"Stock Appreciation Right" means a right to receive a payment determined by
the appreciation in Common Stock as described in Section 8 below.
"Stock Option" or "Option" means a right to purchase shares of Common Stock
(including Restricted Stock, if the Committee so determines) as described in
Section 7 below.
3. ADMINISTRATION. The Plan and all Awards granted pursuant thereto
shall be administered, construed and interpreted by the Committee. The decision
or a majority of the members of the Committee voting shall constitute the
decision of the Committee and the Committee may act either at a meeting at which
a majority of the members of the Committee is present, or by writing signed by
all members of the Committee. The Committee shall have the sole, final and
conclusive authority to interpret the Plan and all Awards granted pursuant
thereto. Notwithstanding the foregoing provisions of this Section 3, and
subject to the restrictions set forth in Section 14 below, the Committee may
delegate to the Chairman or, except as to the issuance of Common Stock, the
Chief Human Resources Officer of the Company any or all authority otherwise
delegated to the
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Committee under the Plan with respect to granting Awards to or administering
Awards granted to, or held by, persons who, at the time such authority is
exercised, are not subject to Section 16(a) or Section 16(b) of the Exchange
Act.
4. PARTICIPATION. The Committee shall, from time to time, determine and
designate the key employees of the Company or its Affiliates (any of whom may be
members of the Board of Directors) who shall be Participants in the Plan and the
types, terms and size of Awards to be made to each such Participant. Any such
Award may be granted singly or in combination or in tandem with other Awards and
may be made in tandem with or in lieu of current or deferred compensation and
may be conditioned on a Participant's purchase and/or retention of shares of
Common Stock, all as the Committee may determine.
5. STOCK SUBJECT TO PLAN. Shares of stock subject to the Plan shall be
shares of the Company's Common Stock. Subject to adjustment as provided in
Section 12 below, the aggregate number of shares of Common Stock with respect to
which Awards may be granted under the Plan shall not exceed 3,500,000 shares.
The grant of an Award shall be deemed to be a grant of shares equal to the
greater of the number of shares that may be issued under the Award or the number
of shares on the basis of which the Award is calculated. To the extent that any
Award terminates by expiration, cancellation, forfeiture, surrender or otherwise
(other than by reason of the exercise of an Award granted in tandem therewith)
without the issuance of shares or without payment therefor or, in the case of
Restricted Stock, without vesting, any shares subject to such Award or on the
basis of which such Award would have been calculated shall again be available
for future Awards. Either authorized and unissued shares or treasury shares may
be used for Plan purposes; provided, however, that unissued shares shall not be
awarded to any Participant who has been employed by the Company or its
Affiliates for less than one year, unless the Committee expressly determines,
after consideration of all other remuneration paid or payable to the
Participant, that the services already rendered to the Company and its
Affiliates by the Participant for which the Participant is being granted the
Award have a value of not less than the par value of the shares being awarded.
6. AWARD AGREEMENT. Each Award under this Plan shall be evidenced by an
Award Agreement which shall include provisions governing the disposition of the
Award in the event of retirement, disability, death or other termination of a
Participant's employment by or relationship to the Company or any of its
Affiliates, and such other terms and conditions, including the criteria for
determining vesting of Awards and the amount or value of Awards, as the
Committee shall deem necessary and appropriate to effect an Award Agreement with
the Participant to whom the Award is granted.
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<PAGE>
7. OPTIONS. Each Option shall entitle the Participant to whom it is
granted the right to purchase a specified number of shares of Common Stock
(including Restricted Stock, if the Committee so determines) at a fixed price
subject to the following terms and conditions, and to such other terms and
conditions not inconsistent with the Plan as shall be prescribed by the
Committee in its sole discretion:
(a) Option Price. The price at which a share of Common Stock may be
purchased pursuant to the exercise of an Option shall be determined by the
Committee at the time such Option is granted, but shall not be less than
the greater of (i) the Fair Market Value of a share of Common Stock on the
date of grant or (ii) the par value or the Common Stock.
(b) Exercisability of Option. An Option or any part thereof shall
become exercisable at such date or dates as shall be fixed by the Committee
at the time such Option is granted or at such earlier time as may
subsequently be determined by the Committee but in no event earlier than
six months after the date of grant. Options shall be exercised in whole or
in part by written notice to the Company and payment in full of the option
price. Payment of the option price may be made, at the discretion of the
optionee, and to the extent permitted by the Committee, (A) in cash
(including check, bank draft, or money order), (B) in Common Stock (valued
at the Fair Market Value thereof on the date of exercise), (C) by a
combination of cash and Common Stock or (D) with any other consideration
(including payment in accordance with a cashless exercise program under
which, if so instructed by the Participant, shares of Common Stock may be
issued directly to the Participant's broker or dealer upon receipt of the
option price in cash from the broker or dealer).
(c) Termination of Option. An Option shall terminate as determined by
the Committee at the time such Option is granted; provided, however, no
Option shall be exercisable after the expiration of ten years from the date
such Option is granted.
(d) Limitation on Amount of Incentive Stock Options. The aggregate
Fair Market Value (determined at the time the Option is granted) of the
shares with respect to which Incentive Stock Options are exercisable for
the first time by any Participant in any calendar year under this Plan and
each other stock option plan of the Company and any "parent" and
"subsidiary" corporations (as those terms are defined in Sections 424(c)
and 424(f) of the Code, respectively, or any successor Code section) shall
not exceed $100,000.
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8. STOCK APPRECIATION RIGHTS. Each Stock Appreciation Right shall entitle
the Participant to whom it is granted to receive, upon exercise of the Stock
Appreciation Right (or of both the Stock Appreciation Right and the related
Option, or of a portion of either, in the case of a Stock Appreciation Right
granted in tandem with all or a portion of a related Stock Option), without any
payment of cash (except for applicable employee withholding taxes), that number
of shares of Common Stock (including Restricted Stock, if the Committee so
determines) having an aggregate Fair Market Value on the date of exercise equal
to the excess of the aggregate Fair Market Value on the exercise date of the
shares of Common Stock for which the Stock Appreciation Right is exercised, over
the exercise price of such right, which price shall be not less than the Fair
Market Value of such shares on the date the right was granted (or, in the case
of a right granted in tandem with an Option, the option price the Participant
would otherwise have been required to pay for such shares). Each Stock
Appreciation Right shall be subject to the terms and conditions set forth in
this Section 8 and to such other terms and conditions not inconsistent with the
Plan as shall be specified in a related Award Agreement, including, but not
limited to, limitations on the period or periods within which the Stock
Appreciation Right shall be exercisable and any restrictions as to the amount of
appreciation that may be recognized upon exercise of such Stock Appreciation
Right. No Stock Appreciation Right shall become exercisable prior to six months
after the date of grant. A Stock Appreciation Right granted in tandem with all
or a portion of a related Stock Option may be granted either at the time of the
grant of the related Option or, unless the related Option is an incentive Stock
Option, at any time thereafter during the term of the Option and shall be
exercisable only to the extent that the related Option is exercisable. The
Company may (if the Committee so determines) settle all or part of the Company's
obligation arising out of the exercise of a Stock Appreciation Right by the
payment of cash equal to the aggregate Fair Market Value of the shares of Common
Stock the Company would otherwise be obligated to deliver.
9. RESTRICTED STOCK. Restricted Stock is Common Stock that is subject to
forfeiture, restrictions on transfer and/or such other restrictions on incidents
of ownership, as the Committee may determine. A Restricted Stock Award shall
entitle the Participant to whom it is granted to receive, on the date or dates
designated in the Award Agreement, subject to such terms and conditions as the
Committee may determine, the number of shares of Common Stock specified in the
Award Agreement and shall require no payment or consideration by the
Participant, either on the date of grant or the date the restrictions are
removed, unless specifically required by the terms of the Award Agreement. The
Committee in its sole discretion may specify at the time a Restricted Stock
Award is granted that the recipient thereof is entitled to receive, currently or
on deferred basis, interest or dividends or interest or dividend equivalents
with respect to the number of shares covered by the Award, and the
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<PAGE>
Committee may specify that such amounts (if any) shall be deemed to have been
reinvested in additional Common Stock or otherwise reinvested.
10. RESTRICTED STOCK UNITS. Each Restricted Stock Unit shall entitle the
Participant to whom it is awarded to receive from the Company upon its
surrender, on or as soon as practicable after the date designated in the Award
Agreement, a payment, subject to such terms and conditions as the Committee may
determine (including those related to the form of such payment), equal to the
Fair Market Value of a share of Common Stock on the date the restrictions lapse.
The Committee in its sole discretion may specify at the time a Restricted Stock
Unit is awarded that the recipient thereof is entitled to receive, currently or
on a deferred basis, interest or dividends or interest or dividend equivalents
with respect to the number of shares covered by the Award, and the Committee may
specify that such amounts (if any) shall be deemed to have been reinvested in
Common Stock or otherwise reinvested.
11. COMPLIANCE WITH APPLICABLE LAWS. Notwithstanding any other provisions
of the Plan, the Committee may subject shares of Common Stock (including
Restricted Stock) awarded under the Plan to such conditions, limitations or
restrictions as the Committee determines to be necessary or desirable to comply
with any law or regulation or with the requirements of any securities exchange.
12. CHANGES IN CAPITALIZATION, SIMILAR CHANGES AND CHANGES IN CONTROL. In
the event of any change in the outstanding shares of Common Stock by reason of
any stock dividend or split, recapitalization, merger, reorganization
(including, but not limited to, any spinoff, extraordinary dividend or other
distribution), consolidation, combination or exchange of shares or other similar
corporate change, the maximum aggregate number and class of shares with respect
to which Awards may be granted under the Plan and (where applicable) the
exercise or purchase price of and the number and class of shares covered by
outstanding Awards shall be equitably adjusted by the Committee. Such
determination of the Committee shall be conclusive; provided that in no event
shall the Committee adjust the exercise or purchase price for an Award under
which shares may be issued to a price less than the par value of the stock on
the date of the adjustment. Furthermore, if there is an adjustment in the
number of shares, no fraction of a share (or, if applicable, fraction of one
cent) shall be delivered with respect to any Restricted Stock or upon any
exercise of any other Award and, if an adjustment of the exercise or purchase
price shall result in a fraction of one cent, a full cent shall be included in
such price in lieu of such fraction. Any shares of stock or other securities
received by a Participant with respect to Restricted Stock in connection with
such an adjustment shall be subject to the same restrictions as was the
Restricted Stock at the time of the adjustment. If the Company shall be
consolidated or merged with another corporation, any
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<PAGE>
stock, securities or other property which any Participant is entitled to receive
by reason of such Participant's ownership of the shares of Restricted Stock
shall be deposited with the Company or its successor. Subject to the provisions
of Section 9 above, such stock, securities or other property shall also be
subject to the same restrictions as such Restricted Stock, and shall bear an
appropriate legend with respect thereto. Notwithstanding the foregoing
provisions of this Section 12 or any other provision of the Plan, other than
Section 14, the Committee may, in its sole discretion, at the time of granting
any Award under the Plan or at any time thereafter, provide for the acceleration
of vesting or the modification of any other terms of such Award in the event of
a change in control of the Company and may establish the conditions under which
such a change in control will be deemed to have occurred.
13. EMPLOYEES' AND PARTICIPANTS' RIGHTS. Notwithstanding any other
provision of the Plan:
(a) No Right to Receive Award. No employee of the Company or any
Affiliate or other person shall have any claim or right to receive an Award
under the Plan except as the Committee (or, if authority is delegated as
provided in Section 3, the Chairman or the Chief Human Resources Officer)
shall have conferred in its discretion in the administration of the Plan.
(b) No Right to Continued Employment. Participation in the Plan shall
not confer upon any Participant any right with respect to continuation of
employment by the Company or any Affiliate, nor interfere with the right of
the Company or such Affiliate to terminate at any time employment of any
Participant.
(c) Rights as a Stockholder. A Participant shall have no rights as a
stockholder with respect to any shares covered by an Award until the date
the Participant or the Participant's nominee becomes the stockholder of
record of the shares. No adjustment shall be made for dividends or other
rights for which the record date is prior to the date the Participant or
the Participant's nominee becomes the stockholder of record of the shares,
unless the Award Agreement specifically requires such adjustment.
(d) Withholding. Except as otherwise provided by the Committee, the
deduction of withholding and any other taxes required by law will be made
from all amounts paid in cash. In the case of payments of Awards in shares
of Common Stock, the Participant shall be required to pay the amount of any
taxes required to be withheld prior to receipt of such
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<PAGE>
stock; provided, however, that the Committee may permit the withholding
obligation to be met in whole or in part by withholding a number of shares
otherwise deliverable under the Award, the Fair Market Value of which
equals the amount required to be withheld.
(e) Non-Assignability. An Award shall not be assignable or
transferable except by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or
Title I of the Employees Retirement Income Security Act, or the rules
thereunder (but only if permitting such transfer will not affect the status
of the Award under the Code).
14. AMENDMENT AND TERMINATION. The Board of Directors may amend, suspend
or terminate the Plan or any portion thereof at any time; provided, however,
that no such amendment, suspension or termination shall impair the rights of
Participants with respect to any outstanding Awards. Notwithstanding any other
provision of the Plan to the contrary, the Committee may amend the Plan to the
extent necessary for the efficient administration of the Plan, or to make it
practically workable or to conform to the provisions of any federal or state law
or regulation. Notwithstanding the foregoing provisions of this Section 14, in
no event shall any amendment be made without stockholder approval, as long as
such approval is required by Rule 16b-3 of the Exchange Act or by the rules of
the New York Stock Exchange, which shall:
(a) increase the total number of shares with respect to which Awards
may be granted under Section 5 of the Plan (subject to adjustment in
accordance with Section 12 above);
(b) reduce the option price under any Option below the Fair Market
Value of the stock subject to the Option determined as of the date of
grant;
(c) materially modify the requirements as to eligibility for
participation in the Plan; or
(d) withdraw the administration of the Plan from the Committee.
The Plan shall terminate automatically on February 25, 2001, except as to
outstanding Awards.
15. EFFECTIVE DATE. This Plan shall be effective as of February 25, 1991
subject to the approval by the affirmative vote of a majority of the shares
present or represented by proxy at the Annual Meeting of Stockholders to be held
on April 22, 1991 or any adjournment thereof and any necessary regulatory
approval. All Awards are subject to such approval and, notwithstanding any
other provision of the Plan, if any such
8
<PAGE>
approval is not obtained, all such Awards as well as dividends paid or payable
with respect to such Awards shall be forfeited.
The following provision was added to the plan by the BAC Board of Directors
on August 7, 1995. For purposes of this provision, "BankAmerica" means
BankAmerica Corporation and "Company" means BankAmerica and its subsidiaries
collectively.
Notwithstanding any other provision in the Plan, the following shall apply
in the event of a Change in Control, as defined below, in BankAmerica:
CHANGE IN CONTROL means that one of the following events has occurred:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of BankAmerica (the
"Outstanding BankAmerica Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of BankAmerica entitled to vote generally in
the election of directors (the "Outstanding BankAmerica Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from BankAmerica (ii) any acquisition by BankAmerica, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or (iv) any acquisition by any corporation pursuant to
a transaction which complies with clauses (A), (B) and (C) of subsection (iii)
below.
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
BankAmerica's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.
(iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
BankAmerica or its principal subsidiary (a "Business Combination"), in each
case, unless, following such Business Combination, (A) all or substantially
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all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding BankAmerica Common Stock and Outstanding
BankAmerica Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 80% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns BankAmerica or all or substantially all of BankAmerica'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 BankAmerica Common Stock and Outstanding
BankAmerica Voting Securities, as the case may be, (provided, however, that, for
the 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 BankAmerica Common Stock or Outstanding BankAmerica
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 from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation unless such Person owned
20% or more of the Outstanding BankAmerica Common Stock or Outstanding
BankAmerica 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 (or, in the case of BankAmerica's principal subsidiary, the
corresponding board of directors) at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination.
(iv) Approval by the shareholders of BankAmerica of a complete
liquidation or dissolution of BankAmerica.
(a) All outstanding stock options and stock appreciation rights under the
Plan shall be immediately exercisable in full if BankAmerica undergoes a Change
in Control.
(b) Except as provided in the following sentence and in (c) below, if
applicable to the Plan, in the event an employee terminates employment with the
Company following a Change in Control, his or her stock options and stock
appreciation rights granted under the Plan shall remain exercisable for a period
of
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three years following termination of employment, not to exceed the original term
of the stock option or stock appreciation right. The preceding sentence shall
not apply to an incentive stock option unless the option agreement gives the
Plan committee discretion to permit the incentive stock option to remain
exercisable following termination of the optionholder's employment, in which
case the incentive stock option shall be exercisable for three months following
termination of employment without further committee action.
(c) [intentionally left blank]
(d) The Company shall have the right to deduct from any settlement of any
stock option or stock appreciation right an amount sufficient to cover
withholding required by law for any federal, state or local taxes, of to take
such other action as may be necessary to satisfy any such withholding
obligation.
The resolution adding the above provision provided that no modification,
suspension, amendment or termination of the Plan may be made which would
adversely affect the rights of any employee or former employee under the
amendment with respect to any stock option or stock appreciation right granted
under the Plan prior to the date of such modification, suspension, amendment or
termination.
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EXHIBIT 10.d
CONTINENTAL BANK CORPORATION
1982 PERFORMANCE, RESTRICTED STOCK
AND STOCK OPTION PLAN
As amended
Last Amended April 28, 1997
<PAGE>
CONTINENTAL BANK CORPORATION
1982 PERFORMANCE, RESTRICTED STOCK
AND STOCK OPTION PLAN
1. PURPOSE. The purpose of the 1982 Performance, Restricted Stock and
Stock Option Plan (the "Plan") of Continental Bank Corporation (the "Company")
is to promote the long-term financial interests of the Company by (i) rewarding
key executives of the Company and its Subsidiaries (as defined below) for their
contributions to the success of the Company, (ii) attracting and encouraging
long service by key executives possessing outstanding abilities, (iii) providing
competitive incentive compensation in the form of incentive stock options, non-
qualified stock options, stock appreciation rights and restricted stock; and
(iv) furthering the identity of interests of key executives with those of the
Company's stockholders through opportunities for increased stock ownership and
awards based on corporate performance. The term "Subsidiary" means any
corporation of which the Company owns or controls, directly or indirectly, 50
percent or more of the outstanding shares of stock normally entitled to vote for
the election of directors.
2. ADMINISTRATION. The Plan shall be administered, construed and
interpreted by a Committee of not less than three members, which, subject to the
following provisions of this Section 2, shall be the Compensation Committee of
the Board of Directors of the Company until such Board of Directors determines
otherwise. No member of the Committee shall be eligible, or within one year
prior to such membership shall have been eligible, for selection as a person to
whom stock may be awarded or allocated or to whom stock options or stock
appreciation rights may be granted under the Plan or any other plan of the
Company (or of any of its affiliates) entitling participants therein to acquire
stock, stock options or stock appreciation rights of the Company (or of any of
its affiliates). The decision of a majority of the members of the Committee
shall constitute the decision of the Committee and the Committee may act either
at a meeting at which a majority of the members of the Committee is present, or
by writing signed by all members of the Committee. The Committee shall have the
sole, final and conclusive authority to interpret the Plan. Notwithstanding the
foregoing provisions of this Section 2, the Chairman of the Company shall
exercise all authority otherwise delegated to the Committee under the Plan with
respect to stock options, stock appreciation rights and Restricted Stock (as
described in Section 8) awarded to, or held by, person who, at the time such
authority is exercised, are not subject to Section 16(a) or Section 16(b) of the
Securities Exchange Act of 1934.
3. PARTICIPATION. The Committee shall, from time to time, determine and
designate the officers (including officers who are members of the Board of
Directors) and other key
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employees of the Company and its Subsidiaries who shall be Participants in the
Plan and the number of stock options, stock appreciation rights and shares of
Restricted Stock to be awarded to each such Participant. In making any such
award the Committee shall take into account the past performance of the Company
and its Subsidiaries, the Participant's contributions to such performance, the
capacity of the Participant to contribute in a substantial measure to such
performance in the future, and such other factors as the Committee may consider
relevant.
4. STOCK SUBJECT TO PLAN. Shares of stock subject to the Plan shall be
shares of the Company's common stock, par value $4 per share ("Common Stock").
Subject to adjustment as provided in Section 11, the aggregate number of shares
of Common Stock which may be delivered under the Plan shall not exceed 4,000,000
shares. Any shares subject to any grant which terminates by expiration,
cancellation, forfeiture, surrender or otherwise without the issuance of shares
or without payment therefore or, in the case of Restricted Stock, without
vesting shall again be available for future grants under the Plan. Either
authorized and unissued shares or treasury shares may be delivered under the
Plan; provided, however, that unissued shares shall not be awarded as Restricted
Stock to any Participant who has been employed by the Company and its
Subsidiaries for less than one year, unless the Committee expressly determines,
after consideration of all other remuneration paid or payable to the
Participant, that the services already rendered to the Company and its
Subsidiaries by the Participant for which he is being awarded Restricted Stock
have a value of not less than the par value of the shares awarded to him.
5. TERMS OF OPTION. Each option granted pursuant to the Plan shall be
evidenced by a Stock Option Agreement between the Company and the Participant,
and shall be subject to the following terms and conditions, and to such other
terms and conditions not inconsistent therewith as the Committee may deem
appropriate in each case:
(a) Option Price. The price at which a share of Common Stock may be
purchased pursuant to the exercise of an option shall be determined by
the Committee at the time such option is granted, but shall not be
less than the greater of (i) the fair market value, as determined by
the Committee, of a share of Common Stock on the date of grant or (ii)
the par value of such stock.
(b) Period for Exercise of Option. The option or any part thereof shall
become exercisable at such date or dates as shall be fixed by the
Committee at the time such option is granted or at such earlier time
as may subsequently be determined by the Committee; provided that an
incentive stock option granted prior to January 1, 1987, by its terms,
shall not be exercisable while there is outstanding, within the
meaning of
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Section 422A(b)(7) of the Internal Revenue Code of 1954, any other
incentive stock option which was granted to the Participant before the
granting of the option and which other incentive stock option is for
the purchase of shares of stock in the Company, in a corporation which
at the time of the granting of the other incentive stock option was a
parent or subsidiary corporation of the Company, or in a predecessor
corporation of any such corporations.
(c) Purchase of Shares. The option price of each share of Common Stock
purchased upon exercise of an option shall be paid in full at the time
of exercise, which payment shall be in cash or, unless otherwise
determined by the Committee, by delivery of shares of Common Stock
having a fair market value equal to the option price, or by a
combination of such shares and cash. Each option may be exercised in
whole or in part, at any time or from time to time, during the period
such option is exercisable, except that no option may be exercised for
less than fifty shares of stock, unless the exercise for a lesser
number of shares will exhaust such option.
(d) Termination of Option. Except as otherwise provided for below, any
option granted pursuant to the Plan shall terminate not more than ten
years after the date on which such option is granted. If a
Participant ceases to be an employee of the Company or any Subsidiary
for any reason other than retirement or death, any option granted to
him pursuant to the Plan shall forthwith terminate. A leave of
absence approved by the Committee, or a transfer of employment from
the Company to any Subsidiary or from a Subsidiary to the Company or
any other Subsidiary, shall not constitute a cessation of employment.
If any Participant ceases to be an employee of the Company or a
Subsidiary by reason of a retirement which entitles him to pension
benefits, other than a deferred vested pension, under any pension plan
then maintained by the Company or a Subsidiary, any option granted to
him pursuant to the Plan may be exercised by him within three years
after the date of his retirement (but not later than ten years after
the date such option was granted) to the full extent such option was
exercisable on the date of such cessation. In the event of the death
of a Participant while in the employ of the Company or a Subsidiary or
within three years after the date of his retirement, any option which
had not previously terminated may be exercised within three years
after the date of his death by his estate or by the person or persons
entitled thereto by will or by applicable laws of descent and
distribution, to the full extent such option was exercisable on the
date of his death;
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provided, however, that an incentive stock option may not be exercised
after the expiration of ten years from the date the option was
granted.
(e) Limitation on Amount of Incentive Stock Options. The aggregate fair
market value (determined at the time the option is granted) of the
shares with respect to which incentive stock options granted after
December 31, 1986 are exercisable for the first time by any
Participant in any calendar year under this Plan and each other stock
option plan of the Company and any parent and subsidiary corporations
shall not exceed $100,000.
6. STOCK APPRECIATION RIGHTS. The Committee may, in its discretion,
grant a stock appreciation right to any Participant under the Plan. Each stock
appreciation right shall be evidenced by a Stock Appreciation Rights Agreement
between the Company and the Participant, and shall relate to and be associated
with all or any part of a specific option. A stock appreciation right may be
granted either at the time of the grant of the related option or at any time
thereafter. A stock appreciation right shall be exercisable only if the fair
market value of a share of Common Stock exceeds the option price for the related
option and then shall be exercisable to the extent, and only to the extent, that
the related option is exercisable. The Committee may at the time of granting
any stock appreciation right add such additional conditions and limitations to
the stock appreciation right as it shall deem advisable, including, but not
limited to, limitations on the period or periods within which the stock
appreciation right shall be exercisable and the maximum amount of appreciation
to be recognized with regard to such stock appreciation right. In the case of
Participants who are subject to Section 16(a) and Section 16(b) of the
Securities Exchange Act of 1934, the Committee may at any time add such
additional conditions and limitations to such stock appreciation right which, in
its discretion, the Committee deems necessary or desirable in order to comply
with Section 16(a) or Section 16(b) and the rules and regulations thereunder, or
in order to obtain any exemption therefrom. A stock appreciation right shall
entitle the Participant to whom it is granted (including his estate or other
successor in interest upon his death as provided in the last sentence of
paragraph 5(d)) the right to elect, so long as such stock appreciation right is
exercisable and subject to such limitations as the Committee shall have imposed,
to surrender any then exercisable portion of his related option, in whole or in
part, and receive from the Company in exchange, without any payment of cash
(except for applicable employee withholding taxes), that number of shares of
Common Stock having an aggregate fair market value on the date of surrender
equal to the product of (i) the excess of the fair market value of a share of
Common Stock on the date of surrender over the per share option price under such
option and (ii) the number of shares of Common Stock subject to such option or
portion thereof which is surrendered. Any option or portion thereof which is
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<PAGE>
surrendered shall no longer be exercisable. The Committee, in its sole
discretion, may allow the Company to settle all or part of the Company's
obligation arising out of the exercise of a stock appreciation right by the
payment of cash equal to the aggregate fair market value of the shares of Common
Stock the Company would otherwise be obligated to deliver.
7. TRANSFERABILITY. Options and stock appreciation rights are not
transferable except by will or the laws of descent and distribution. Options
and stock appreciation rights may be exercised during the lifetime of the
Participant only by the Participant and, after the death of the Participant,
only as provided in paragraph 5(d).
8. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS. All shares of Common
Stock awarded to Participants under the Plan ("Restricted Stock") shall be
subject to the following terms and conditions and to such other terms and
conditions, not inconsistent with the Plan, as shall be prescribed by the
Committee in its sole discretion:
(a) Restricted Period. Shares of Restricted Stock awarded to Participants
may not be sold, assigned, transferred, pledged or otherwise
encumbered during a "Restricted Period" commencing on the date of the
award and ending on the September 30th coincident with or next
following the fourth anniversary thereof, or such later date as the
Committee may designate at the time of the award, subject to the
following:
(i) Except as otherwise provided by the Committee at the time of an
award of Restricted Stock, if a Participant's employment with the
Company and its Subsidiaries is terminated by reason of his
death, disability (as determined by the Committee) or a
retirement which entitles him to pension benefits other than a
deferred vested pension under a pension plan then maintained by
the Company or a Subsidiary, then the Restricted Period shall end
as of the date of such termination with respect to such number
of shares (disregarding any fractional shares) of Restricted
Stock granted to him under such prior award as is proportionate
to the ratio of (A) the number of whole calendar months elapsed
between the date of the award and the date of such termination to
(B) the number of whole calendar months in the original
Restricted Period.
(ii) The Committee may, at the time of an award or at any time
thereafter, reduce or terminate the Restricted Period otherwise
applicable to all or any portion of any Restricted Stock award;
provided, however, that no such reduction under this subparagraph
(i) shall be applicable to
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Restricted Stock held by a Participant who voluntarily terminates
his employment within one year of the date such Restricted Stock
was awarded. For purposes of this subparagraph (ii), termination
of employment by reason of disability (as determined by the
Committee) or mandatory retirement shall not be deemed a
voluntary termination.
Subject to the provisions of paragraphs (b) and (f) next below, at the
end of the Restricted Period for any shares of Restricted Stock, such
shares will be transferred free of all restrictions to the Participant
or, in the event of his death, to the beneficiary or beneficiaries
designated by the Participant under this Plan or, if none, to his
estate. Delivery of shares in accordance with the preceding sentence
shall be made within the thirty-day period following the end of the
Restricted Period.
(b) Forfeitures. Except as otherwise provided in subparagraph 8(a)(i) and
subject to the rights of the Committee under subparagraph 8(a)(ii), a
Participant shall forfeit all shares of Restricted Stock and all
dividends and interest accumulated in accordance with the provisions
of Section 9 if his employment with the Company and its Subsidiaries
is terminated prior to the last day of the applicable Restricted
Period.
(c) Certificates Deposited With Company. Each certificate issued in
respect of shares of Restricted Stock awarded under the Plan shall be
registered in the name of the Participant and deposited with the
Company. Each such certificate shall bear the following (or a
similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) contained in the Continental Bank Corporation 1982
Performance, Restricted Stock and Stock Option Plan and an Agreement
entered into between the registered owner and Continental Bank
Corporation. A copy of such Plan and Agreement is on file at the
principal office of Continental Bank Corporation at 231 South LaSalle
Street, Chicago, Illinois 60697."
(d) Restricted Stock Agreement. The Participant shall enter into an
Agreement with the Company in a form specified by the Committee
agreeing to the terms and conditions of the award and such other
matters as the Committee shall, in its sole discretion, determine.
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(e) Stockholder Rights. Subject to the foregoing restrictions and to the
provisions of Section 9, each Participant shall have all the rights of
a stockholder with respect to his shares of Restricted Stock,
including, but not limited to, the right to vote such share.
(f) Substitution of Rights. Prior to the end of the Restricted Period
with respect to any shares of Restricted Stock awarded to a
Participant, the Committee may, with the consent of the Participant,
substitute an unsecured obligation of the Company to pay cash or stock
(on such reasonable terms and conditions as the Committee may, in its
sole discretion, determine) in lieu of its obligations under this
Section 8 and under Section 9 to deliver unrestricted shares of Common
Stock plus accrued dividends and interest.
9. DIVIDENDS. Except as otherwise provided by the Committee, dividends,
including stock dividends, shall be accrued on each share of Restricted Stock
from the date as of which it is awarded and, if such share has not been
forfeited, shall be paid to the Participant, or in the event of his death to his
estate, as of the last day of the Restricted Period with respect to such share.
Such dividends shall not be held in a separate fund or separately invested.
Upon delivery of such dividends, interest shall be paid by the Company on the
amount of cash dividends withheld, including cash dividends on stock dividends,
at a rate equal to the rate of interest payable on amounts deferred under the
Continental Bank Corporation Deferred Incentive Plan, as such rate may be
adjusted from time to time.
10. COMPLIANCE wITH APPLICABLE LAWS. Notwithstanding any other provision
of the Plan, the Committee may subject shares of Common Stock awarded under the
Plan to such conditions, limitations or restrictions as the Committee determines
to be necessary or desirable to comply with any law or regulation or with the
requirements of any securities exchange.
11. CHANGES IN CAPITALIZATION, SIMILAR CHANGES AND CHANGES IN CONTROL. In
the event of any change in the outstanding shares of Common stock by reason of
any stock dividend or split, recapitalization, merger, consolidation,
combination or exchange of shares or other similar corporate change, the maximum
aggregate number and class of shares which may be delivered under the Plan and
the option price under and the number and class of shares covered by outstanding
options and stock appreciation rights shall be equitably adjusted by the
Committee. Such determination of the Committee shall be conclusive; provided
that in no event shall the Committee adjust the option price of the stock to a
price less than the par value of the stock on the date of the adjustment.
Furthermore, if there is an adjustment in the number of shares, no fraction of a
share shall be delivered upon any exercise of an option or with respect to any
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Restricted Stock; and, if an adjustment of the option price shall result in a
fraction of one cent, a full cent shall be included in such price in lieu of
such fraction. Any shares of stock or other securities received by a
Participant with respect to Restricted Stock will be subject to the same
restrictions and shall be deposited with the Company. If the company shall be
consolidated or merged with another corporation, any stock, securities or other
property which any Participant is entitled to receive by reason of his ownership
of the shares of Restricted Stock shall be deposited with the Company or its
successor. Subject to the provisions of Section 8, such stock, securities or
other property shall also be subject to the same restrictions as such Restricted
Stock, and shall bear an appropriate legend similar in form to the legend set
forth in paragraph 8(c). Notwithstanding the foregoing provisions of this
Section 11, or any other provision of the Plan, other than Section 14, the
Committee may, in its sole discretion, at the time of any award or grant under
the Plan or at any time thereafter, provide for the acceleration of rights under
any grant or award in the event of a change in control of the Company and may
establish the conditions under which such a change in control will be deemed to
have occurred.
12. WITHHOLDING TAX. The Company shall have the right to withhold with
respect to any payments made to Participants under the Plan any taxes required
by law to be withheld because of such payments.
13. EMPLOYEES' AND PARTICIPANTS' RIGHTS. No employee or other person
shall have any claim or right to be awarded stock options, stock appreciation
rights or Restricted Stock under the Plan except as the Committee shall have
conferred in its discretion in the administration of the Plan. Participation in
the Plan shall not confer upon any Participant any right with respect to
continuation of employment by the Company or a Subsidiary, nor interfere with
the right of the Company or such Subsidiary to terminate at any time employment
of any Participant.
14. AMENDMENT AND TERMINATION. The Board of Directors may amend, suspend
or terminate the Plan or any portion thereof at any time. The Compensation
Committee of the Board of Directors, or any successor thereto designated by the
Board of Directors in accordance with the provisions of Section 2, may amend the
Plan to the extent necessary for the efficient administration of the Plan, or to
make it practically workable or to conform to the provisions of any federal or
State law or regulation. Notwithstanding the foregoing provisions of this
Section 14, in no event shall any amendment be made without stockholder approval
which shall:
(a) increase the total number of shares which may be awarded under Section
4 of the Plan (subject to adjustment in accordance with Section 11);
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(b) reduce the option price under any option below the fair market value
of the stock subject to the option determined as of the date of grant;
(c) extend the period during which an option or stock appreciation right
may be exercised beyond the period provided in paragraph 5(d); or
(d) withdraw the administration of the Plan from the Committee.
The Plan shall terminate automatically on April 26, 1993. In no event may any
amendment, suspension or termination impair the rights of any Participant,
without his consent, in any stock option, stock appreciation right or Restricted
Stock previously awarded under the Plan.
15. EFFECTIVE DATE. This Plan shall be effective as of January 1, 1982
subject to the approval by the affirmative vote of a majority of the shares
present or represented by proxy at the Annual Meeting of Stockholders to be held
on April 26, 1982 or any adjournment thereof. All awards of stock options,
stock appreciation rights and Restricted Stock are subject to such approval and,
notwithstanding any other provision of the Plan, if such stockholder approval is
not obtained, all such awards as well as dividends paid or payable with respect
to Restricted Stock shall be forfeited.
The following provision was added to the plan by the BAC Board of Directors
on August 7, 1995. For purposes of this provision, "BankAmerica" means
BankAmerica Corporation and "Company" means BankAmerica and its subsidiaries
collectively.
Notwithstanding any other provision in the Plan, the following shall apply
in the event of a Change in Control, as defined below, in BankAmerica:
Change in Control means that one of the following events has occurred:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of BankAmerica (the
"Outstanding BankAmerica Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of BankAmerica entitled to vote generally in
the election of directors (the "Outstanding BankAmerica Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from BankAmerica (ii) any acquisition by BankAmerica, (iii) any
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acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or (iv) any acquisition by any corporation pursuant to
a transaction which complies with clauses (A), (B) and (C) of subsection (iii)
below.
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
BankAmerica's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.
(iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
BankAmerica or its principal Subsidiary (a "Business Combination"), in each
case, unless, following such Business Combination, (A) all or substantially all
of the individuals and entities who were the beneficial owners, respectively, of
the Outstanding BankAmerica Common Stock and Outstanding BankAmerica Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 80% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns BankAmerica or all or substantially all of BankAmerica'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 BankAmerica Common Stock and Outstanding BankAmerica Voting
Securities, as the case may be, (provided, however, that, for the 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 BankAmerica Common Stock or Outstanding BankAmerica 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 from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding
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shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation unless such Person owned 20% or more of the
Outstanding BankAmerica Common Stock or Outstanding BankAmerica 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 (or, in the
case of BankAmerica's principal Subsidiary, the corresponding board of
directors) at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination.
(iv) Approval by the shareholders of BankAmerica of a complete
liquidation or dissolution of BankAmerica.
(a) All outstanding stock options and stock appreciation rights under the
Plan shall be immediately exercisable in full if BankAmerica undergoes a Change
in Control.
(b) [intentionally left blank]
(c) [intentionally left blank]
(d) The Company shall have the right to deduct from any settlement of any
stock option or stock appreciation right an amount sufficient to cover
withholding required by law for any federal, state or local taxes, or to take
such other action as may be necessary to satisfy any such withholding
obligation.
The resolution adding the above provision provided that no modification,
suspension, amendment or termination of the Plan may be made which would
adversely affect the rights of any employee or former employee under the
amendment with respect to any stock option or stock appreciation right granted
under the Plan prior to the date of such modification, suspension, amendment or
termination.
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CONTINENTAL ILLINOIS CORPORATION
231 South LaSalle Street
Chicago, Illinois 60697
SERIAL NUMBER
8290021
Optionee:
Shares: 9,000
Option Price: $16.875
Date of Grant: February 26, 1990
Expiration Date: February 24, 2000
ENDORSEMENTS
<TABLE>
<CAPTION>
=============================================================
SHARES ISSUED
- -------------------------------------------------------------
ISSUE NUMBER BALANCE AUTHORIZED ENDORSEMENT
DATE OF OF SIGNATURE DATE
SHARES OPTION
SHARES
<S> <C> <C> <C> <C>
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
=============================================================
</TABLE>
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EXHIBIT 10.e
[LOGO OF BANKAMERICA]
BANKAMERICA CORPORATION
PERFORMANCE EQUITY PROGRAM
As adopted February 3, 1997 and
amended through April 28, 1997
<PAGE>
BANKAMERICA CORPORATION PERFORMANCE EQUITY PROGRAM
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C>
ARTICLE I
GENERAL.................................................................... 1
1.1 Name and Purpose................................................. 1
1.2 General Description.............................................. 1
1.3 Eligibility...................................................... 1
1.4 Effective Date and Term of Plan.................................. 1
1.5 Limitation on Options and Limited SARs Awardable
to Any Single Participant........................................ 1
ARTICLE II
DEFINITIONS................................................................ 3
2.1 "Award".......................................................... 3
2.2 "Award Agreement"................................................ 3
2.3 "BankAmerica".................................................... 3
2.4 "Board".......................................................... 3
2.5 "Cause".......................................................... 3
2.6 "Change in Control".............................................. 3
2.7 "Committee"...................................................... 5
2.8 "Common Stock"................................................... 5
2.9 "Company"........................................................ 5
2.10 "Disability"..................................................... 5
2.11 "Early Retirement"............................................... 5
2.12 "Effective Date"................................................. 5
2.13 "Employment"..................................................... 6
2.14 "Exchange Act"................................................... 6
2.15 "Executive Officer".............................................. 6
2.16 "Exercise Price"................................................. 6
2.17 "Fair Market Value".............................................. 6
2.18 "Final Measurement Period"....................................... 6
2.19 "Grant Date"..................................................... 6
2.20 "Grant Value".................................................... 6
2.21 "Impact Level 1 Officer"......................................... 7
2.22 "Index Stock".................................................... 7
2.23 "Initial Grant".................................................. 7
2.24 "Initial Grant Pricing Date"..................................... 7
2.25 "Internal Revenue Code".......................................... 7
2.26 "Limited Stock Appreciation Right" or "Limited SAR".............. 7
2.27 "Market Index"................................................... 7
2.28 "Market Price Option"............................................ 7
2.29 "Normal Retirement".............................................. 7
2.30 "Option"......................................................... 7
2.31 "Participant".................................................... 7
2.32 "Performance Period"............................................. 8
2.33 "Plan"........................................................... 8
2.34 "Premium Price Option"........................................... 8
2.35 "Shareholder Return Performance Percentile"...................... 8
2.36 "Subsidiary"..................................................... 8
2.37 "Termination of Employment"...................................... 8
</TABLE>
i
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Page
<S> <C>
2.38 "Total Shareholder Return"....................................... 8
2.39 "Trading Day".................................................... 9
ARTICLE III
STOCK OPTIONS............................................................. 10
3.1 Grant of Options................................................ 10
3.2 Option Agreement................................................ 10
3.3 Option Mix and Premium Price Option Exercise Price.............. 10
3.3.1 Initial Grant to Executive Officers...................... 10
3.3.2 Initial Grant to Impact Level 1 Officers................. 10
3.3.3 Options Granted After Initial Grant...................... 11
3.3.4 Minimum Exercise Price for Premium Price Options......... 11
3.4 Exercisability of Options....................................... 11
3.4.1 Initial Grant............................................ 11
3.4.2 Initial Grant of Premium Price Options - Effect of
Shareholder Return Performance Percentile................ 12
3.4.3 Initial Grant of Premium Price Options - Effect of Early
or Normal Retirement or Involuntary Termination Without
Cause.................................................... 12
3.4.4 Initial Grant of Premium Price Options - Effect of Death
or Disability............................................ 13
3.4.5 Future Awards............................................ 13
3.4.6 Special Rule for Market Price Options on Change in
Control.................................................. 13
3.4.7 Optional Provisions for Premium Price Options on Change
in Control............................................... 13
3.5 Expiration of Options........................................... 13
3.5.1 Premium Price Options.................................... 13
3.5.2 Market Price Options..................................... 14
3.6 Manner of Paying Option Price................................... 15
3.7 Exercise of Option.............................................. 15
ARTICLE IV
LIMITED SARS.............................................................. 16
4.1 Grant of Limited SARs........................................... 16
4.2 Exercise Price.................................................. 16
4.3 Number of Limited SARs.......................................... 16
4.4 Exercisability.................................................. 16
4.5 Expiration of Limited SARs...................................... 16
4.6 Payment of Limited SARs......................................... 16
ARTICLE V
SHARES SUBJECT TO THE PLAN................................................ 18
5.1 Number of Shares................................................ 18
5.2 Source of Shares................................................ 18
5.3 Dilution and Other Adjustments.................................. 18
5.4 General Restriction............................................. 18
5.5 Rights as Shareholder........................................... 19
</TABLE>
ii
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<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE VI
AMENDMENT AND ADMINISTRATION.............................................. 20
6.1 Amendment or Discontinuance of the Plan......................... 20
6.2 Plan Administration............................................. 20
ARTICLE VII
OTHER PROVISIONS.......................................................... 22
7.1 Unsecured Status of Claim....................................... 22
7.2 No Right to Employment.......................................... 22
7.3 Beneficiary Designations........................................ 22
7.4 Domestic Relations Orders....................................... 22
7.5 Bona Fide Gifts................................................. 22
7.6 Nonassignability................................................ 23
7.7 Separability, Validity.......................................... 23
7.8 Withholding Tax................................................. 23
7.9 Applicable Law.................................................. 24
7.10 Inurement of Rights and Obligations............................. 24
7.11 Notice.......................................................... 24
7.12 Entire Plan..................................................... 24
</TABLE>
iii
<PAGE>
BANKAMERICA CORPORATION PERFORMANCE EQUITY PROGRAM
ARTICLE I
GENERAL
1.1 NAME AND PURPOSE. BankAmerica Corporation ("BankAmerica") hereby
establishes the BankAmerica Corporation Performance Equity Program (the "Plan").
The Plan is intended to (a) closely align the interests of shareholders of
BankAmerica and senior management of the Company, (b) attract key executives of
the highest quality, and (c) motivate Participants to generate superior returns
to shareholders of BankAmerica.
1.2 GENERAL DESCRIPTION. The Plan authorizes the granting of the
following forms of Awards:
(a) Options to purchase shares of BankAmerica's Common Stock at
Exercise Prices equal to the Fair Market Value of the shares on the Grant Date
("Market Price Options").
(b) Options to purchase shares of BankAmerica's Common Stock at
Exercise Prices in excess of the Fair Market Value of the shares on the Grant
Date ("Premium Price Options"). Such Options shall be subject to forfeiture if
the Exercise Price is not attained within a specified time frame.
(c) Limited Stock Appreciation Rights granted in tandem with Premium
Price Options which become exercisable upon a Change in Control.
1.3 ELIGIBILITY. Each Executive Officer and each Impact Level 1 Officer
is eligible to receive Awards under the Plan. In addition, the Committee may
designate other officers of the Company as being eligible to receive Awards
under the Plan. The Committee shall have the power and complete discretion to
select those eligible officers who are to receive an Award and subject to
Sections 3.3.1 and 3.3.2, the types of Awards to grant to eligible officers.
1.4 EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective upon
the date the shareholders of BankAmerica approve the Plan (the "Effective
Date"). Unless the shareholders of BankAmerica shall approve an extension or
renewal of the Plan for such new or additional term as they may determine, no
Awards shall be made after May 22, 2000. However, all Awards made under the
Plan prior to such date shall remain in effect until such Awards shall have been
satisfied, terminated, or paid out, or expire, in accordance with the Plan and
the terms of such Awards.
1.5 LIMITATION ON OPTIONS AND LIMITED SARS AWARDABLE TO ANY SINGLE
PARTICIPANT. The maximum number of shares of Common Stock underlying Options and
Limited SARs that may be awarded under the
1
<PAGE>
Plan to any single Participant during any calendar year is 1,000,000.
2
<PAGE>
ARTICLE II
DEFINITIONS
The following terms, when written with initial capital letters, will have
the meanings stated below. Unless the context plainly indicates otherwise,
words in any gender include the other genders and the singular includes the
plural and vice versa:
2.1 "Award" means the grant of an Option or Limited SAR under the Plan,
either individually or collectively.
2.2 "Award Agreement" means the written agreement setting forth the terms
and conditions applicable to each Award.
2.3 "BankAmerica" means BankAmerica Corporation, a Delaware corporation.
2.4 "Board" means the Board of Directors of BankAmerica.
2.5 "Cause" means (a) or (b) below:
(a) The willful and continued failure of the Participant to
substantially perform the Participant's duties with the Company (other than any
such failure resulting from incapacity due to physical or mental illness), after
a written demand for such performance is delivered to the Participant by the
Board or the chief executive officer of BankAmerica or of the Subsidiary
employing the Participant, which specifically identifies the manner in which the
Board or chief executive officer believes that the Participant has not
substantially performed the Participant's duties.
(b) The willful engaging by the Participant in illegal conduct or
gross misconduct which is injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of the
Participant shall be considered "willful" unless it is done, or omitted to be
done, by the Participant in bad faith or without reasonable belief that the
Participant's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the chief executive officer of
BankAmerica or a senior officer of the Company or based upon the advice of legal
counsel for the Company shall be conclusively presumed to be done, or omitted to
be done, by the Participant in good faith and in the best interests of the
Company.
2.6 "Change in Control" means that one of the following events has
occurred:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934)
(a "Person") of beneficial
3
<PAGE>
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either (i) the then outstanding shares of common stock of
BankAmerica (the "Outstanding BankAmerica Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of BankAmerica entitled
to vote generally in the election of directors (the "Outstanding BankAmerica
Voting Securities"); provided, however, that for purposes of this subsection
(a), the following acquisitions shall not constitute a Change in Control: (i)
any acquisition directly from BankAmerica (ii) any acquisition by BankAmerica,
(iii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or (iv) any acquisition by any corporation pursuant
to a transaction which complies with clauses (i), (ii) and (iii) of subsection
(c) below.
(b) Individuals who, as of February 3, 1997 constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
February 3, 1997 whose election, or nomination for election by BankAmerica's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.
(c) Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of BankAmerica or
its principal Subsidiary (a "Business Combination"), in each case, unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding BankAmerica Common Stock and Outstanding BankAmerica Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 70% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns BankAmerica or all or substantially all of BankAmerica'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 BankAmerica Common Stock and Outstanding BankAmerica Voting
Securities, as the case may be, (provided, however, that, for the purposes of
this clause (i), 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
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BankAmerica Common Stock or Outstanding BankAmerica 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), (ii) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding voting
securities of such corporation unless such Person owned 20% or more of the
Outstanding BankAmerica Common Stock or Outstanding BankAmerica Voting
Securities immediately prior to the Business Combination and (iii) 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 (or, in the
case of BankAmerica's principal Subsidiary, the corresponding board of
directors) at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination.
(d) Approval by the shareholders of BankAmerica of a complete
liquidation or dissolution of BankAmerica.
2.7 "Committee" means the Executive Personnel and Compensation Committee
of the Board or other such committee of the Board, comprised of not less than
two persons who qualify as "non-employee directors" as defined in Rule 16b-
3(b)(3) under the Exchange Act, or any successor definition adopted by the
Securities and Exchange Commission, and as "outside directors" within the
meaning of Section 162(m) of the Internal Revenue Code.
2.8 "Common Stock" means shares of BankAmerica's common stock, $1.5625 par
value per share.
2.9 "Company" means BankAmerica and its Subsidiaries, collectively.
2.10 "Disability" means a Termination of Employment under the policy of the
Company then in effect governing extended medical absences by reason of the
Participant becoming totally disabled.
2.11 "Early Retirement" means a Termination of Employment at age 55 or
later (but prior to Normal Retirement) by reason of the Participant's retirement
from the Company in accordance with the retirement policy of the Company then in
effect for the Participant.
2.12 "Effective Date" means the date the Plan is approved by the
shareholders of BankAmerica.
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2.13 "Employment" means employment (including an authorized leave of
absence) with the Company.
2.14 "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and regulations and rulings issued thereunder.
2.15 "Executive Officer" means an officer of BankAmerica designated by the
Board as an Executive Officer for purposes of the Securities and Exchange
Commission reporting and proxy regulations.
2.16 "Exercise Price" means the price at which a share of Common Stock may
be purchased by a Participant pursuant to the exercise of an Option or the price
specified in a Limited SAR used to determine the amount of appreciation in a
share of Common Stock.
2.17 "Fair Market Value" of a share of Common Stock (or the common stock of
an Index Stock) on any date means the closing price of a share as reflected in
the report of consolidated 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
or in any other publication selected by the Committee, provided, however, that
if share prices are misquoted or omitted by the selected publication(s), the
Committee shall directly solicit this information from officials of the stock
exchanges or from other informed independent market sources. If shares of
Common Stock (or the common stock of an Index Stock) shall not have been
publicly traded for more than ten days immediately preceding such date, then the
fair market value of a share shall be determined by the Committee in such manner
as it may deem appropriate.
Notwithstanding the foregoing, for purposes of determining the Exercise
Price of a Market Price Option or Limited SAR, Fair Market Value means the
average of the high and low sales prices of a share of Common Stock for the
Grant Date as reflected in such report.
2.18 "Final Measurement Period" means, with respect to Premium Price
Options, the ten consecutive Trading Days immediately prior to the end of the
Performance Period.
2.19 "Grant Date" means, with respect to an Option or Limited SAR, the date
on which the Option or Limited SAR was granted.
2.20 "Grant Value" means the dollar value of an Award as of (a) the Initial
Grant Pricing Date, in the case of Premium Price Options granted in the Initial
Grant or (b) the Grant Date, in the case of all other Awards, determined
according to the Black-Scholes Option Price Model or other valuation methodology
approved by the Committee that attempts to equate the risk-
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adjusted present value of the different types of Awards available under the
Plan.
2.21 "Impact Level 1 Officer" means an officer of the Company who has been
designated as an Impact Level 1 officer by the Chief Executive Officer of
BankAmerica.
2.22 "Index Stock" means the shares of common stock of any corporation
(other than BankAmerica) included in the Market Index on each Trading Day during
both the Initial Measurement Period and the Final Measurement Period.
2.23 "Initial Grant" means the grant of Awards under the Plan to Executive
Officers and Impact Level 1 Officers on the Effective Date.
2.24 "Initial Grant Pricing Date" means February 3, 1997, the date the Plan
was adopted by the Board.
2.25 "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations and rulings thereunder.
2.26 "Limited Stock Appreciation Right" or "Limited SAR" means an Award
granted under Article IV in connection with a related Premium Price Option, the
exercise of which shall require cancellation of the related Option or portion
thereof (and if and when the Option is exercised, the Limited SAR shall be
similarly canceled).
2.27 "Market Index" means the Standard & Poor's Financial Index, or in the
event such index is no longer available, such comparable stock market index as
may be selected by the Committee.
2.28 "Market Price Option" means an Option under which the shares of Common
Stock carry an Exercise Price equal to the Fair Market Value of a share of
Common Stock on the Grant Date.
2.29 "Normal Retirement" means a Termination of Employment on or after age
65 by reason of the Participant's retirement from the Company in accordance with
the retirement policy of the Company then in effect for the Participant.
2.30 "Option" means an option to purchase shares of Common Stock which is
granted under Article III and which is not intended to be an incentive stock
option under Section 422 of the Internal Revenue Code.
2.31 "Participant" means an executive of the Company who is designated by
the Committee to be granted an Award under the Plan.
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2.32 "Performance Period" means, with respect to each Premium Price Option,
the four, six or eight year period, as applicable, described in Section
3.4.1.(b), (c) and (d).
2.33 "Plan" means the BankAmerica Corporation Performance Equity Plan as
set forth in this document and as amended from time to time.
2.34 "Premium Price Option" means an Option under which the shares of
Common Stock carry an Exercise Price in excess of the Fair Market Value of a
share of Common Stock on the Grant Date, or, in the case of an Option granted in
the Initial Grant, in excess of the average of the Fair Market Value of a share
of Common Stock for the 10 consecutive Trading Days immediately preceding the
Initial Grant Price Date, as provided in Article III.
2.35 "Shareholder Return Performance Percentile" means a figure determined
by (a) separately calculating the Total Shareholder Return of each Index Stock
over the applicable Performance Period; (b) ranking the Index Stocks according
to Total Shareholder Return; (c) ranking BankAmerica amongst the Index Stocks
according to the Total Shareholder Return of BankAmerica; (d) dividing (i) the
number of Index Stocks with a lower Total Shareholder Return than the Total
Shareholder Return of BankAmerica by (ii) the number of Index Stocks plus 1; and
(e) multiplying such quotient by 100. For example, if there are 75 Index Stocks
and the Total Shareholder Return of BankAmerica exceeds the Total Shareholder
Return of 55 of the Index Stocks, then BankAmerica would rank in the 72nd
Shareholder Return Performance Percentile.
2.36 "Subsidiary" means any corporation of which BankAmerica owns, directly
or indirectly, 20% or more of the voting stock.
2.37 "Termination of Employment" means the date the Employment of a
Participant ends for any reason.
2.38 "Total Shareholder Return" shall be calculated by (a) assuming that
one share (the "initial share") of Common Stock or of an Index Stock as the case
may be, is purchased on the Grant Date at the average Fair Market Value of such
share for the ten consecutive Trading Days immediately prior to the Grant Date,
(b) assuming that additional shares (or fractions of shares) are purchased upon
the payment of dividends or other distributions to holders of such shares on the
initial share and on shares accumulated through the assumed reinvestment of
dividends and other distributions at a price equal to the Fair Market Value of
such shares on the date such dividends or distributions are paid, (c)
calculating the number of shares (including fractions of shares), including the
initial share, that would be accumulated over the Performance Period, adjusting
as necessary for any stock split or similar events, (d) multiplying the number
of shares (including fractions of shares) determined in clause (c) by the
average Fair Market Value for the ten consecutive Trading Days
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immediately prior to the last day of the Performance Period, and (e) determining
the annual compound growth rate during the Performance Period (or such shorter
period) based upon the value determined in clause (a) and the value determined
in clause (d). In the event any non-cash dividend or distribution is made to
holders of shares, the Committee shall, in its sole discretion, determine the
value of such dividend or distribution, which amount shall be assumed to be
reinvested in the manner provided for in clause (b) above.
2.39 "Trading Day" means, with respect to a share of Common Stock or the
Common Stock of an Index Stock, a day on which such Share is publicly traded.
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ARTICLE III
STOCK OPTIONS
3.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Participants at any time and from time to time as
determined by the Committee in its sole discretion. The Committee, in its sole
discretion, shall determine the number of shares of Common Stock subject to each
Option.
3.2 OPTION AGREEMENT. Each Option shall be evidenced by an Award
Agreement. The Award Agreement shall specify the Exercise Price, the expiration
date of the Option, the number of shares of Common Stock to which the Option
pertains, any conditions to exercise the Option, and such other terms and
conditions as the Committee, in its sole discretion, shall determine.
3.3 OPTION MIX AND PREMIUM PRICE OPTION EXERCISE PRICE. The mix between
Premium Price Options and Market Price Options and the Exercise Price(s) for
Premium Price Options shall be determined by the Committee in accordance with
the provisions of this Section 3.3.
3.3.1 INITIAL GRANT TO EXECUTIVE OFFICERS. The Initial Grant to
Participants who are Executive Officers shall consist entirely of Premium Price
Options. The Exercise Price of the Initial Grant of Premium Price Options shall
be determined as follows:
(a) The Exercise Price of the shares comprising one-third of the Grant
Value shall be 33 1/3 percent above the average of the Fair Market Value of the
Common Stock for the 10 consecutive Trading Days immediately prior to the
Initial Grant Pricing Date. The Exercise Price shall be rounded down to the
nearest whole dollar.
(b) The Exercise Price of the shares comprising one-third of the Grant
Value shall be 50 percent above the average of the Fair Market Value of the
Common Stock for the 10 consecutive Trading Days immediately prior to the
Initial Grant Pricing Date. The Exercise Price shall be rounded down to the
nearest whole dollar.
(c) The Exercise Price of the shares comprising one-third of the Grant
Value shall be 100 percent above the average Fair Market Value of the Common
Stock for the 10 consecutive Trading Days immediately prior to the Initial Grant
Pricing Date. The Exercise Price shall be rounded down to the nearest whole
dollar.
3.3.2 INITIAL GRANT TO IMPACT LEVEL 1 OFFICERS. One-half of the
Grant Value of the Initial Grant to Participants who are Impact Level 1 Officers
shall consist of Market Price Options. In determining such Grant Value, the
Committee shall take into account any options granted on the same Grant Date
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under the BankAmerica Corporation 1992 Management Stock Plan to such
Participants. One-half of the Grant Value of the Initial Grant to Participants
who are Impact Level 1 Officers shall consist of Premium Price Options. The
Exercise Prices of the Initial Grant of Premium Price Options shall be the same
as in Section 3.3.1.
3.3.3 OPTIONS GRANTED AFTER INITIAL GRANT. In the case of Options
granted after the Initial Grant under the Plan, the mix between Premium Price
Options and Market Price Options, and the Exercise Price(s) of Premium Price
Options shall be determined by the Committee in its sole discretion, provided
that the Exercise Price(s) of Premium Price Options shall represent an
appropriate premium over the then Fair Market Value of a share of Common Stock,
as determined by the Committee.
3.3.4 MINIMUM EXERCISE PRICE FOR PREMIUM PRICE OPTIONS. In no event
shall the Exercise Price of a Premium Price Option be less than the Exercise
Price of a Market Price Option granted on the same Grant Date.
3.4 EXERCISABILITY OF OPTIONS. Each Option shall become exercisable in
accordance with the provisions of this Section 3.4.
3.4.1 INITIAL GRANT. Each Option granted under the Initial Grant
shall become exercisable as follows, subject to the special rules contained in
Sections 3.4.3 and 3.4.4.
(a) With respect to a Market Price Option, 33 1/3 percent of the
shares of Common Stock covered by the Option shall become exercisable on the
first anniversary of the Grant Date, an additional 33 1/3 percent of such shares
shall become exercisable on the second anniversary of the Grant Date, and the
remaining shares shall become exercisable on the third anniversary of the Grant
Date, provided that in each case the Participant remains continuously in
Employment on the applicable anniversary date.
(b) With respect to a Premium Price Option with an Exercise Price 33
1/3 percent above the average Fair Market Value of the shares of Common Stock
for the 10 consecutive Trading Days immediately prior to the Initial Grant
Pricing Date, 100 percent of the shares shall become exercisable on the tenth
Trading Day (occurring within a period of 20 consecutive Trading Days) on which
the Fair Market Value of the Common Stock share is at least equal to the
Exercise Price, provided that such 10th Trading Day occurs not later than four
years after the Grant Date.
(c) With respect to a Premium Price Option with an Exercise Price 50
percent above the average Fair Market Value of the shares for the 10 consecutive
Trading Days immediately prior to the Initial Grant Pricing Date, 100 percent of
the shares shall become exercisable on the 10th Trading Day (occurring within a
period of 20 consecutive Trading Days) on which the Fair Market Value of the
Common Stock is at least equal to the
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Exercise Price, provide that such 10th Trading Day occurs not later than six
years after the Grant Date.
(d) With respect to a Premium Price Option with an Exercise Price 100
percent above the average Fair Market Value of the shares of Common Stock for
the 10 consecutive trading days immediately prior to the Initial Grant Pricing
Date, 100 percent of the shares shall become exercisable on the 10th Trading Day
(occurring within a period of 20 consecutive Trading Days) on which the Fair
Market Value of the Common Stock is at least equal to the Exercise Price,
provided that such 10th Trading Day occurs not later than eight years after the
Grant Date.
(e) No Premium Price Option granted in the Initial Grant may be
exercised before the third anniversary of the date of the Initial Grant, even if
the Option has otherwise become exercisable before that date, except as provided
in Section 3.4.7.
3.4.2 INITIAL GRANT OF PREMIUM PRICE OPTIONS - EFFECT OF SHAREHOLDER
RETURN PERFORMANCE PERCENTILE. In the event any Premium Price Option awarded in
the Initial Grant does not become exercisable within the applicable four, six or
eight year Performance Period, the Committee may, in its sole discretion, permit
all or a portion of the shares subject to such Option to become exercisable as
of the last day of the Performance Period if BankAmerica ranks in the 75th
Shareholder Return Performance Percentile or higher over the applicable
Performance Period.
3.4.3 INITIAL GRANT OF PREMIUM PRICE OPTIONS - EFFECT OF EARLY OR
NORMAL RETIREMENT OR INVOLUNTARY TERMINATION WITHOUT CAUSE. If a Participant
incurs a Termination of Employment on account of Early Retirement, Normal
Retirement or involuntary termination without Cause within three years of the
date of the Initial Grant, Premium Price Options shall be treated as follows:
(a) If such Option had become exercisable under Section 3.4.1(b), (c)
or (d) prior to the Participant's Termination of Employment, 100 percent of the
Option shall remain outstanding, subject to Section 3.5, after the Participant's
Termination of Employment.
(b) If such Option had not become exercisable under Section 3.4.1(b),
(c) or (d) prior to the Participant's Termination of Employment, a portion of
such Option shall remain outstanding, subject to Section 3.5, equal to the
percentage of such three year period which had elapsed at the time of the
Participant's Termination of Employment. In addition, the Committee, in its
sole discretion, may determine to permit up to 100 percent of the Option to
remain outstanding after such date. If such Termination of Employment occurs
three years or more after the date of the Initial Grant, 100 percent of such
Option shall remain outstanding, subject to Section 3.5, after the Participant's
Termination of Employment.
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3.4.4 INITIAL GRANT OF PREMIUM PRICE OPTIONS - EFFECT OF DEATH OR
DISABILITY. If a Participant incurs a Termination of Employment on account of
death or Disability, 100 percent of all Premium Price Options shall remain
outstanding, subject to Section 3.5, after the date of the Participant's death
or Disability.
3.4.5 FUTURE AWARDS. The periods of exercisability of each Option
granted after the Initial Grant shall be determined by the Committee in its sole
discretion.
3.4.6 SPECIAL RULE FOR MARKET PRICE OPTIONS ON CHANGE IN CONTROL. If
a Change in Control occurs prior to the Participant's Termination of Employment,
100 percent of the shares subject to a Market Price Option shall become
exercisable on the date that the Change in Control occurs.
3.4.7 OPTIONAL PROVISIONS FOR PREMIUM PRICE OPTIONS ON CHANGE IN
CONTROL. The Committee, in its discretion, may determine and specify in each
Premium Price Option Award Agreement that if a Change in Control occurs prior to
the Participant's Termination of Employment, the following shall be applicable;
(a) The Option shall become fully exercisable (with no change in the
Exercise Price) on the date that the Change in Control occurs without regard to
whether the Common Stock reaches the Exercise Price within the applicable
Performance Period specified in Section 3.4.1(b), (c) and (d) or similar
criteria established by the Committee in any future Award.
(b) The Option may be exercised before the third anniversary of the
date of the Initial Grant.
(c) In the case of Termination of Employment for any reason following
a Change in Control, the expiration date of the Option shall be the period
specified in Section 3.5.1(a).
3.5 EXPIRATION OF OPTIONS. The expiration date for each Option shall
occur on the first to occur of the following events:
3.5.1 PREMIUM PRICE OPTIONS.
(a) The expiration of 10 years from the Grant Date or such shorter
period as the Committee shall determine and specify in the Award Agreement.
(b) The date of the Participant's Termination of Employment for any
reason within six months of the Grant Date (i) except as provided in (g) and
(ii) in the case of death, unless the Committee determines in its sole
discretion to permit all or a part of the Option to remain outstanding after
such date for a period specified by the Committee.
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(c) The date of the Participant's Termination of Employment for any
reason other than Early Retirement, Normal Retirement, Disability, death or
involuntary termination without Cause six months or more after the Grant Date,
unless the Committee determines in its sole discretion to permit the Option to
remain outstanding after such date for a period specified by the Committee.
(d) In the case of Termination of Employment by reason of death or
Disability six months or more after the Grant Date, the expiration of the period
in (a).
(e) In the case of Termination of Employment by reason of Early
Retirement, Normal Retirement or involuntary termination without Cause between
six months and three years from the Grant Date, the expiration of five years
from the date of the Participant's Termination of Employment. In the case of
Termination of Employment by reason of Early Retirement, Normal Retirement or
involuntary termination without Cause three years or more after the Grant Date,
the expiration of the period in (a).
(f) The date on which a Premium Price Option no longer may become
exercisable due to the failure of the Fair Market Value of the Common Stock to
reach the Exercise Price in accordance with Section 3.4.1(b), (c) or (d), as
applicable, the failure to satisfy Section 3.4.2 or the failure to meet similar
criteria established by the Committee in any future Award.
(g) If so specified in the Award Agreement as provided in Section
3.4.7(c), in the case of Termination of Employment for any reason following a
Change in Control, the expiration of the period in (a).
3.5.2 MARKET PRICE OPTIONS.
(a) The expiration of 10 years from the Grant Date or such shorter
period as the Committee shall determine and specify in the Award Agreement.
(b) The date of the Participant's Termination of Employment for any
reason within six months of the Grant Date (i) except as provided in (e) and
(ii) in the case of death, unless the Committee determines in its sole
discretion to permit all or a part of the Option to become exercisable after
such date for a period specified by the Committee.
(c) The date of the Participant's Termination of Employment for any
reason other than Early Retirement, Normal Retirement or death six months or
more after the Grant Date, unless the Committee determines in its sole
discretion to permit the Participant to exercise all or part of the Option after
such date for a period specified by the Committee, without regard to whether the
Option was fully exercisable upon such Termination of Employment.
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(d) The expiration of three years from the date of Participant's
Termination of Employment for reasons of Early Retirement, Normal Retirement or
death six months or more after the Grant Date. In the case of Early Retirement
or death, only the portion of the option which was fully exercisable upon such
Termination of Employment shall remain exercisable, unless the Committee
determines in its sole discretion to permit the Participant to exercise all or
part of the Option after such date. In the case of Normal Retirement, 100
percent of the Option shall be exercisable.
(e) In the case of Termination of Employment for any reason following
a Change in Control, the expiration of three years from the date of the
Participant's Termination of Employment.
3.6 MANNER OF PAYING OPTION PRICE. On exercise of each Option, the
Exercise Price shall be paid as follows: (a) in cash, (b) in already-owned
shares of Common Stock, or (c) in some combination of cash and shares, as
specified in the Award Agreement or as otherwise permitted by the Committee.
Already-owned shares of Common Stock must have been owned by the Participant at
the time of exercise for at least the period of time specified in the Award
Agreement, and shall be valued at their Fair Market Value on the date of
exercise.
3.7 EXERCISE OF OPTION. The Committee shall establish, and shall set
forth in each Award Agreement, the procedures governing the exercise of an
Option. In general, subject to such specific provisions, an Option shall be
exercised as follows:
(a) The Participant shall deliver written notice that he or she
intends to exercise the Option to the Company department or officer designated
in the Award Agreement.
(b) The Participant shall pay the full Exercise Price at the time of
exercise.
(c) As soon as practicable after receipt of such notice and payment,
the Company shall direct BankAmerica's transfer agent to register the shares of
Common Stock in the name of the Participant.
In lieu of paying the full Exercise Price at the time of exercise, a Participant
may request that BankAmerica cause all or a portion of the shares subject to the
Option being exercised to be sold, with the portion of the sale proceeds
sufficient to cover the Exercise Price transferred to BankAmerica and the
remainder of the proceeds, less applicable withholding taxes and transaction
costs, paid to the Participant.
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ARTICLE IV
LIMITED SARS
4.1 GRANT OF LIMITED SARs. Limited SARs may be granted in conjunction
with all or any part of a Premium Price Option on or after the Grant Date of the
Premium Price Option as determined by the Committee in its sole discretion.
Limited SARs (or the applicable portion thereof) granted with respect to a
Premium Price Option shall terminate upon the termination or exercise of the
related Premium Price Option. Each Limited SAR shall be evidenced by an Award
Agreement that shall specify the Exercise Price, the expiration date, the number
of shares of Common Stock to which the Limited SAR pertains, any conditions to
exercise, and other such terms and conditions as the Committee, in its sole
discretion, shall determine.
4.2 EXERCISE PRICE. The Exercise Price of each Limited SAR shall equal
the Fair Market Value of a share of Common Stock on the Grant Date of the
related Option.
4.3 NUMBER OF LIMITED SARs. The number of Limited SARs granted in
conjunction with each Premium Price Option shall not exceed the figure
determined by multiplying the ratio of (a) the Black-Scholes value on the Grant
Date of a Premium Price Option for one share of Common Stock to (b) the Black-
Scholes value of the related Market Price Option on the same Grant Date for one
share of Common Stock by (c) the number of shares represented by the Premium
Price Option. In determining the Black-Scholes values, identical assumptions
for the two Options shall be used for the term, risk-free rate, dividend yield,
and stock price volatility.
4.4 EXERCISABILITY. Each Limited SAR which has not otherwise expired
under Section 4.5 shall become exercisable immediately upon the occurrence of a
Change in Control to the extent determined by the Committee in its sole
discretion and specified in the Award Agreement.
4.5 EXPIRATION OF LIMITED SARs. The Committee, in its sole discretion,
shall determine and specify in the Award Agreement when each Limited SAR shall
expire, provided that:
(a) No Limited SAR may have a term longer than would be permitted by
applying the rules of Section 3.5 regarding the expiration of Options.
(b) Each Limited SAR shall terminate no later than the last day of the
period of 60 consecutive days which begins on the date of the Change in Control.
4.6 PAYMENT OF LIMITED SARs. Upon exercise of a Limited SAR, the
Participant shall be entitled to receive payment from the Company equal to the
amount determined by multiplying (a) times (b):
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(a) The amount by which the Fair Market Value of a share of Common
Stock on the date of exercise exceeds the Exercise Price.
(b) The number of shares of Common Stock with respect to which the
Limited SAR is exercised.
Each Limited SAR shall be paid in cash, provided that if any such
payment would cause a Change in Control transaction to be ineligible for pooling
of interests accounting under APB No. 16, which transaction but for such payment
otherwise would have been eligible for such accounting treatment, any Limited
SAR shall be paid in shares of Common Stock having a Fair Market Value equal to
the cash amount foregone.
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ARTICLE V
SHARES SUBJECT TO THE PLAN
5.1 NUMBER OF SHARES. Subject to adjustment as provided in Section 5.2,
the aggregate number of Shares that may be issued under the Plan shall not
exceed 5,700,000 shares, provided that if an Award is canceled, terminates,
expires or lapses (except due to failure of an Option to become exercisable due
to the failure of the Common Stock to reach the Exercise Price in accordance
with Section 3.4.1(b), (c) or (d) as applicable, or to satisfy Section 3.4.2,
any such shares shall again be available for issuance under the Plan.
5.2 SOURCE OF SHARES. Shares of Common Stock delivered under the Plan may
be original issue shares, shares purchased in the open market or otherwise, or
treasury stock as determined by the Chief Financial Officer of BankAmerica from
time to time.
5.3 DILUTION AND OTHER ADJUSTMENTS. In the event that the Committee shall
determine that any dividend or other distribution (whether in the form of cash,
shares of Common Stock, other securities, or other property), recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation, split-
up, spin-off, combination, repurchase, or exchange of shares of Common Stock or
other securities of BankAmerica, issuance of warrants or other rights to
purchase shares of Common Stock or other securities of BankAmerica, or other
similar corporate transaction or event, affects the Common Stock, such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such manner as it
shall deem equitable, adjust any or all of (i) the number and type of shares of
Common Stock which thereafter may be made the subject of Awards, (ii) the number
and type of shares of Common Stock (or other securities or property) subject to
outstanding Awards, (iii) the grant, purchase or exercise price with respect to
any Award, (iv) the period required to attain such exercise prices, and (v) the
performance requirements under Section 3.4.2., or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award. Provided,
however, that the number of shares of Common Stock subject to any Award
denominated in shares of Common Stock shall always be a whole number.
5.4 GENERAL RESTRICTION. Each Award under the Plan shall be subject to
the requirement that, if at any time the Committee shall determine that (a) the
listing, registration or qualification of the shares of Common Stock subject or
related thereto upon any securities exchange or under any state or federal law,
(b) the consent or approval of any government regulatory body, or (c) an
agreement by the recipient of an Award with respect to the disposition of shares
of Common Stock, is necessary or desirable as a condition of, or in connection
with, the making of an Award or the issue, delivery or purchase of
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shares of Common Stock thereunder, then such Award shall not be consummated in
whole or in part unless such listing, registration, qualification, consent,
approval or agreement shall have been effected or obtained free of any
conditions not acceptable to the Committee.
5.5 RIGHTS AS SHAREHOLDER. No Participant shall have rights as a
shareholder with respect to any Award unless and until the shares of Common
Stock subject to such Award are registered in the name of the individual.
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ARTICLE VI
AMENDMENT AND ADMINISTRATION
6.1 AMENDMENT OR DISCONTINUANCE OF THE PLAN. The Board, upon the
recommendation of the Committee, may amend, suspend or terminate the Plan at any
time. However, no amendment, suspension or termination of the Plan may, without
the consent of the Participant, adversely affect such Participant's rights under
the Plan with respect to any Award previously made in any material respect.
6.2 PLAN ADMINISTRATION. The Plan shall be administered by the Committee.
The Committee shall have the power, authority, and sole discretion to construe,
interpret and administer the Plan. The Committee's decisions construing,
interpreting and administering the Plan shall be conclusive and binding on all
parties. Notwithstanding the foregoing, Award under the Plan to the Chief
Executive Officer of BankAmerica shall be subject to approval or ratification by
the Board.
6.2.1 Subject to the provisions of the Plan, the Committee shall have
sole, final, and conclusive authority to determine:
(a) The individuals to whom Awards are granted and the type and size
of Awards granted to each Participant.
(b) The Grant Dates for such Awards and the frequency of Awards.
(c) The price to be paid for the shares upon the exercise of each
Option, which shall be not less than 100% of the Fair Market Value per share, as
determined by the Committee, provided that the Exercise Price(s) of Premium
Price Options shall represent an appropriate premium over the then Fair Market
Value of a share of Common Stock, at the time of granting the Option, and the
period within which each Option shall be exercised.
(d) Whether and to what extent a Participant may use already-owned
shares of Common Stock to exercise Options.
(e) The basis for any Termination of Employment, including whether or
not it was for Cause, Disability, Normal or Early Retirement or otherwise.
(f) The calculation of Total Shareholder Return and the Total
Shareholder Return Performance Percentile.
(g) The terms and conditions of each Award Agreement, which, however,
shall be in accordance with the provisions of the Plan.
6.2.2 The Awards under the Plan are intended to qualify as
performance-based compensation within the meaning of
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Section 162(m) of the Internal Revenue Code, and the Plan provisions shall be
interpreted accordingly.
6.2.3 The act or determination of a majority of the Committee shall
be deemed to be the act or determination of the entire Committee. The Committee
may consult with counsel, who may be counsel to the Company, and such other
advisors as the Committee may deem necessary and/or desirable, and the members
of the Committee shall not incur any liability for any action taken in good
faith in reliance upon the advice of counsel or any other advisor.
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ARTICLE VII
OTHER PROVISIONS
7.1 UNSECURED STATUS OF CLAIM. Participants and their beneficiaries,
heirs, successors and assigns shall have no legal or equitable rights, interests
or claims in any specific property or assets of the Company. No assets of the
Company shall be held under any trust for the benefit of Participants, their
beneficiaries, heirs, successors or assigns, or held in any way as collateral
for the fulfillment of the Company's obligations under the Plan. Any and all of
the Company's assets shall be, and shall remain, the general unpledged and
unrestricted assets of the Company. BankAmerica's obligations under the Plan
shall be merely that of an unfunded and unsecured promise to pay benefits in the
future.
7.2 NO RIGHT TO EMPLOYMENT. Nothing contained in the Plan nor any
document related to the Plan nor any action taken in the administration of the
Plan shall confer upon any Participant the right to continue in the employment
of the Company, nor affect any right which the Company may have to terminate the
employment of such person. All Participants who are at-will employees remain
at-will employees of the Company. If the Participant is not an employee or
officer of BankAmerica, participation in the Plan shall not cause the individual
to become an employee or officer of BankAmerica, but rather, the Participant
shall remain an employee of the subsidiary which employs the Participant.
7.3 BENEFICIARY DESIGNATIONS. If permitted by the Committee, a
Participant may name a beneficiary or beneficiaries to whom any vested but
unpaid Award or amount due under the Plan shall be transferred in the event of
the Participant's death. Each such designation shall revoke all prior
designations by the Participant and shall be effective only if given in a form
and manner acceptable to the Committee. This Section 7.3 shall not be effective
until specifically authorized by the Committee.
7.4 DOMESTIC RELATIONS ORDERS. If permitted by the Committee, and under
such procedures as the Committee may adopt from time to time, an Award may be
transferred to a Participant's spouse, former spouse or dependent pursuant to a
court-approved domestic relations order which relates to the provision of child
support, alimony payments or marital property rights. This Section 7.4 shall
not be effective until specifically authorized by the Committee.
7.5 BONA FIDE GIFTS.
(a) Any Participant who is an Executive Officer shall have the right,
subject to the conditions specified in the following paragraph, to irrevocably
transfer to Immediate Family Members (as defined below) Options granted at any
time under the Plan to such Participant. For purposes of this Section and any
Award Agreement, the term Immediate Family Members means (i) the children,
grandchildren or spouse of an Executive Officer
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Participant or (ii) a trust for the benefit of such family members.
(b) As conditions to such transferability of any Options, (i) the
Executive Officer Participant may not receive any consideration for the
transfer; (ii) the Award Agreements pursuant to which such Options are granted,
or amendments to the Award Agreements with respect to previously granted
Options, in each case approved by the Committee, must specify the actual extent
to which such Options may be transferred, all in accordance with the terms of
the Plan; and (iii) the Options so transferred must continue to be subject to
the same terms and conditions that were applicable to such Options prior to
their transfer.
(c) The transferee of any Options transferred in accordance with the
terms and conditions of the Plan shall have the right to exercise such Options
and to have the shares of Common Stock covered by such Options registered in the
name of such transferee, as though such transferee were the Executive Officer
Participant.
7.6 NONASSIGNABILITY. No person shall have any right to sell, assign,
transfer, pledge, anticipate, mortgage or otherwise encumber, hypothecate or
convey in advance of actual receipt an Award, if any, granted or payable under
the Plan, or any part thereof, or any interest therein, other than by (a) will,
(b) the laws of descent and distribution, or (c) to the limited extent provided
for in Sections 7.3, 7.4 and 7.5. Except for the limited extent provided for in
Section 7.4, no portion of an Award nor the amounts payable shall, prior to
actual payment, be subject to seizure, attachment, lien or sequestration for the
satisfaction of any debts, judgments, alimony or separate maintenance owed by a
Participant or any other person, nor be transferable by operation of law in the
event of the Participant's or any other person's bankruptcy or insolvency. Any
such transfer or attempted transfer in violation of the preceding provisions
shall be considered null and void.
Notwithstanding anything contained in this Section, BankAmerica shall have
the right to offset from any unpaid or deferred Award any amounts due and owing
from the Participant to the Company to the extent permitted by law; provided,
--------
however, that with respect to any Options that are transferred in accordance
- -------
with the terms and conditions of the Plan, such right shall cease upon the
transfer.
7.7 SEPARABILITY, VALIDITY. In the event that any provision of the Plan
or related Award Agreement is held to be invalid, void or unenforceable, the
same shall not affect, in any respect whatsoever, the validity of any other
provision of the Plan or any related Award Agreement.
7.8 WITHHOLDING TAX. The Company shall withhold from all benefits due
under the Plan an amount sufficient to satisfy any
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federal, state and local tax withholding requirements. The Committee may, in
its sole discretion and pursuant to such procedures as it may specify from time
to time, permit a Participant to satisfy such tax withholding obligation, in
whole or in part, by (a) electing to have the Company withhold otherwise
deliverable shares of Common Stock, or (b) delivering to the Company already-
owned Shares of the Common Stock having a Fair Market Value equal to the amount
required to be withheld.
7.9 APPLICABLE LAW. The Plan and any related Award Agreements shall be
governed in accordance with the laws of the State of Delaware without regard to
the application of the conflicts of law provisions thereof. The obligation of
BankAmerica with respect to the grant, exercise and payment of Awards shall be
subject to all applicable laws, rules and regulations and such approvals by any
governmental agencies as may be required, including, without limitation, the
effectiveness of any registration statement required under the Securities Act of
1933, as amended, and the rules and regulations of any securities exchange on
which the Common Stock may be listed.
7.10 INUREMENT OF RIGHTS AND OBLIGATIONS. The rights and obligations
under the Plan and any related Award Agreements shall inure to the benefit of,
and shall be binding upon, the Company and its successors and assigns, and the
Participants and their beneficiaries and assigns.
7.11 NOTICE. All notices and other communications required or permitted
to be given under the Plan shall be in writing and shall be deemed to have been
duly given if delivered personally or mailed first class, postage prepaid, as
follows: (a) if to BankAmerica, at its principal business address to the
attention of the Secretary; (b) if to any Participant, at the last address of
the Participant known to the sender at the time the notice or other
communication is sent.
7.12 ENTIRE PLAN. This document is a complete statement of the Plan. As
of its effective date this document supersedes all prior plans, representations
and proposals, written or oral, relating to its subject matter. The Company
shall not be bound by or liable to any person for any representation, promise or
inducement made by any employee or agent of the Company which is not embodied in
this document or in any authorized written amendment to the Plan.
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EXHIBIT 10.f
SECURITY PACIFIC CORPORATION
STOCK OPTION PLAN
As amended
Last Amended April 28, 1997
<PAGE>
EXHIBIT 10.F
SECURITY PACIFIC CORPORATION
STOCK OPTION PLAN
1. PURPOSE.
The purpose of this Stock Option Plan ("Plan") is to strengthen Security
Pacific Corporation ("Corporation"), by providing an additional means of
retaining and attracting competent management personnel and by providing to
participating officers and other key employees of the Corporation and its
subsidiaries (as hereinafter defined) added incentive for high levels of
performance and for unusual efforts to increase the earnings of the Corporation
through the opportunity for stock ownership offered under this Plan.
2. ADMINISTRATION.
The Plan shall be administered by the Executive Officers Compensation and
Development Committee ("Committee") of the Board of Directors ("Board") of the
Corporation. The Committee shall consist of three or more members of the Board
selected by, and serving at the pleasure of, the Board. There may be appointed
to the Committee only members of the Board who are disinterested, i.e., who are
not eligible to receive options or stock appreciation rights under the Plan and
who have not been eligible, at any time within one year prior to appointment to
the Committee, for selection as a person to whom stock may be allocated or to
whom options or stock appreciation rights may be granted pursuant to the Plan or
any other plan of the Corporation or any of its subsidiaries entitling the
participants therein to acquire stock, stock appreciation rights or stock
options of the Corporation or any of its subsidiaries. Any action of the
Committee with respect to the administration of the Plan shall be taken pursuant
to a majority vote, or to the written consent of all of its members.
Subject to the express provisions of the Plan, the Committee shall have the
authority to construe and interpret the Plan, and to define the terms used
therein, to prescribe, amend and rescind rules and regulations relating to the
administration of the Plan, to determine the duration and purposes of leaves of
absence which may be granted to participants without constituting a termination
of their employment for the purposes of the Plan, and to make all other
determinations necessary or advisable for the administration of the Plan. The
determinations of the Committee on the matters referred to in this section shall
be conclusive.
3. PARTICIPATION.
Officers and other key employees ("eligible employees") of the Corporation
or of any subsidiary corporation (as such term is defined in Section 425(f) of
the Internal Revenue Code of 1986,
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as amended, the "Code") shall be eligible for selection to participate in the
Plan; provided, however, that members of the Committee shall not, while serving
as members of such Committee, be eligible to receive a grant of options or stock
appreciation rights under the Plan. Directors who are not officers or employees
of the Corporation or any such subsidiary corporation are not eligible to
participate in the Plan. The Committee shall have the authority and power to
grant options and stock appreciation rights to any eligible employee other than
a member of the Office of the Chairman as such body shall be constituted from
time to time by the Board. With respect to the options and stock appreciation
rights which the Committee is authorized to grant, the Committee may also
determine the terms and provisions of the respective option agreements (which
need not be identical), the designation of an option as a nonqualified option or
incentive stock option, the times at which such options and stock appreciation
rights shall be granted, and the number of shares subject to each option and,
where applicable, companion stock appreciation right. Any action of the
Committee with respect to option grants shall be taken pursuant to a majority
vote of all the members of the Committee or the written consent of all of its
members.
The Board shall have the authority and power, after consideration of the
recommendations of the Committee, to grant options and stock appreciation rights
to any eligible employee including members of the Office of the Chairman. With
respect to the options and stock appreciation rights which the Board is
authorized to grant, the Board may also determine the terms and provisions of
the respective option agreements (which need not be identical), the designation
of an option as a nonqualified option or incentive stock option, the times at
which such options and stock appreciation rights shall be granted, and the
number of shares subject to each option and, where applicable, companion stock
appreciation right. Any action of the Board with respect to option grants shall
be taken pursuant to a vote of a disinterested majority of all the members of
the Board or the written consent of all of its members. A director eligible for
a grant of an option or stock appreciation right shall not participate in the
vote on any such grant nor in the determination as to whether an option or stock
appreciation right should be awarded to such director.
An individual who has been granted an option may, if otherwise eligible, be
granted an additional option or options and stock appreciation right or rights,
if the Board or the Committee, as the case may be, shall so determine.
4. STOCK SUBJECT TO THE PLAN.
Subject to adjustment as provided in Section 9 hereof, the stock to be
offered under the Plan shall be treasury shares or shares of the Corporation's
authorized but unissued Common Stock
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(hereinafter collectively called "stock"). The aggregate amount of stock to be
delivered upon the exercise of all options granted under this Plan shall not
exceed 4,500,000 shares, subject to adjustment as set forth in Section 9 hereof.
If any option granted hereunder and related stock appreciation right or rights,
if any, shall lapse or terminate without having been exercised in full, the
unpurchased shares subject thereto shall again be available for the purposes of
the Plan. For purposes of determining the number of shares to charge against
the 4,500,000 share limitation set forth above, the exercise of a stock
appreciation right or rights shall be treated as the exercise of the portion of
the option or options which are surrendered in connection with the exercise of
the stock appreciation right or rights.
5. OPTIONS.
One or more options may be granted to any eligible employee. Each option
so granted shall be designated by the Board or the Committee, as the case may
be, as either a nonqualified option or incentive stock option subject to the
following conditions:
(a) The option price per share of stock shall be set by the grant but
shall in no instance be less than fair market value on the date of grant,
based on the value of the stock on the date of grant of options as
determined by the mean of the bid and asked prices for the Common Stock as
supplied by the National Association of Securities Dealers, Inc., through
NASDAQ and published in the Western Edition of The Wall Street Journal, or
the closing price of such stock as reported on the Composite Tape and
published in the Western Edition of The Wall Street Journal.
(b) The option shall become exercisable in such manner and within such
period or periods as shall be determined by the Board or the Committee, as
the case may be, (subject to the limitations set forth in this Section 5
and in Sections 6 and 10 hereof) upon payment in full solely in cash,
solely in shares of Common Stock or partly in such shares and partly in
cash. Any shares of Common Stock received as payment for an option
exercise shall be valued at the mean of the bid and asked prices for the
Common Stock as supplied by the National Association of Securities Dealers,
Inc., through NASDAQ and published in the Western Edition of The Wall
Street Journal, or the closing price of such stock as reported on the
Composite Tape and published in the Western Edition of The Wall Street
Journal on the date of exercise of the stock option. The option shall
lapse:
(1) If the grantee is then living, at the earliest of the
following times:
(i) ten years after it is granted,
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(ii) immediately upon termination of employment by reason of
a discharge for cause as that term may be determined by the
Committee in its sole discretion,
(iii) one year after termination of employment if termination
occurs after fifteen years of service to the Corporation and any
of its subsidiary corporations or by reason of retirement or
disability as those terms are determined by the Committee in its
sole discretion,
(iv) three months after termination of employment other
than as described in (ii) and (iii) above,
(v) any earlier time set by the grant; or
(2) If the grantee dies while employed by the Corporation or any
subsidiary corporation, or during the period referred to in Section
5(b)(1)(iii) or (iv) hereof, one year after the date of death subject
to earlier termination pursuant to Sections 5(b)(1)(i) or (v). During
the period after death, the option may, to the extent exercisable on
the date of death, be exercised by the person or persons to whom the
grantee's rights under the option shall pass by will or by the
applicable laws of descent and distribution; and
(3) Notwithstanding (1) and (2) above, on the date of termination
of employment whether for death or any other cause to the extent of
any portion of the option not exercisable on such date of termination.
(4) Notwithstanding (1) above, effective on the date of the
merger of Security Pacific Corporation and BankAmerica Corporation
(the "Merger Date") the period of exercise of all outstanding options
shall be extended from three months to one year after termination of
employment, in the case of all terminations other than terminations by
reason of death or discharge for cause; provided, however, that no
such extension shall apply to any nonqualified option unless the
grantee consents to such extension; and provided further, that such
extension shall not be available under any incentive stock option
unless, upon the written request of the grantee, the Committee shall,
in its sole discretion, determine to grant such extension. Prior to
the Merger Date the Committee may, in its sole discretion, extend the
period of exercise of any outstanding options to one year after
termination of employment subject to the receipt of the grantee's
consent in the case of nonqualified options and subject
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<PAGE>
to a grantee's request in the case of incentive stock options as
provided in the preceding sentence."
(c) Incentive stock options shall be so designated at the time of
grant except that options granted on or before December 31, 1980, may be
designated as incentive stock options on or before August 1, 1982, and
options granted from January 1, 1981 through April 20, 1982, may be
designated as incentive stock options on or before April 20, 1982.
Incentive stock options shall be subject to the conditions specified in
Section 5(a) and 5(b) and subject to the additional following conditions:
(1) An incentive stock option granted prior to January 1, 1987,
shall not be exercisable while there is outstanding, within the
meaning of Section 422A of the Code, any other incentive stock option
which was earlier granted to the employee.
(2) The aggregate fair market value of the shares (determined as
of the date the incentive stock option is granted) for which any
employee may be granted incentive stock options in any calendar year
prior to January 1, 1987, shall not exceed $100,000 plus any unused
limit carried forward to such year. The unused limit carried forward
available in any such year to any employee shall be determined in
accordance with Section 422A of the Code.
(3) For incentive stock options granted after December 31, 1986,
the aggregate fair market value of the shares (determined as of the
date the incentive stock option is granted) with respect to which such
incentive stock options are exercisable for the first time (other than
as a result of acceleration pursuant to Section 10) by an employee
during any calendar year (under the Plan or any other incentive stock
option plan of the Corporation or of any subsidiary corporation) shall
not exceed $100,000.
(4) There shall be imposed any other conditions required in order
that the option be an "incentive stock option" as that term is defined
in Section 422A of the Code.
6. CONTINUATION OF EMPLOYMENT; EXERCISE.
Each person to whom an option is granted must agree that he or she will, at
the request of the Corporation, remain in the continuous employ of the
Corporation or a subsidiary corporation for a period of not less than one year
following the date of the granting of the option. Nothing contained in the Plan
(or in any option or stock appreciation right granted pursuant to the Plan)
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<PAGE>
shall confer upon any employee any right to continue in the employ of the
Corporation or of any subsidiary corporation or to interfere in any way with the
right of the Corporation or any subsidiary corporation to reduce his or her
compensation from the rate in existence at the time of the granting of an option
or stock appreciation right, but nothing contained herein or in an option
agreement shall affect any contractual rights of an employee.
Options shall be nonexercisable during the first year after the date of
grant. If the holder of an option shall not purchase all of the shares which he
or she is entitled to purchase in any given installment period, the right to
purchase shares not purchased in such installment period shall continue until
the lapse or termination of such option. No option or installment thereof shall
be exercisable except in respect of whole shares, and fractional share interests
shall be disregarded except that they may be accumulated in accordance with the
next preceding sentences. Not less than 10 shares may be purchased at one time
unless the number purchased is the total number at the time available for
purchase under the option.
7. STOCK APPRECIATION RIGHTS.
A stock appreciation right may be granted, in the discretion of the Board
or the Committee, as the case may be, concurrently with the grant of any option
granted under the Plan ("companion grant") subject to Section 11 of the Plan. A
stock appreciation right shall extend to all or a portion of the shares covered
by the companion grant. If a stock appreciation right extends to less than all
the shares covered by the companion grant and if a portion of the option
contained in the companion grant is thereafter exercised, the number of shares
subject to the unexercised stock appreciation right shall be reduced only if and
to the extent that the remaining portion of the option contained in the
companion grant covers fewer shares than the unexercised stock appreciation
right would otherwise cover. A stock appreciation right shall entitle the
holder (subject to the conditions and limitations set forth below), upon
surrender of a then exercisable portion of the option contained in the companion
grant (subject to the maximum number of shares to which the stock appreciation
right extends), to receive payment of an amount determined pursuant to
subparagraph (b) of the following paragraph.
Stock appreciation rights shall be subject to the following terms and
conditions and to such other terms and conditions not inconsistent with the Plan
as the Board may determine:
(a) A stock appreciation right shall be exercisable by the holder (or
such other person entitled under Section 5 of the Plan to exercise the
option contained in the companion grant) only at such time or times, and to
the extent, that
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<PAGE>
the option contained in the companion grant could have been exercised and
only when the fair market value of the stock subject to the option
contained in the companion grant exceeds the exercise price of such option.
(b) Upon exercise of the stock appreciation right and surrender of an
exercisable portion of the option contained in the companion grant, the
holder shall be entitled to receive payment of an amount (subject to
Section 7(d) below) determined by multiplying
(1) the difference obtained by subtracting the option exercise
price per share of Common Stock subject to the companion grant from
the fair market value of a share of Common Stock on the date of
exercise of the stock appreciation right as determined by the mean of
the bid and asked prices for the Common Stock as supplied by the
National Association of Securities Dealers, Inc., through NASDAQ and
published in the Western Edition of The Wall Street Journal, or the
closing price of such stock as reported on the Composite Tape and
published in the Western Edition of The Wall Street Journal, by
(2) the number of shares with respect to which the stock
appreciation right is exercised.
(c) The Committee, in its sole discretion, may settle the amount
determined under subparagraph (b) above solely in cash, solely in shares of
Common Stock (valued at the mean of the bid and asked prices for the Common
Stock as supplied by the National Association of Securities Dealers, Inc.,
through NASDAQ and published in the Western Edition of The Wall Street
Journal, or the closing price of such stock as reported on the Composite
Tape and published in the Western Edition of The Wall Street Journal on the
date of exercise of the stock appreciation right), or partly in such shares
and partly in cash, provided however, that in any event cash shall be paid
in lieu of fractional shares.
(d) The maximum amount per share which will be payable upon exercise
of a stock appreciation right shall be the option exercise price of the
option contained in the companion grant.
(e) Notwithstanding any other provision of the Plan, the Committee may
impose such conditions on exercise of a stock appreciation right
(including, without limitation, the right of the Committee to limit the
time of exercise to specified periods) as may be required to satisfy the
requirements of Rule 16b-3 (or any successor rule), promulgated by the
Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934.
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8. NON-TRANSFERABILITY OF OPTIONS.
An option or stock appreciation right granted under this Plan is non-
transferable by the option holder other than by will or the laws of descent and
distribution, and shall be exercisable during his or her lifetime only by such
option holder.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
If the outstanding shares of the Common Stock of the Corporation are
changed into, or exchanged for a different number or kind of shares or
securities of the Corporation through a reorganization or merger in which the
Corporation is the surviving entity, or through a combination, recapitalization,
reclassification, or otherwise, or if the number of outstanding shares is
changed through a stock split, stock dividend, stock consolidation or otherwise,
an appropriate adjustment shall be made in the number and kind of shares as to
which options may be granted. A corresponding adjustment changing the number or
kind of shares and the exercise price per share allocated to unexercised options
or portions thereof, which shall have been granted prior to any such change,
shall likewise be made. Any such adjustment in an outstanding option, however,
shall be made without change in the total price applicable to the unexercised
portion of the option but with a corresponding adjustment in the price for each
share covered by the option. Corresponding adjustments shall be made with
respect to stock appreciation rights based upon the adjustments made to the
option contained in the companion grant.
Upon the dissolution or liquidation of the Corporation, or upon a
reorganization, merger, or consolidation of the Corporation with one or more
corporations as a result of which the Corporation is not the surviving
corporation, or upon a sale of substantially all the property of the Corporation
to another corporation, this Plan shall terminate, and any option theretofore
granted hereunder shall terminate, unless provision be made in connection with
such transaction for the assumption of options theretofore granted, or the
substitution for such options of new options covering the stock of a successor
employer corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to number and kind of shares and prices.
In so adjusting Common Stock to reflect such changes, or in determining
that no such adjustment is necessary, the Board may rely upon the advice of
independent counsel and accountants of the Corporation, and the determination of
the Board shall be conclusive. No fractional shares of stock shall be issued
under the Plan on account of any such adjustment.
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10. CORPORATE CHANGES.
Unless, prior to an Event (as defined below), the Board determines that,
upon its occurrence, there shall be no acceleration of options or related stock
appreciation rights or determines those options and related stock appreciation
rights which shall be accelerated and the extent to which they shall be
accelerated, each option and each related stock appreciation right shall become
immediately exercisable to the full extent theretofore not exercisable
notwithstanding any provision of this Plan (or of an option holder's option
agreement); provided, however, that no option or stock appreciation right shall,
in any event, be so accelerated to a date less than one year after the date of
grant. Any of the following shall constitute an Event:
(i) Approval by the stockholders of the Corporation of the
dissolution or liquidation of the Corporation;
(ii) Approval by the stockholders of the Corporation of any agreement
to merge or consolidate, or otherwise reorganize, with or into one or more
entities which are not subsidiaries of the Corporation, as a result of
which less than 50% of the outstanding voting securities of the surviving
or resulting entity are, or are to be, owned by former stockholders of the
Corporation (excluding from the term "former stockholders" a stockholder
who is, or as a result of the transaction in question becomes, an
"affiliate", as that term is used in the Securities Exchange Act of 1934
and the Rules promulgated thereunder, of any party to such merger,
consolidation or reorganization);
(iii) Approval by the stockholders of the Corporation of the sale of
substantially all of the Corporation's business and/or assets to a person
or entity which is not a subsidiary of the Corporation; or
(iv) A Change in Control, as from time to time defined in the By-
Laws of the Corporation.
Acceleration of options and related stock appreciation rights shall comply with
applicable regulatory requirements, including, without limitation, Rule 16b-3
promulgated by the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934 and Section 422A of the Code. For purposes of this Section
10 only, Board shall mean the Board as constituted immediately prior to the
Event.
11. TERMINATION, SUSPENSION AND AMENDMENT.
The Board may at any time suspend, amend or terminate this Plan and may,
with the consent of an option holder, make such modifications of the terms and
conditions of his or her option and, where applicable, any related stock
appreciation right, as
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<PAGE>
it shall deem advisable; provided that, except as permitted under the provisions
of Section 9 hereof, no amendment or modification may be adopted without
approval by the vote of the holders of a majority of the Corporation's
outstanding stock entitled to vote thereon which would:
(a) increase the aggregate number of shares which may be obtained
pursuant to options granted under the Plan;
(b) change the minimum option price;
(c) increase the maximum term of options or stock appreciation rights
provided for herein; or
(d) permit the granting of options or stock appreciation rights to
anyone other than an officer or other key employee of the Corporation or a
subsidiary corporation.
Notwithstanding the above, the Board or the Committee, as the case may be,
may grant to an option holder, if he or she is otherwise eligible, additional
options (with or without stock appreciation rights) or the Board, with the
consent of the option holder, may grant a new option (with or without a stock
appreciation right) in lieu of an outstanding option (with or without a stock
appreciation right) for a number of shares, at an option price and for a term
which in any respect is greater or less than that of the earlier option, subject
to the general limitations of Section 5 hereof.
No option or stock appreciation right may be granted during any suspension
of the Plan or after its termination. Except as provided in Section 9 hereof,
the amendment, suspension or termination of the Plan shall not, without the
consent of the option holder, alter or impair any rights or obligations under
any option or stock appreciation right theretofore granted under the Plan prior
to such amendment, suspension or termination, including any right to
acceleration under Section 10.
12. DATE OF GRANT OF OPTIONS.
The grant of an option or stock appreciation right pursuant to the Plan
shall take place on the date of the action described in Section 3 hereof, or at
such later date as shall be prescribed by the Board or the Committee, as the
case may be. In the event such action is taken by written consent, the action
shall be deemed to be at the date the last member of the Board or the Committee,
as the case may be, signs the consent.
13. PRIVILEGES OF STOCK OWNERSHIP; PURCHASE FOR INVESTMENT.
The holder of an option or stock appreciation right shall not be entitled
to the privilege of stock ownership as to any shares of stock not actually
issued and delivered to such option
10
<PAGE>
holder. Upon the exercise of an option (or a stock appreciation right where
stock is issued) at a time when there is not in effect a registration statement
under the Securities Act of 1933 relating to the stock issuable upon exercise
hereof and available for delivery a prospectus meeting the requirements of
Section 10(a)(3) of said Act, the stock may be issued only if the option holder
represents and warrants in writing to the Corporation that the shares purchased
are being acquired for investment and not with a view to the distribution
thereof. No shares shall be purchased upon the exercise of any option or stock
appreciation right unless and until any then applicable requirements of the
Securities and Exchange Commission, the California Corporations Commissioner, or
other regulatory agencies having jurisdiction and of any exchanges upon which
stock of the Company may be listed shall have been fully complied with.
14. TAX WITHHOLDING.
The Corporation and any subsidiary corporation shall have the right to
deduct from any payment hereunder any amounts that Federal, state, local or
foreign tax law requires to be withheld with respect to such payment. In the
alternative, pursuant to such rules as the Committee may establish, the option
holder or other person exercising any option or stock appreciation right may pay
such amounts to the Corporation or any subsidiary corporation in cash or in
shares of the Corporation's Common Stock. Without limiting the generality of
the foregoing, in any case where it determines that a tax is required to be
withheld in connection with the issuance or transfer of shares of Common Stock
under this Plan, the Corporation or any subsidiary corporation may, pursuant to
such rules as the Committee may establish, reduce the number of shares so issued
or transferred by such number of shares as the Corporation or any subsidiary
corporation may deem appropriate in its sole discretion to accomplish such
withholding. Any shares of Common Stock used to pay such withholding shall be
valued on the date as of which the amount of the tax to be withheld is
determined at the closing price of such stock as reported on the Composite Tape
and published in the Western Edition of The Wall Street Journal. There is no
obligation under this Plan that any option holder be advised of the existence of
any tax or any amount required to be withheld.
Notwithstanding any other provision of this Plan, the Committee may impose
such conditions on the payment of any withholding obligation as may be required
to satisfy applicable regulatory requirements, including, without limitation,
Rule 16b-3 promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934.
11
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15. TERM OF THE PLAN.
This Plan shall be effective upon approval thereof by the vote of the
holders of a majority of the Corporation's outstanding Common Stock entitled to
vote thereon. Unless previously terminated by the Board, this Plan shall
terminate at the close of business on December 31, 1989, and no options or stock
appreciation rights shall be granted under it thereafter, but such termination
shall not affect any option or stock appreciation right theretofore granted.
16. GOVERNING LAW.
This Plan and option agreements issued hereunder shall be governed by, and
construed in accordance with, the laws of the State of California.
The following provision was added to the plan by the BAC Board of Directors
on August 7, 1995. For purposes of this provision, "BankAmerica" means
BankAmerica Corporation and "Company" means BankAmerica and its subsidiaries
collectively.
Notwithstanding any other provision in the Plan, the following shall apply
in the event of a Change in Control, as defined below, in BankAmerica:
Change in Control means that one of the following events has occurred:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of BankAmerica (the
"Outstanding BankAmerica Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of BankAmerica entitled to vote generally in
the election of directors (the "Outstanding BankAmerica Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from BankAmerica (ii) any acquisition by BankAmerica, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or (iv) any acquisition by any corporation pursuant to
a transaction which complies with clauses (A), (B) and (C) of subsection (iii)
below.
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to
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the date hereof whose election, or nomination for election by BankAmerica's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.
(iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
BankAmerica or its principal subsidiary (a "Business Combination"), in each
case, unless, following such Business Combination, (A) all or substantially all
of the individuals and entities who were the beneficial owners, respectively, of
the Outstanding BankAmerica Common Stock and Outstanding BankAmerica Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 80% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns BankAmerica or all or substantially all of BankAmerica'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 BankAmerica Common Stock and Outstanding BankAmerica Voting
Securities, as the case may be, (provided, however, that, for the 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 BankAmerica Common Stock or Outstanding BankAmerica 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 from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation unless such Person owned
20% or more of the Outstanding BankAmerica Common Stock or Outstanding
BankAmerica 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
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resulting from such Business Combination were members of the Incumbent Board
(or, in the case of BankAmerica's principal subsidiary, the corresponding board
of directors) at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination.
(iv) Approval by the shareholders of BankAmerica of a complete
liquidation or dissolution of BankAmerica.
(a) All outstanding stock options and stock appreciation rights under the
Plan shall be immediately exercisable in full if BankAmerica undergoes a Change
in Control.
(b) [intentionally left blank]
(c) [intentionally left blank]
(d) The Company shall have the right to deduct from any settlement of any
stock option or stock appreciation right an amount sufficient to cover
withholding required by law for any federal, state or local taxes, of to take
such other action as may be necessary to satisfy any such withholding
obligation.
The resolution adding the above provision provided that no modification,
suspension, amendment or termination of the Plan may be made which would
adversely affect the rights of any employee or former employee under the
amendment with respect to any stock option or stock appreciation right granted
under the Plan prior to the date of such modification, suspension, amendment or
termination.
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EXHIBIT 10.g
SECURITY PACIFIC CORPORATION
STOCK-BASED INCENTIVE AWARD PLAN
AS AMENDED
Last Amended April 28, 1997
<PAGE>
Board of Directors April 27, 1992
BankAmerica Corporation
RESOLUTION RE AMENDMENT OF STOCK AND STOCK-BASED AWARD PLANS
IN CONNECTION WITH THE MERGER OF
BANKAMERICA CORPORATION AND SECURITY PACIFIC CORPORATION
--------------------------------------------------------
The Board of Directors of BankAmerica Corporation ("BAC") authorizes
and determines:
1. As of April 22, 1992, the effective date of the merger of Security
Pacific Corporation ("SPC") into BAC (the "Merger"), SPC sponsored the following
plans (the "SPC Stock Plans") pursuant to which awards of stock and stock-based
incentives have been made:
Security Pacific Corporation Stock-Based Incentive Award Plan
Security Pacific Corporation Stock Option Plan
Management Incentive Stock Plan of Rainier Bancorporation
Security Pacific Corporation Performance Incentive Plan
2. Grants and awards have been made and are outstanding under the SPC
Stock Plans. BAC assumes the obligations of, and shall be successor to, SPC
under the SPC Stock Plans.
3. The SPC Stock Plans are amended as follows, effective April 22,
1992:
a. Except as provided in (b), below, and unless the context clearly
indicates otherwise, references to SPC shall become references to BAC
and references to Security Pacific National Bank shall become
references to Bank of America NT&SA.
b. The names of the SPC Stock Plans shall remain unchanged.
c. Unless the context clearly indicates otherwise, all references
to SPC Common Stock, par value $10.00, shall become references to BAC
Common Stock, par value $1.5625.
d. Only employees of SPC prior to the Merger are eligible to
participate in the SPC Stock Plans.
e. All references to the Executive Officers Compensation and
Development Committee of the Board of Directors of SPC and to the
"Committee" in the Rainier Bancorporation Management Incentive Stock
Plan shall become references to the Executive Personnel and
Compensation Committee of the Board of Directors of BAC, which is and
shall be composed solely of disinterested directors.
<PAGE>
4. BAC's Personnel Relations Officer is further authorized and
directed to take such action as she deems necessary and appropriate to implement
the provisions of the foregoing resolution.
CERTIFICATION
-------------
I, Christine Lundgren, an Assistant Secretary of BankAmerica Corporation, a
Delaware corporation having its principal place of business in the City and
County of San Francisco, State of California, certify that the foregoing
resolution is a true and correct copy of the resolution adopted by the Board of
Directors of BankAmerica Corporation, at a meeting held on April 27, 1992. This
resolution is still in effect.
--------------------------
Assistant Secretary
BANKAMERICA CORPORATION
Dated: May 7, 1992
-----------------
<PAGE>
SECURITY PACIFIC CORPORATION
STOCK-BASED INCENTIVE AWARD PLAN
I. DEFINITIONS.
1.1 Definitions.
(a) "Act" shall mean the Securities Exchange Act of 1934.
(b) "Award" shall mean an Option, which may be designated as a Nonqualified
or Incentive Stock Option, a Stock Appreciation Right, a Restricted Stock Award
or a Performance Share Award, in each case granted under this Plan.
(c) "Award Agreement" shall mean a written agreement setting forth the terms
of an Award.
(d) "Award Date" shall mean the date upon which the Grantor took the action
granting an Award or such later date as is prescribed by the Grantor.
(e) "Award Period" shall mean the period beginning on an Award Date and
ending on the expiration date of such Award.
(f) "Beneficiary" shall mean the person, persons, trust or trusts entitled
by will or the laws of descent and distribution to receive the benefits
specified under this Plan in the event of the Participant's death.
(g) "Board of Directors" shall mean the Board of Directors of the
Corporation, a majority of whom shall be Disinterested when taking action with
respect to this Plan.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(i) "Committee" shall mean the Executive Officers Compensation and
Development Committee of the Board of Directors as from time to time constituted
and any successor committee of the Board of Directors with similar functions and
shall consist of three or more members each of whom shall be Disinterested.
(j) "Common Stock" shall mean the Common Stock of the Corporation ($10.00
par value), subject to adjustment pursuant to Section 7.2.
(k) "Company" shall mean, collectively, the Corporation and its
Subsidiaries.
(l) "Corporation" shall mean Security Pacific Corporation and its
successors.
(m) "Disinterested" shall mean disinterested within the meaning of
applicable regulatory requirements, including those promulgated under Section 16
of the Act.
(n) "Eligible Employee" shall mean an officer or key employee of the
Company.
(o) "Event" shall mean any of the following:
(i) Approval by the stockholders of the Corporation of the dissolution
or liquidation of the Corporation;
(ii) Approval by the stockholders of the Corporation of an agreement to
merge or consolidate, or otherwise reorganize, with or into one or more
entities which are not Subsidiaries, as a result of which less than 50% of
the outstanding voting securities of the surviving or resulting entity are,
or are to be, owned by former stockholders of the Corporation (excluding
from the term "former stockholders" a stockholder who is, or as a result of
the transaction in question becomes, an "affiliate", as that term is
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used in the Act and the Rules promulgated thereunder, of any party to such
merger, consolidation or reorganization):
(iii) Approval by the stockholders of the Corporation of the sale of
substantially all of the Corporation's business and/or assets to a person or
entity which is not a Subsidiary; or
(iv) A Change in Control, as from time to time defined in the
Corporation's By-Laws.
(p) "Fair Market Value" shall mean the closing price of the Common Stock on
the New York Stock Exchange as reported on the Composite Tape and published in
the Western Edition of The Wall Street Journal, or, if there is no trading of
the Common Stock on the date in question, then the closing price of the Common
Stock, as so reported and published, on the next preceding date on which there
was trading in the Common Stock.
(q) "Grantor" shall mean the Board of Directors and the Committee, each in
its capacity as grantor of Awards.
(r) "Incentive Stock Option" shall mean an incentive stock option within the
meaning of Section 422A of the Code, the award of which contains such provisions
as are necessary to comply with that section.
(s) "Nonqualified Stock Option" shall mean an option granted pursuant to
this Plan which does not qualify as an Incentive Stock Option.
(t) "Option" shall mean an option to purchase Common Stock under this Plan.
An option shall be designated by the Grantor as a Nonqualified Stock Option or
an Incentive Stock Option.
(u) "Participant" shall mean an Eligible Employee who has been awarded an
Award.
(v) "Performance Share Award" shall mean an award of shares of Common Stock
issuance of which is contingent upon attainment of performance objectives
specified by the Grantor.
(w) "Personal Representative" shall mean the person or persons who, upon the
disability or incompetence of a Participant, shall have acquired on behalf of
the Participant by legal proceeding or otherwise the right to receive the
benefits specified in this Plan.
(x) "Plan" means this Security Pacific Corporation Stock-Based Incentive
Award Plan.
(y) "Restricted Stock" shall mean those shares of Common Stock issued
pursuant to a Restricted Stock Award which are not free of the restrictions set
forth in the related Award Agreement.
(z) "Restricted Stock Award" shall mean an award of a fixed number of shares
of Common Stock to the Participant subject, however, to payment of such
consideration, if any, and such forfeiture provisions, as are set forth in the
Award Agreement.
(aa) "Retirement" shall mean retirement of an individual as an employee of
the Company at any time described in Sections 4.1 and 4.3 of the Security
Pacific Trusteed Retirement Income Plan or in any successor Section or plan, in
each case, as from time to time in effect.
(bb) "Stock Appreciation Right" shall mean a right to receive a number of
shares of Common Stock or an amount of cash, or a combination of shares and
cash, determined as provided in Section 4.3(a).
(cc) "Subsidiary" shall mean any corporation or other entity a majority or
more of whose outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Corporation.
(dd) "Total Disability" shall mean total disability as defined in Article I
of the Security Pacific Trusteed Retirement Income Plan or in any successor
provision or plan, as from time to time in effect.
2
<PAGE>
II. THE PLAN.
2.1 Purpose.
The purpose of this Plan is to promote the success of the Company by
providing an additional means to attract and retain key personnel through added
long term incentive for high levels of performance and for significant efforts
to improve the financial performance of the Company by granting Awards.
2.2 Administration.
This Plan shall be administered by the Committee. Action of the Committee
with respect to the administration of this Plan shall be taken pursuant to a
majority vote or the written consent of all of its members. In the event action
by the Committee is taken by written consent of all of its members, the action
by the Committee shall be deemed to have been taken at the time specified in the
consent or. if none is specified, at the time of the last signature. The
Committee may delegate administrative functions to individuals who are officers
or employees of the Company.
Subject to the express provisions of this Plan, the Committee shall have the
authority to construe and interpret this Plan and any agreements defining the
rights and obligations of the Company and Participants under this Plan, to
further define the terms used in this Plan, to prescribe, amend and rescind
rules and regulations relating to the administration of this Plan, to determine
the duration and purposes of leaves of absence which may be granted to
Participants without constituting a termination of their employment for purposes
of this Plan and to make all other determinations necessary or advisable for the
administration of this Plan. The determinations of the Committee on the
foregoing matters shall be conclusive.
Any action taken by, or inaction of, the Corporation, any Subsidiary, the
Board of Directors or the Committee relating to this Plan shall be within the
absolute discretion of that entity or body and shall be conclusive and binding
upon all persons. No member of the Board of Directors or Committee, or officer
of the Corporation or Subsidiary, shall be liable for any such action or
inaction of the entity or body, of another person or, except in circumstances
involving bad faith, of himself or herself. Subject only to compliance with the
express provisions hereof, the Board of Directors and the Committee may act in
their absolute discretion in matters related to this Plan.
2.3 Participation.
Awards may be granted only to Eligible Employees. An Eligible Employee who
has been granted an Award may, if otherwise eligible, be granted additional
Awards if the Grantor shall so determine. Members of the Board of Directors who
are not officers or employees of the Company and members of the Committee shall
not be eligible to receive Awards.
2.4 Stock Subject to this Plan.
Subject to Section 7.2, the stock to be offered under this Plan shall be
treasury shares or shares of the Corporation's authorized but unissued Common
Stock. The aggregate amount of Common Stock that may be issued or transferred
pursuant to Awards granted under this Plan shall not exceed 4,500,000 shares,
subject to adjustment as set forth in Section 7.2. If any Option and any
related Stock Appreciation Right shall lapse or terminate without having been
exercised in full, or any Common Stock subject to a Restricted Stock Award shall
not vest or any Common Stock subject to a Performance Share Award shall not have
been transferred, the unpurchased, unvested or untransferred shares subject
thereto shall again be available for purposes of this Plan. No more than 10% of
the aggregate amount of Common Stock available under this Plan may be granted as
Restricted Stock Awards.
3
<PAGE>
2.5 Grants of Awards.
Either the Board of Directors or the Committee may grant Awards in
accordance with the provisions of this Plan. A majority of the members of the
Board of Directors acting hereunder shall be Disinterested. The grant of an
Award is made on the Award Date.
III. OPTIONS.
3.1 Grants.
One or more Options may be granted to any Eligible Employee. Each Option so
granted shall be designated by the Grantor as either a Nonqualified Stock Option
or Incentive Stock Option.
3.2 Option Price.
The purchase price per share of the Common Stock covered by each Option
shall be determined by the Grantor but shall not be less than the Fair Market
Value of such Common Stock on the Award Date. The purchase price of any shares
purchased shall be paid in full at the time of each purchase in cash, or,
provided that the Grantor permits such exercise, in shares of Common Stock which
shall be valued at their Fair Market Value on the date of exercise of the
Option, or partly in such shares and partly in cash, or in such other form or
such other manner as the Board of Directors may determine.
3.3 Option Period.
Each Option and all rights or obligations thereunder shall expire on such
date as shall be determined by the Grantor, but not later than ten years and one
day after the Award Date, and shall be subject to earlier termination as
hereinafter provided.
3.4 Exercise of Options.
Except as otherwise provided in Section 7.4 and subject to Section 7.5, an
Option may become exercisable, in whole or in part, subsequent to the date or
dates specified in the Award Agreement and until the expiration or earlier
termination of the Participant's Option. The Grantor may, at any time after
grant of the Option and from time to time, increase the number of shares
purchasable at any time so long as the total number of shares subject to the
Option is not increased. No Option shall be exercisable except in respect of
whole shares, and fractional share interests shall be disregarded. Not fewer
than 10 shares may be purchased at one time unless the number purchased is the
total number at the time available for purchase under the Option.
3.5 Limitations on Grant of Incentive Stock Options.
(a) The aggregate Fair Market Value (determined as of the Award Date) of the
Common Stock for which Incentive Stock Options may be first exercisable by any
Participant during any calendar year under this Plan, together with that of
common stock subject to incentive stock options first exercisable (other than as
a result of acceleration pursuant to Section 7.4) by such Participant under any
other plan of the Corporation or any Subsidiary, shall not exceed $100,000.
(b) There shall be imposed in the Award Agreement relating to Incentive
Stock Options such terms and conditions as are required in order that the Option
be an "incentive stock option" as that term is defined in Section 422A of the
Code.
4
<PAGE>
IV. STOCK APPRECIATION RIGHTS.
4.1 Grants.
In its discretion, the Grantor may grant Stock Appreciation Rights
concurrently with the grant of Options. A Stock Appreciation Right shall extend
to all or a portion of the shares covered by the related Option. If a Stock
Appreciation Right extends to less than all the shares covered by the related
Option and if a portion of the related Option is thereafter exercised, the
number of shares subject to the unexercised Stock Appreciation Right shall be
reduced only if and to the extent that the remaining number of shares covered by
such related Option is less than the remaining number of shares subject to such
Stock Appreciation Right. A Stock Appreciation Right shall entitle the
Participant who holds the related Option, upon exercise of the Stock
Appreciation Right and surrender of the related Option, or portion thereof, to
the extent the Stock Appreciation Right and related Option each were previously
unexercised, to receive payment of an amount determined pursuant to Section 4.3.
Any Stock Appreciation Right granted in connection with an Incentive Stock
Option shall contain such terms as may be required to comply with the provisions
of Section 422A of the Code and the regulations promulgated thereunder.
4.2 Exercise of Stock Appreciation Rights.
(a) A Stock Appreciation Right shall be exercisable only at such time or
times, and to the extent, that the related Option shall be exercisable and only
when the Fair Market Value of the stock subject to the related Option exceeds
the exercise price of the related Option.
(b) Notwithstanding any other provision of this Plan, the Committee may
impose, by rule and in Award Agreements, such conditions upon a Stock
Appreciation Right and the related Option and upon their exercises (including,
without limitation, conditions limiting the time of exercise to specified
periods) as may be required to satisfy applicable regulatory requirements,
including, without limitation, Rule 16b-3 (or any successor rule) promulgated by
the Securities and Exchange Commission pursuant to the Act.
(c) In the event that a Stock Appreciation Right is exercised, the number of
shares of Common Stock subject to the related Option shall be charged against
the maximum amount of Common Stock that may be issued or transferred pursuant to
Awards under this Plan. The number of shares subject to the Stock Appreciation
Right and related Option shall be reduced by such number of shares.
4.3 Payment.
(a) Upon exercise of a Stock Appreciation Right and surrender of an
exercisable portion of the related Option, the Participant shall be entitled to
receive payment of an amount determined by multiplying
(i) the difference obtained by subtracting the exercise price per share
of Common Stock under the related Option from the Fair Market Value of a
share of Common Stock on the date of exercise of the Stock Appreciation
Right, by
(ii) the number of shares with respect to which the Stock Appreciation
Right shall have been exercised.
(b) The Committee or the Board of Directors, in its sole discretion, may
settle the amount determined under paragraph (a) above solely in cash, solely in
shares of Common Stock (valued at Fair Market Value on the date of exercise of
the Stock Appreciation Right), or partly in such shares and partly in cash
provided that the Committee or the Board of Directors shall have determined that
such exercise and payment are consistent with applicable law. In any event,
cash shall be paid in lieu of fractional shares. Absent a determination to the
contrary, all Stock Appreciation Rights shall be settled in cash as soon as
practicable after exercise.
(c) The maximum amount per share which shall be payable upon exercise of a
Stock Appreciation Right shall be 200% of the exercise price of the related
Option.
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<PAGE>
V. RESTRICTED STOCK AWARDS.
5.1 Grants.
Subject to Section 2.4, the Grantor may, in its discretion, grant one or
more Restricted Stock Awards to any Eligible Employee. Each Restricted Stock
Award Agreement shall specify the number of shares of Common Stock to be issued
to the Participant, the date of such issuance, the price, if any, to be paid for
such shares by the Participant and the restrictions imposed on such shares,
which restrictions shall not terminate earlier than one year after the Award
Date. Shares of Restricted Stock shall be evidenced by a stock certificate
registered only in the name of the Participant, which stock certificate shall be
held by the Corporation until the restrictions on such shares shall have lapsed
and those shares shall have thereby vested.
5.2 Restrictions.
(a) Shares of Common Stock included in Restricted Stock Awards may not
be sold, assigned, transferred, pledged or otherwise disposed of or encumbered,
either voluntarily or involuntarily, until such shares have vested.
(b) Participants receiving Restricted Stock shall be entitled to
dividend and voting rights for the shares issued even though they are not
vested, provided that such rights shall terminate immediately as to any
forfeited Restricted Stock.
(c) In the event that the Participant shall have paid cash in
connection with the Restricted Stock Award, the Award Agreement shall specify
whether and to what extent such cash shall be returned upon a forfeiture (with
or without an earnings factor).
VI. PERFORMANCE SHARE AWARDS.
6.1 Grants.
The Grantor may, in its discretion, grant Performance Share Awards to
Eligible Employees based upon such factors as the Grantor shall determine. A
Performance Share Award Agreement shall specify the number of shares of Common
Stock subject to the Performance Share Award, the price, if any, to be paid for
such shares by the Participant and the conditions upon which issuance to the
Participant shall be based, which issuance shall not be earlier than one year
after the Award Date.
VII. OTHER PROVISIONS.
7.1 Rights of Eligible Employees, Participants and Beneficiaries.
(a) Status as an Eligible Employee shall not be construed as a
commitment that any Award will be made under this Plan to an Eligible Employee
or to Eligible Employees generally.
(b) Nothing contained in this Plan (or in Award Agreements or in any
other documents related to this Plan or to Awards) shall confer upon an Eligible
Employee or Participant any right to continue in the employ of the Company or
constitute any contract or agreement of employment, or interfere in any way with
the right of the Company to reduce such person's compensation or to terminate
the employment of such Eligible Employee or Participant, with or without cause,
but nothing contained in this Plan or any document related thereto shall affect
any other contractual right of any Eligible Employee or Participant.
(c) Amounts payable pursuant to an Award shall be paid only to the
Participant or, in the event of the Participant's death, to the Participant's
Beneficiary or, in the event of the Participant's Total Disability, to the
Participant's Personal Representative or, if there is none, to the Participant.
Other than by will or the
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laws of descent and distribution, no benefit payable under, or interest in, this
Plan or in any Award shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge and any such attempted
action shall be void and no such benefit or interest shall be, in any manner,
liable for, or subject to, debts, contracts, liabilities, engagements or torts
of any Eligible Employee, Participant or Beneficiary. The Committee shall
disregard any attempt at transfer, assignment or other alienation prohibited by
the preceding sentence and shall pay or deliver such cash or shares of Common
Stock in accordance with the provisions of this Plan.
(d) No Participant, Beneficiary or other person shall have any right,
title or interest in any fund or in any specific asset (including shares of
Common Stock) of the Company by reason of any Award granted hereunder. There
shall be no funding of any benefits which may become payable hereunder. Neither
the provisions of this Plan (or of any documents related hereto), nor the
creation or adoption of this Plan, nor any action taken pursuant to the
provisions of this Plan shall create, or be construed to create, a trust of any
kind or a fiduciary relationship between the Company and any Participant,
Beneficiary or other person. To the extent that a Participant, Beneficiary or
other person acquires a right to receive an Award hereunder, such right shall be
no greater than the right of any unsecured general creditor of the Company.
Awards payable under this Plan shall be paid from the general assets of the
Corporation, and no special or separate fund or deposit shall be established and
no segregation of assets shall be made to assure payment of such Awards.
Nothing in this Plan shall be deemed to give any Eligible Employee or
Participant any right to participate in this Plan except in accordance herewith.
7.2 Adjustments upon Changes in Capitalization.
If the outstanding shares of Common Stock are increased, decreased or
changed into, or exchanged for, a different number or kind of shares or
securities of the Corporation through a reorganization or merger in which the
Corporation is the surviving entity, or through a combination, recapitalization,
reclassification, stock split, stock dividend, stock consolidation or otherwise,
an appropriate adjustment shall be made in the number and kind of shares that
may be issued pursuant to Awards. A corresponding adjustment to the
consideration payable with respect to Awards granted prior to any such change
and to the price, if any, paid in connection with Restricted Stock Awards shall
also be made. Any such adjustment, however, shall be made without change in the
total payment, if any, applicable to the portion of the Award not exercised,
vested or issued but with a corresponding adjustment in the price for each
share. Corresponding adjustments shall be made with respect to Stock
Appreciation Rights based upon the adjustments made to the Options to which they
are related.
Upon the dissolution or liquidation of the Corporation, or upon a
reorganization, merger, or consolidation of the Corporation with one or more
corporations as a result of which the Corporation is not the surviving
Corporation, or upon a sale of substantially all the property of the Corporation
to another corporation, this Plan shall terminate, and any outstanding Options,
Stock Appreciation Rights and Performance Share Awards shall terminate and any
Restricted Stock shall be forfeited, unless provision be made in connection with
such transaction for the assumption of Awards theretofore granted, or the
substitution for such Awards of new incentive awards covering the stock of a
successor employer corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to number and kind of shares and prices.
In so adjusting Common Stock to reflect such changes, or in determining that
no such adjustment is necessary, the Board of Directors may rely upon the advice
of independent counsel and accountants of the Corporation, and the determination
of the Board of Directors shall be conclusive. No fractional shares of stock
shall be issued under this Plan on account of any such adjustment.
7.3 Termination of Employment.
(a) Upon the date a Participant is no longer employed by the Company for
any reason other than Retirement, death or Total Disability, (i) the Participant
shall have one year from that date to exercise his or her Options to the extent
they shall have become exercisable on that date and any Options not exercisable
on that date shall terminate; (ii) shares of Common Stock subject to the
Participant's Restricted Stock Award shall be forfeited in accordance with the
provisions of the related Award Agreement to the extent such shares have
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not become vested on that date; and (iii) shares of Common Stock subject to the
Participant's Performance Share Award shall be forfeited in accordance with the
provisions of the related Award Agreement to the extent such shares have not
been issued or become issuable on that date.
(b) Upon the date a Participant is no longer employed by the Company as
a result of Retirement, death or Total Disability, (i) the Participant, his or
her Beneficiary, or Personal Representative, as the case may be, shall have
three years from that date to exercise the Participant's Options to the extent
they shall have become exercisable by that date and any Options not exercisable
on that date shall terminate; (ii) shares of Common Stock subject to the
Participant's Restricted Stock Award shall be forfeited in accordance with the
provisions of the related Award Agreement to the extent such shares have not
become vested on that date; and (iii) shares of Common Stock subject to the
Participant's Performance Share Award shall be forfeited in accordance with the
provisions of the related Award Agreement to the extent such shares have not
been issued or become issuable on that date. In the event of termination of
employment as a result of Retirement, death or Total Disability, the Grantor
may, in its discretion, increase the portion of the Participant's Award
available to the Participant, or his or her Beneficiary or Personal
Representative, as the case may be, upon such terms as the Grantor shall
determine.
(c) Each Stock Appreciation Right shall have the same termination
provisions and exercisability periods as the Option to which it relates. The
exercisability period of a Stock Appreciation Right or of an Option shall not
exceed that provided in Section 3.3 or in the related Award Agreement. Each
Option and Stock Appreciation Right shall expire at the end of that
exercisability period.
(d) If an entity ceases to be a Subsidiary, such action shall be deemed
for purposes of this Section 7.3 to be a termination of employment of each
employee of that entity.
(e) Upon forfeiture of a Restricted Stock Award pursuant to this
Section 7.3, the Participant, or his or her Beneficiary or Personal
Representative, as the case may be, shall transfer to the Corporation the
portion of the Restricted Stock Award not vested at the date of termination of
employment, without payment of any consideration by the Company for such
transfer unless the Participant paid a purchase price in which case repayment,
if any, of that price shall be governed by the Award Agreement. Notwithstanding
any such transfer to the Corporation, or failure, refusal or neglect to
transfer, by the Participant, or his or her Beneficiary or Personal
Representative, as the case may be, such nonvested portion of any Restricted
Stock Award shall be deemed transferred automatically to the Corporation on the
date of termination of employment. The Participant's original acceptance of the
Restricted Stock Award shall constitute his or her appointment of the
Corporation and each of its authorized representatives as attorney(s)-in-fact to
effect such transfer and to execute such documents as the Corporation or such
representatives deem necessary or advisable in connection with such transfer.
7.4 Acceleration of Awards.
Unless, prior to an Event, the Board of Directors determines that, upon its
occurrence, there shall be no acceleration of Awards or determines those Awards
which shall be accelerated and the extent to which they shall be accelerated,
(i) each Option and each related Stock Appreciation Right shall become
immediately exercisable to the full extent theretofore not exercisable, (ii)
Restricted Stock shall immediately vest free of restrictions and (iii) the
number of shares covered by each Performance Share Award shall be issued to the
Participant; provided, however, that Awards shall not, in any event, be so
accelerated to a date less than one year after the Award Date. Acceleration of
Awards shall comply with applicable regulatory requirements, including, without
limitation, Rule 16b-3 promulgated by the Securities and Exchange Commission
pursuant to the Act and Section 422A of the Code. For purposes of this Section
7.4 only, Board of Directors shall mean the Board of Directors as constituted
immediately prior to the Event.
7.5 Continuation of Employment.
Each person to whom an Award is granted must agree that he or she will, at
the request of the Company, remain in the continuous employment of the Company
for a period of not less than one year
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following the Award Date. No Option or Stock Appreciation Right shall be
exercisable, no Restricted Stock shall vest and no Performance Share Award shall
be paid unless the Participant has remained in the continuous employment of the
Company for at least one year from the Award Date.
7.6 Government Regulations.
This Plan, the granting of Awards under this Plan and the issuance or
transfer of shares of Common Stock (and/or the payment of money) pursuant
thereto are subject to all applicable Federal and state laws, rules and
regulations and to such approvals by any regulatory or governmental agency
(including without limitation "no action" positions of the Securities and
Exchange Commission) which may, in the opinion of counsel for the Corporation,
be necessary or advisable in connection therewith. Without limiting the
generality of the foregoing, no Awards may be granted under this Plan, and no
shares shall be issued by the Corporation, nor cash payments made by the
Corporation, pursuant to or in connection with any such Award, unless and until,
in each such case, all legal requirements applicable to the issuance or payment
have, in the opinion of counsel to the Corporation, been complied with. In
connection with any stock issuance or transfer, the person acquiring the shares
shall, if requested by the Corporation, give assurances satisfactory to counsel
to the Corporation in respect of such matters as the Corporation may deem
desirable to assure compliance with all applicable legal requirements.
7.7 Tax Withholding.
The Company shall have the right to deduct from any payment hereunder any
amounts that Federal, state, local or foreign tax law requires to be withheld
with respect to such payment but, in the alternative, the Participant may, prior
to the payment of any Award, pay such amounts to the Company in cash or in
shares of Common Stock (which shall be valued at their Fair Market Value on the
date of payment). There is no obligation under this Plan that any Participant
be advised of the existence of the tax or the amount required to be withheld.
Without limiting the generality of the foregoing, in any case where it
determines that a tax is required to be withheld in connection with the issuance
or transfer of shares of Common Stock under this Plan, the Company may, pursuant
to such rules as the Committee may establish, reduce the number of such shares
so issued or transferred by such number of shares as the Company may deem
appropriate in its sole discretion to accomplish such withholding.
Notwithstanding any other provision of this Plan, the Committee may impose
such conditions on the payment of any withholding obligation as may be required
to satisfy applicable regulatory requirements, including, without limitation,
Rule 16b-3 promulgated by the Securities and Exchange Commission pursuant to the
Act.
7.8 Amendment, Termination and Suspension.
(a) The Board of Directors may, at any time, terminate or, from time to
time, amend, modify or suspend this Plan (or any part thereof). In addition,
the Committee may, from time to time, amend or modify any provision of this Plan
except Sections 7.4 and 7.8(b). The Grantor, with the consent of the
Participant, may make such modifications of the terms and conditions of such
Participant's Award as it shall deem advisable. No Awards may be granted during
any suspension of this Plan or after its termination. The amendment, suspension
or termination of this Plan shall not, without the consent of the Participant,
alter or impair any rights or obligations pertaining to any Awards granted under
this Plan prior to such amendment, suspension or termination, including any
right to acceleration under Section 7.4. The Grantor shall have the power and
may, with the consent of the Participant, cancel any existing Awards and reissue
Awards to the Participant, having a new and lower Fair Market Value, but
otherwise bearing substantially similar terms to the cancelled Awards.
(b) If an amendment would (i) materially increase the benefits accruing
to Participants within the meaning of Rule 16b-3(a) under the Act or any
successor thereto, (ii) increase the aggregate number of shares which may be
issued under this Plan, or (iii) modify the requirements of eligibility for
participation in this Plan, the amendment shall be approved by the Board of
Directors and by the stockholders. For purposes of
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this Section 7.8(b) any cancellation and reissuance of Awards at a new or lower
Fair Market Value pursuant to Section 7.8(a) shall not constitute an amendment
of this Plan.
7.9 Privileges of Stock Ownership; Nondistributive Intent.
A Participant shall not be entitled to the privilege of stock ownership as
to any shares of Common Stock not actually issued to him. Upon the issuance and
transfer of shares to the Participant, unless a registration statement is in
effect under the Securities Act of 1933, as amended, relating to such issued and
transferred Common Stock and there is available for delivery a prospectus
meeting the requirements of Section 10 of such Act, the Common Stock may be
issued and transferred to the Participant only if he represents and warrants in
writing to the Corporation that the shares are being acquired for investment and
not with a view to the resale or distribution thereof. No shares shall be
issued and transferred unless and until there shall have been full compliance
with any then applicable regulatory requirements (including those of any
exchanges upon which any Common Stock of the Corporation may be listed).
7.10 Effective Date of this Plan.
This Plan shall be effective upon its approval by the stockholders of the
Corporation.
7.11 Term of this Plan.
Unless previously terminated by the Board of Directors or the Committee,
this Plan shall terminate at the close of business on April 19, 1998, and no
Awards shall be granted under it thereafter, but such termination shall not
affect any Award theretofore granted.
7.12 Governing Law.
This Plan and the documents evidencing Awards and all other related
documents shall be governed by, and construed in accordance with, the laws of
the State of California. If any provision shall be held by a court of competent
jurisdiction to be invalid and unenforceable, the remaining provisions of this
Plan shall continue to be fully effective.
The following provision was added to the plan by the BAC Board of Directors
on August 7, 1995. For purposes of this provision, "BankAmerica" means
BankAmerica Corporation and "Company" means BankAmerica and its subsidiaries
collectively.
Notwithstanding any other provision in the Plan, the following shall apply
in the event of a Change in Control, as defined below, in BankAmerica:
Change in Control means that one of the following events has occurred:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of BankAmerica (the
"Outstanding BankAmerica Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of BankAmerica entitled to vote generally in
the election of directors (the "Outstanding BankAmerica Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from BankAmerica (ii) any acquisition by BankAmerica, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or (iv) any acquisition by any corporation pursuant
to a transaction which complies with clauses (A), (B) and (C) of subsection
(iii) below.
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual
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becoming a director subsequent to the date hereof whose election, or nomination
for election by BankAmerica's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board.
(iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
BankAmerica or its principal Subsidiary (a "Business Combination"), in each
case, unless, following such Business Combination, (A) all or substantially all
of the individuals and entities who were the beneficial owners, respectively, of
the Outstanding BankAmerica Common Stock and Outstanding BankAmerica Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 80% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns BankAmerica or all or substantially all of BankAmerica'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 BankAmerica Common Stock and Outstanding BankAmerica Voting
Securities, as the case may be, (provided, however, that, for the 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 BankAmerica Common Stock or Outstanding BankAmerica 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 from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of, respec-
tively, the then outstanding shares of common stock of the corporation resulting
from such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation unless such Person owned 20%
or more of the Outstanding BankAmerica Common Stock or Outstanding BankAmerica
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 (or, in the
case of BankAmerica's principal Subsidiary, the corresponding board of
directors) at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination.
(iv) Approval by the shareholders of BankAmerica of a complete
liquidation or dissolution of BankAmerica.
(a) All outstanding stock options and stock appreciation rights under the
Plan shall be immediately exercisable in full if BankAmerica undergoes a Change
in Control.
(b) Except as provided in the following sentence and in (c) below, if
applicable to the Plan, in the event an employee terminates employment with the
Company following a Change in Control, his or her stock options and stock
appreciation rights granted under the Plan shall remain exercisable for a period
of three years following termination of employment, not to exceed the original
term of the stock option or stock appreciation right. The preceding sentence
shall not apply to an incentive stock option unless the option agreement gives
the Plan committee discretion to permit the incentive stock option to remain
exercisable following termination of the optionholder's employment, in which
case the incentive stock option shall be exercisable for three months following
termination of employment without further committee action.
(c) Subsection (b) shall not apply to stock options and stock appreciation
rights granted under the Plan to a person who, at the time of such termination
of employment, is an officer or director of BankAmerica, as such terms are
defined in Section 16 of the Securities Exchange Act of 1934 and the rules of
the Securities and Exchange Commission thereunder.
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(d) The Company shall have the right to deduct from any settlement of any
stock option or stock appreciation right an amount sufficient to cover
withholding required by law for any federal, state or local taxes, of to take
such other action as may be necessary to satisfy any such withholding
obligation.
The resolution adding the above provision provided that no modification,
suspension, amendment or termination of the Plan may be made which would
adversely affect the rights of any employee or former employee under the
amendment with respect to any stock option or stock appreciation right granted
under the Plan prior to the date of such modification, suspension, amendment or
termination.
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Exhibit 10.h
CHANGE IN CONTROL
SEVERANCE PAY PROGRAM
In April, 1997, the BAC Board of Directors adopted a change in control executive
severance pay program covering executive officers ("Executive Officers"). These
Executive Officers are covered by individual change in control agreements with
BAC ("Agreements"), which were amended by the Board's action.
The amended form of agreement which is in effect between BAC and each of the
Executive Officers covered by the Agreements is substantially in the form
attached hereto.
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AGREEMENT
AGREEMENT by and between BankAmerica Corporation, a Delaware corporation
("BANKAMERICA") and __________ _________ (the "EXECUTIVE").
The Executive is currently employed by BankAmerica and/or a direct or
indirect subsidiary of BankAmerica (the "COMPANY"). The Board of Directors of
BankAmerica (the "BOARD"), has determined that it is in the best interests of
BankAmerica and its shareholders to assure that the Company will have the
continued dedication of the Executive, notwithstanding the possibility, threat
or occurrence of a Change in Control (as defined below) of BankAmerica. The
Board believes it is important to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created by a pending
or threatened Change in Control and to encourage the Executive's full attention
and dedication to the Company currently and in the event of any threatened or
pending Change in Control, and to provide the Executive with compensation and
benefits arrangements upon a Change in Control which ensure that the
compensation and benefits expectations and claims of the Executive will be
satisfied and released and which are competitive with those of other financial
institutions. Therefore, in order to accomplish these objectives, the Board has
directed BankAmerica to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
-------------------
(a) The "EFFECTIVE DATE" shall mean the first date during the Change in
Control Period (as defined in Section 1(b)) on which a Change in Control (as
defined in Section 2) occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change in Control occurs and if the Executive's employment
with the Company is terminated (including termination for Good Reason, as
defined in Section 5(c)) prior to the date on which the Change in Control
occurs, and if it is reasonably demonstrated by the Executive that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to affect a Change in Control or (ii)otherwise arose
in connection with or anticipation of a Change in Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date immediately prior to
the date of such termination of employment.
(b) The "CHANGE IN CONTROL PERIOD" shall mean the period commencing on
February 1, 1997 and ending on the second anniversary of such date, provided,
however, that commencing on the date one year after February 1, 1997, and on
each annual anniversary of such date (such date and each annual anniversary
thereof shall be hereinafter referred to as the "RENEWAL DATE"), unless
previously terminated, the Change in Control Period shall be automatically
extended so as to terminate two years from such Renewal
-1-
34217
<PAGE>
Date, unless at least 60 days prior to the Renewal Date the Company shall give
notice to the Executive that the Change in Control Period shall not be so
extended.
2. Change in Control. For the purpose of this Agreement, a "CHANGE IN
-----------------
CONTROL" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of BankAmerica (the
"OUTSTANDING BANKAMERICA COMMON STOCK") or (ii) the combined voting power of the
then outstanding voting securities of BankAmerica entitled to vote generally in
the election of directors (the "Outstanding BankAmerica Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition
directly from BankAmerica (ii) any acquisition by BankAmerica, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (iv)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"INCUMBENT BOARD") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by BankAmerica's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of BankAmerica or
its principal Subsidiary (a "BUSINESS COMBINATION"), in each case, unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding BankAmerica Common Stock and Outstanding BankAmerica Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 70% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns BankAmerica or all or substantially all of BankAmerica's assets
either directly or through one or more subsidiaries) in substantially the same
proportions as
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34217
<PAGE>
their ownership, immediately prior to such Business Combination of the
Outstanding BankAmerica Common Stock and Outstanding BankAmerica Voting
Securities, as the case may be, (provided, however, that, for the purpose of
this clause (i), 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 BankAmerica Common Stock or Outstanding BankAmerica 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), (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation unless such Person owned
20% or more of the Outstanding BankAmerica Common Stock or Outstanding
BankAmerica Voting Securities immediately prior to the Business Combination and
(iii) 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 (or, in the case of BankAmerica's principal Subsidiary, the
corresponding board of directors) at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
(d) Approval by the shareholders of BankAmerica of a complete
liquidation or dissolution of BankAmerica.
3. Employment Period. BankAmerica agrees that the Company is expected, but
-----------------
not obligated, to continue the Executive in its employ, and, in return for the
consideration provided by this Agreement, the Executive hereby agrees to remain
in the employ of the Company subject to the terms and conditions of this
Agreement, for the period commencing on the Effective Date and ending on the
first anniversary of such date (the "EMPLOYMENT PERIOD").
4. Terms of Employment.
-------------------
(a) Position and Duties. (i) During the Employment Period, (A) the
-------------------
Company shall not assign the Executive any duties or responsibilities
substantially inconsistent with the Executive's duties or responsibilities with
the Company immediately preceding the Effective Date nor shall the Company
substantially reduce the Executive's duties or responsibilities as they existed
immediately preceding the Effective Date and (B) the Executive's services shall
be performed primarily at the location where the Executive was primarily
employed immediately preceding the Effective Date or primarily at any office or
location no more than 35 miles from such location.
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<PAGE>
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time to the business and affairs of the
Company and to use the Executive's reasonable best efforts to perform faithfully
and efficiently the responsibilities and duties assigned to the Executive.
During the Employment Period it shall not be a violation of this Agreement for
the Executive to (A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so long as such
activities comply with policies and guidelines of the Company in effect
generally with respect to peer executives of the Company and do not
significantly interfere with the performance of the Executive's responsibilities
as an employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the
Company so long as such activities comply with policies and guidelines of the
Company in effect generally with respect to peer executives of the Company.
(b) Compensation. (i) Base Salary. During the Employment Period, the
------------ -----------
Executive shall receive an annual base salary ("ANNUAL BASE SALARY"), which
shall be paid at a monthly rate, at least equal to twelve times the highest
monthly base salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company during the period between
the initial public disclosure of the potential Change in Control and the month
in which the Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed at intervals no less frequent than customary for
the Executive prior to the Effective Date. Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the Executive under
this Agreement. Annual Base Salary shall not be reduced after any such increase
during the Employment Period and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased.
(ii) Annual Bonus. In addition to Annual Base Salary, the Executive
------------
shall have, for each fiscal year ending during the Employment Period, the
opportunity for an annual cash bonus (the "ANNUAL BONUS") equal to that of other
peer executives on the Managing Committee or at Impact Level I as applicable,
but in no event shall such bonus be less than the Executive's lowest bonus paid
to the Executive under the Company's Senior Management Incentive Plan, or any
comparable bonus under any predecessor or successor plan, for the last three
full fiscal years prior to the Effective Date (annualized in the event that the
Executive was not employed by the Company for the whole of such fiscal year)
(the "RECENT LOWEST ANNUAL BONUS"). Each such Annual Bonus shall be paid no
later than the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus.
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<PAGE>
(iii) Incentive, Savings and Retirement Plans. During the Employment
---------------------------------------
Period, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, policies and programs applicable generally to other peer
executives of the Company on the Managing Committee or at Impact Level I, as
applicable, including the opportunity for cash and stock incentive awards
(measured with respect to both regular and special incentive opportunities, to
the extent, if any, that such distinction is applicable) equal to that of peer
executives of the Company on the Managing Committee or at Impact Level I, as
applicable.
(iv) Welfare Benefit Plans. During the Employment Period, the
---------------------
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
policies and programs provided by the Company (including, without limitation,
medical, prescription, dental, disability, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company on the Managing Committee or
at Impact Level I, as applicable.
(v) Expenses. During the Employment Period, the Executive shall be
--------
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the policies and procedures of the Company in
effect generally with respect to other peer executives of the Company on the
Managing Committee or at Impact Level I, as applicable.
(vi) Fringe Benefits. During the Employment Period, the Executive
---------------
shall be entitled to fringe benefits, including, without limitation, tax and
financial planning services, payment of club dues, and, if applicable, use of an
automobile, home security system and payment of related expenses, in accordance
with the plans, programs and policies of the Company in effect generally with
respect to other peer executives of the Company on the Managing Committee or at
Impact Level I, as applicable.
(vii) Office and Support Staff. During the Employment Period, the
------------------------
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, as provided generally with respect to other peer executives of
the Company on the Managing Committee or at Impact Level I, as applicable.
(viii) Vacation. During the Employment Period, the Executive shall
--------
be entitled to paid vacation in accordance with the plans, policies and programs
in effect generally with respect to other peer executives of the Company on the
Managing Committee or at Impact Level I, as applicable.
5. Termination of Employment.
-------------------------
(a) Death or Disability. The Executive's employment shall terminate
-------------------
automatically upon the Executive's death during the Employment Period. If the
Executive
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<PAGE>
suffers a Disability, the Executive's employment may end pursuant to the policy
of Company governing extended medical absences as in effect on the date of the
Change in Control. For purposes of this Agreement, "DISABILITY" shall mean the
absence of the Executive from the Executive's duties with the Company as a
result of incapacity due to mental or physical illness.
(b) Cause. The Company may terminate the Executive's employment during
-----
the Employment Period for Cause. For purposes of this Agreement, "CAUSE" shall
mean:
(i) the willful and continued failure of the Executive to
substantially perform the Executive's duties with the Company (other than
any such failure resulting from incapacity due to physical or mental
illness), after a written demand for such performance is delivered to the
Executive by the Board or the Chief Executive Officer of BankAmerica or of
the subsidiary employing the Executive, which specifically identifies the
manner in which the Board or Chief Executive Officer believes that the
Executive has not substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct or
gross misconduct which is injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of legal counsel for
the Company shall be conclusively presumed to be done, or omitted to be done, by
the Executive in good faith and in the best interests of the Company. The
cessation of employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board at a meeting of the Board (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity to submit written comments to the Board), finding that, in the good
faith opinion of the Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.
(c) Good Reason. The Executive's employment may be terminated by the
-----------
Executive for Good Reason during the Employment Period. For purposes of this
Agreement, "GOOD REASON" shall mean:
(i) any failure by the Company to comply with any of the provisions
of Section 4(a) of this Agreement, excluding for this purpose an isolated,
insubstantial and inadvertent failure not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by
the Executive;
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<PAGE>
(ii) any failure by the Company to comply with any of the provisions
of Section 4(b) of this Agreement, other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is remedied by
the Company promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than as provided in Section 4(a)(i)(B) hereof.
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by BankAmerica to comply with and satisfy Section
12(c) of this Agreement.
For purposes of this Section 5(c), any determination of "Good Reason" made by
the Executive reasonably and in good faith shall be conclusive.
(d) Notice of Termination. Any termination by the Company for Cause, or
---------------------
by the Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 13(b) of this
Agreement. For purposes of this Agreement, a "NOTICE OF TERMINATION" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date. The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "DATE OF TERMINATION" means (i) if the
-------------------
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
the later date specified therein, as the case may be, but no more than 30 days
after the giving of such notice absent the mutual agreement of the Executive and
the Company, (ii) if the Executive's employment is terminated by the Company
other than for Cause or Disability or on account of death, the Date of
Termination shall be the date on which the Company notifies the Executive of
such termination and (iii) if the Executive's employment is terminated by reason
of death or Disability, the Date of Termination shall be the date of death of
the Executive or the date employment ends under the Company policy concerning
extended medical absences, as the case may be.
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<PAGE>
6. Obligations of the Company upon Termination.
-------------------------------------------
(a) Good Reason; Other Than for Cause, Disability or Death. If the
------------------------------------------------------
Company shall terminate the Executive's employment other than for Cause or
Disability or on account of the Executive's death or the Executive shall
terminate employment for Good Reason, and the Date of Termination shall occur
within the Employment Period:
(i) The Company shall pay to the Executive in a lump sum in cash, to
the extent reasonably feasible within 30 days after the Date of
Termination (except for the prorated Annual Bonus described in A.(2)), the
aggregate of the following amounts:
A. The sum of (1) the Executive's Annual Base Salary through the
Date of Termination to the extent not theretofore paid; (2) a prorated
Annual Bonus for the fiscal year in which the Date of Termination occurs
equal to the product of (x) the higher of (I) the Recent Lowest Annual
Bonus and (II) the Annual Bonus paid or payable to peer executives of the
Company on the Managing Committee or at Impact Level I, as applicable, for
such fiscal year if any and (y) a fraction, the numerator of which is the
number of days in the current fiscal year through the Date of Termination,
and the denominator of which is 365, which prorated Annual Bonus shall be
payable at the customary time for the Annual Bonus for the fiscal year;
and (3) any accrued vacation pay, in each case to the extent not
theretofore paid (the sum of the amounts described in clauses (1), (2),
and (3) shall be hereinafter referred to as the "ACCRUED OBLIGATIONS").
B. The amount equal to the product of (1) [three] [two] and (2) the
sum of (x) the Executive's Annual Base Salary and (y) the average of the
actual annual bonus or bonuses received by the Executive for the period of
up to three consecutive fiscal years, commencing with the 1994 fiscal
year, ending immediately preceding the Effective Date.
C. If the Executive forfeits any benefits under the BankAmerica
401(k) Investment Plan or Pension Plan or under any other qualified
retirement plan of the Company, a payment equal to the amount of such
forfeited benefits. The Executive shall also be 100% vested in any
Supplemental Retirement Plan benefits, which shall be payable pursuant to
the terms of such plan.
D. The amount equal to the product of (1) [three] [two] and (2) the
current annual contribution provided by the Company for the Executive's
medical and dental, long term disability, life and accidental death and
dismemberment insurance, multiplied by 191% to compensate for the payment
being taxable.
(ii) If at the time the Executive's employment with the Company
ends, the Executive qualifies as a retiree under the personnel policy of the
Company, the Executive shall be eligible for benefits pursuant to the plans,
programs and policies in effect from time to time
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<PAGE>
for similarly situated retired peer executives of the Company on the Managing
Committee or at Impact Level I, as applicable.
(iii) The Company shall, at its sole expense as incurred, provide
the Executive with outplacement services, the provider of which shall be
selected by the Company, and financial counseling services for the calendar year
in which the Date of Termination occurs and for one additional year pursuant to
the financial counseling program in effect for peer Executives on the Managing
Committee or at Impact Level I, as applicable. The Company does not warrant that
the outplacement services will result in the Executive obtaining new employment.
(iv) To the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is entitled to receive
under any plan, program, policy or contract or agreement of the Company, other
than severance pay or separation benefits subject to Section 13(g). (The other
amounts or benefits required to be paid shall be hereinafter referred to as the
"OTHER BENEFITS"). To the fullest extent permitted by law, payment under Section
6(a)(i)B shall be in lieu of any severance pay or pay in lieu of notice required
under applicable law.
(b) Death. If the Executive's employment is terminated by reason of the
-----
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives, other than
for payment of Accrued Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of
Termination to the extent reasonably feasible. With respect to the provision of
Other Benefits, the term Other Benefits as utilized in this Section 6(b) shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits equal to those provided by the Company to
the estates and beneficiaries of peer executives of the Company on the Managing
Committee or at Impact Level I, as applicable, under such plans, programs and
policies relating to death benefits, if any, as in effect at the time of death.
(c) Disability. If the Executive's employment is terminated by reason of
----------
the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination to the extent reasonably feasible. With
respect to the provision of Other Benefits, the term Other Benefits as utilized
in this Section 6(c) shall include, and the Executive shall be entitled after
the Date of Termination to receive, disability and other benefits equal to those
generally provided by the Company to disabled executives and/or their families
in accordance with such plans, programs and policies relating to disability, if
any, as in effect generally with respect to other peer executives on the
Managing Committee or at Impact Level I, as applicable, and their families, to
the extent the Executive has enrolled in and paid for such benefits, as
applicable.
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<PAGE>
(d) Cause; Other than for Good Reason. If the Executive's employment
---------------------------------
shall be terminated for Cause during the Employment Period, or if the Executive
voluntarily terminates employment during the Employment Period without Good
Reason, this Agreement shall terminate without further obligations to the
Executive (other than the obligation to pay to the Executive (x) his Annual Base
Salary through the Date of Termination and any accrued vacation pay, and (y)
Other Benefits, in each case to the extent theretofore unpaid).
(e) Termination as a Result of Divestiture. This Section shall apply if
--------------------------------------
the Executive ceases to be employed within the Company as a result of a sale of
assets or stock of a BankAmerica subsidiary during the Employment Period. For
purposes of this Section, a "COMPARABLE JOB" is a position with the purchaser
with (i) at least the same base salary and substantially equivalent bonus
opportunity as the Executive's then current position, (ii) duties and
responsibilities which are not substantially less than, and with no duties or
responsibilities substantially inconsistent with, the Executive's then current
position, (iii) eligibility for benefits received by similarly situated
executives of the purchaser, and (iv) a primary work location no more than 35
miles from the Executive's then current primary work location. If the Executive
receives an offer for a comparable job with the purchaser, the Executive shall
not receive payments or benefits under this Agreement, whether or not the
Executive accepts the offer, other than payment of Accrued Obligations and the
timely payment or provision of Other Benefits. However, if the Executive accepts
the comparable job, and within one year of the effective date of the sale, the
purchaser terminates the Executive's employment without Cause or the Executive
resigns on account of the failure of the purchaser to fulfill the terms of an
offer for a comparable job as defined above, the Executive shall, subject to
Section 8, receive payment under Section 6(a)(i)B of this Agreement, less any
severance payments paid to the Executive by the purchaser, and the Executive
shall also receive associated payments under Section 9 of this Agreement. If the
Executive accepts a position with the purchaser which is not a comparable job,
which position is accepted on or before the effective date of the sale, the
Executive shall not receive payments or benefits under the Agreement other than
payment of Accrued Obligations and the timely payment or provision of Other
Benefits, unless within one year of the date of the sale, the purchaser
terminates the Executive's employment without Cause or the Executive resigns
because the Executive's primary work location is moved more than 35 miles from
the Executive's initial primary work location with the purchaser, in which case
the Executive shall, subject to Section 8, receive payment under Section
6(a)(i)B of this Agreement, less any severance payments paid to the Executive by
the purchaser, and the Executive shall also receive associated payments under
Section 9 of this Agreement. For purposes of this provision, the Executive's
Date of Termination shall be the date the Executive's employment with the
purchaser ends.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
-------------------------
limit the Executive's continuing or future participation in any plan, program,
or policy provided by the Company for which the Executive may qualify, nor,
subject to Sections 13(f) and 13(g), shall anything herein limit or otherwise
affect such rights as the Executive may have under any contract or agreement
with the Company. Amounts which are vested benefits, deferred
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<PAGE>
compensation or which the Executive is otherwise entitled to receive under any
plan, policy, or program of, or any contract or agreement with, the Company at
or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, or program or contract or agreement except as explicitly
modified by this Agreement.
8. Signing of Release and Full Settlement.
--------------------------------------
(a) Execution and non-revocation of Release by Executive. The Company's
----------------------------------------------------
obligation to make the payments provided for in this Agreement (other than the
obligation to pay to the Executive (x) his Annual Base Salary through the Date
of Termination and any accrued vacation pay, and (y) Other Benefits, in each
case to the extent theretofore unpaid) and otherwise to perform its obligations
hereunder are subject to the Executive's execution, after the Date of
Termination, and delivery to the Company of a general release in the form of
Appendix "A" attached hereto and the delivery to the Company of a statement of
non-revocation in the form of Appendix "B" executed at least 8 days after the
date of execution of the general release.
(b) Right of Set-Off by Company; No Duty to Seek Employment. The
-------------------------------------------------------
Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any set-
off, counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others, except that the Company shall
be entitled to deduct from the amounts payable under this Agreement any amounts
outstanding on the Executive's business credit card on the Termination Date
which are not reimbursable under the Expense Guidelines of the Company then in
effect. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and such amounts shall
not be reduced whether or not the Executive obtains other employment.
9. Certain Additional Payments by the Company.
------------------------------------------
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 9) (a "PAYMENT") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"CODE"), or any interest or penalties are incurred by the Executive with respect
to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "EXCISE TAX"), then
the Executive shall be entitled to receive an additional payment (a "GROSS-UP
PAYMENT") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive
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<PAGE>
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
(b)(i) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Ernst & Young
or such other nationally recognized certified public accounting firm as may be
designated by the Company (the "ACCOUNTING FIRM") which shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days after the Accounting Firm has been advised that a Payment was made, or such
earlier time as is requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or group
effecting the Change in Control, the Company shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
reasonable fees and expenses of the Accounting Firm shall be borne solely by the
Company. Any Gross-Up Payment, as determined pursuant to this Section 9, shall
be paid by the Company to the Executive promptly following the receipt of the
Accounting Firm's determination, unless the Company requests further
calculations. Any determination made by the Accounting Firm shall be binding
upon the Company and the Executive, although either party may challenge such a
determination through a legal proceeding. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company, should have been made ("UNDERPAYMENT"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 9(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(b)(ii) To the extent the Company overpays any Excise Tax or Gross-Up
Payment, the Executive agrees such overpayment(s) will be immediately returned
to the Company by the Executive. As a condition to receipt of a Gross-Up Payment
or Excise Tax Payment, the Executive consents to jurisdiction and venue in
California in an action by Company to recover any overpayments. The Executive
also agrees to provide Company all financial information and data, including tax
information, reasonably requested by Company to calculate such overpayments. The
Executive agrees that the Executive shall not be entitled to delay or avoid
repayment of overpayments (A) based on other types of tax disputes the Executive
may have with tax authorities, (B) based on a change in the residence of the
Executive following receipt of a Gross-Up Payment or Excise Tax Payment, (C)
based on any claim or claims by the Executive against Company for additional
sums or benefits, or (D) based on any claims or claims for offset by the
Executive against Company.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of
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<PAGE>
a Gross-Up Payment. Such notification shall be given as soon as practicable but
no later than ten business days after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the 30-day period following the date on
which the Executive gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively
to contest such claim, and
(iv) permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Section 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable
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<PAGE>
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 9(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 9(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 9(c), a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days after
Company's receipt of such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
10. Confidential Information. The Executive shall hold in a fiduciary
------------------------
capacity for the benefit of the Company all secret, confidential or non-public
information, knowledge or data relating to the Company (including its employees,
officers, directors, agents or representatives), which was obtained by the
Executive during the Executive's employment by the Company, unless such
information, data, or knowledge is disclosed to the public by an authorized
Company representative. (If the data, information, or knowledge is disclosed by
the Executive or by representatives of the Executive in violation of this
Agreement, this shall not constitute authorized public disclosure.) However,
nothing herein preventing the disclosure of such information, knowledge or data
shall preclude the Executive from utilizing the general non-confidential
knowledge or expertise of the Executive acquired while at the Company in any
position which the Executive may hereafter hold with another employer outside of
the Company. In no event shall an asserted violation of the provisions of this
Section 10 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement. However, breach of this Section
by the Executive is a material breach, and the Company reserves all other
remedies both in law and equity against the Executive for breach of this Section
10.
11. Non-Disparagement. The Executive agrees that the Executive will not
-----------------
publicly (e.g., via an interview or speech or presentation available to the
----
public) criticize, defame, or disparage the Company (including its employees,
officers, directors, representatives or agents), its plans or its actions,
orally or in writing, unless compelled by law to do so. However, if the
Executive is publicly criticized, disparaged, or defamed by a representative of
the Company who is speaking on behalf of the Company, the foregoing contractual
limitations on the Executive's ability to criticize or disparage the Company
shall cease to exist and shall be deemed null and void. In no event shall an
asserted violation of the provisions of this Section 11 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement. However, breach of this Section by the Executive is a material
breach, and the Company reserves all other remedies both in law
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and equity against the Executive for breach of this Section 11. In addition, an
action to enforce obligations under this Section by either party and statements
made in such litigation itself shall not be deemed to violate this Section 11.
12. Successors.
----------
(a) This Agreement is personal to the Executive and without the prior
written consent of an authorized representative of BankAmerica shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
BankAmerica and its successors and assigns.
(c) BankAmerica will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of BankAmerica to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "BankAmerica" shall mean BankAmerica Corporation as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
13. Miscellaneous.
-------------
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the Executive and
BankAmerica (or any successor), signed by the Chief Executive Officer or
Personnel Relations Officer of BankAmerica, except as provided in the following
sentence. If the Executive is the Chief Executive Officer of BankAmerica, the
Chairman of the Executive Personnel and Compensation Committee of the
BankAmerica Board of Directors (or its equivalent successor committee) shall
sign the agreement on behalf of BankAmerica
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
- -------------------
-15-
34217
<PAGE>
If to the Company:
- -----------------
BankAmerica Corporation
Office of the General Counsel #3017
P.O. Box 37000
San Francisco, CA 94137
Street address: 555 California Street, 8th Floor
San Francisco, CA 94104
Attention: General Counsel, and a separate copy to the attention of the
BankAmerica Personnel Relations Officer, at:
BankAmerica Corporation
Executive Offices #3001
P.O. Box 37000
San Francisco, CA 94137
Street address: 555 California Street, 40th Floor
San Francisco, CA 94104
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
-16-
34217
<PAGE>
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and an authorized representative of the Company, the employment of the Executive
by the Company is "at will" and, the Executive's employment may be terminated by
either the Executive or the Company at any time. If such termination or any
other termination of employment occurs prior to the Effective Date, the
Executive shall have no further rights under this Agreement. From and after the
Effective Date this Agreement shall supersede any other agreement between the
parties with respect to the subject matter hereof, although the employment of
the Executive by the Company shall continue to be "at-will" and may be
terminated by the Company or the Executive at any time. If the Executive is not
an employee or officer of BankAmerica, the execution of this Agreement by
BankAmerica shall not cause the Executive to become an employee or officer of
BankAmerica, but rather, the Executive shall remain an employee of the
BankAmerica subsidiary which employs the Executive.
(g) If the Executive is eligible to receive severance pay under this
Agreement, the Executive agrees that the Executive shall not be eligible to
receive severance pay or separation benefits under any other plan, program,
policy, guideline, or practice of the Company, including any staff reduction
program of the Company then in effect, or under any agreement between the
Executive and the Company.
(h) "Peer" or "peer executives" as used in this Agreement shall be as
reasonably determined by the Chief Executive Officer or Personnel Relations
Officer of BankAmerica.
(i) The Executive shall not have the right to alienate, assign,
encumber, hypothecate, or pledge the Executive's interest in any payments or
benefits under this Agreement, voluntarily or involuntarily, and any attempt to
so dispose of any such interest shall be void.
(j) This document is a complete statement of the Agreement and as of
the date executed by both parties supersedes all prior plans, proposals,
representations, promises, and inducements, written or oral, relating to its
subject matter. The Company will not be bound by or liable to the Executive for
any representation, promise, or inducement made by any person or entity relating
to its subject matter which is not embodied in this Agreement.
-17-
34217
<PAGE>
IN WITNESS WHEREOF, the Executive has executed this instrument and
BankAmerica, pursuant to the authorization from its Board of Directors, has
caused this instrument to be executed by its duly authorized officer, on the
dates written below.
Date: ____________________ ______________________________
[Executive]
BANKAMERICA CORPORATION
Dated: ___________________ By ___________________________
_____________________
-18-
34217
<PAGE>
APPENDIX A
GENERAL RELEASE
---------------
PLEASE READ THIS ENTIRE AGREEMENT CAREFULLY.
NOTE THAT IT CONTAINS A RELEASE AND WAIVER OF CLAIMS. YOU ARE ENCOURAGED TO
------------------
CONTACT AN ATTORNEY OF YOUR CHOICE FOR ADVICE CONCERNING ITS TERMS AND LEGAL
SIGNIFICANCE BEFORE SIGNING IT. IF YOU AGREE TO ITS TERMS, SIGN BELOW.
------
I have reviewed the terms of my Agreement with BankAmerica Corporation dated
______________ (the "Agreement") and have had the opportunity to read and
understand its provisions. I received the Agreement together with this General
Release more than 45 days prior to the date I am signing this General Release.
In particular, I understand that to receive separation benefits, including
severance pay, provided under the Agreement, I must agree to the terms of this
General Release and to the terms of the Non-Revocation Form, which I have also
received, and properly complete, sign and return both of these documents to the
Company. I understand the Non-Revocation form may not be signed and returned
any sooner than 8 days after I sign this General Release, and that I can revoke
my agreement to this General Release for seven days after I sign the General
Release. If signed by me, this General Release is my voluntary resignation from
any and all directorships or board memberships or committee memberships I hold
with or within BankAmerica Corporation, including its subsidiaries or its
affiliates (hereinafter collectively the "Company") or on the Company's behalf
or for the Company's benefit. I will promptly complete whatever documentation
is required to effect these resignations.
I also agree to make myself reasonably available, provide information and
otherwise cooperate with the Company or its representatives after my employment
ends in connection with any matter, dispute or the like for which the Company
desires my availability or cooperation, or in connection with any data I possess
which the Company wishes to obtain related to my employment with the Company.
The Company will reimburse me for reasonable documented expenses in accord with
then applicable company expense guidelines.
As consideration and in exchange for my receipt and acceptance of the separation
benefits, including severance pay, provided under the Agreement, and to the
extent permitted by law, I hereby waive, release and fully discharge, and agree
not to pursue, any and all claims, claims for relief and/or causes of action I
have or may have as of the date I sign this General Release against BankAmerica
Corporation, Bank of America NT&SA, and/or its or their current or former,
affiliates, subsidiaries, successors, or predecessors, and/or any of the current
or former, officers, directors, shareholders, employees, attorneys, employee
benefit plans, representatives, successors or agents of the foregoing entities
(Released Parties), arising out of
-1-
34217
<PAGE>
and/or connected in any way with my employment relationship within the Company,
and/or the termination of that employment relationship, and/or with respect to
any other claim, matter, or event arising prior to the time I execute this
General Release. I recognize and agree that such released claims, claims for
relief, and/or causes of action include, but are not limited to, age claims
under the federal Age Discrimination in Employment Act, as well as claims under
Title VII of the Civil Rights Act of 1964, Section 1981 of Title 42 of the
United States Code, the Employee Retirement Income Security Act of 1974, the
Racketeer Influenced and Corrupt Organizations Act, the Financial Reform
Recovery and Enforcement Act of 1989, the Americans With Disabilities Act, the
Rehabilitation Act of 1973, the federal Family and Medical Leave Act, the
California Fair Employment and Housing Act, the California Labor Code, the Equal
Pay Act, the Fair Labor Standards Act, and all other laws, whether foreign,
federal, state or local of any jurisdiction. This General Release does not waive
rights or claims based on events that may occur after the date I sign it.
To the extent permitted by law, I further hereby waive all rights under Section
1542 of the California Civil Code or any similar law of any jurisdiction against
the Released Parties. I recognize that Section 1542 provides:
"A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor."
I understand that should any provision of this General Release be determined to
be invalid by a court or government agency of competent jurisdiction or should I
fail to fulfill my obligations under it, the remainder of this General Release
shall, at the Company's option, remain in full force and effect and/or I shall
be required to return, in full or in part, as determined by the Company, any and
all consideration I received in exchange for my agreeing to this General
Release.
I hereby confirm my promise to adhere to the terms of the confidentiality clause
and nondisparagement clause at Sections 10 and 11 of the Agreement and to
fulfill my obligations and agreements relating to any payment under Section 9 of
the Agreement.
Nothing in this General Release constitutes an admission of liability by the
parties. This General Release constitutes the complete understanding of the
parties concerning its subject matter, and supersedes any and all prior
agreements, promises or inducements, written or oral, except as specifically set
forth in the Agreement. No other promises or agreements, or any modifications
to or of this General Release, shall be binding unless reduced to writing and
signed by an authorized representative of the Company and me.
I acknowledge that I have read this General Release, that I fully understand and
appreciate its meaning, and that I had an opportunity to consult my own
attorney.
-2-
34217
<PAGE>
This General Release does not release any vested rights I may have under the
pension program or savings program, or any claims I may have for indemnification
under applicable law or applicable by-laws, any claims I may have for workers
compensation, disability, or unemployment insurance benefits, nor does it
release any claims for breach of the Agreement itself. If I am retiring, this
General Release also does not affect my participation in any benefit program
made available to retirees by the Company.
- -------------------------
Signature
- -------------------------
Printed Name of Executive
- -------------------------
Date
- -------------------------
Social Security No.
THIS GENERAL RELEASE MAY NOT BE SIGNED AND RETURNED UNTIL AFTER YOUR DATE OF
TERMINATION.
-3-
34217
<PAGE>
APPENDIX B
STATEMENT OF NON-REVOCATION OF GENERAL RELEASE
AS OF THE DATE SHOWN ON THIS FORM
By signing below, I hereby verify that I have chosen not to revoke my
agreement to and execution of the General Release. My signature also confirms
my renewed agreement, as of the date shown below, to the terms of the General
Release, including the release and waiver to the extent permitted by law of any
and all claims I have or may have against BankAmerica Corporation, Bank of
America NT&SA, including its or their subsidiaries and affiliates, and the
officers, employees, directors, representatives and/or agents of any of the
foregoing entities, or any other Released Parties, other than claims
specifically excluded from release by the terms of the General Release itself.
- -------------------------
Signature
- -------------------------
Printed Name of Executive
- -------------------------
Date
- -------------------------
Social Security No.
TO BE VALID, THIS DOCUMENT MAY NOT BE SIGNED AND RETURNED UNTIL 8 DAYS OR MORE
AFTER THE DATE THE GENERAL RELEASE IS SIGNED
34217
<PAGE>
EXHIBIT 12(A)
PAGE 1 OF 2
BANKAMERICA CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30 YEAR ENDED DECEMBER 31
---------------- ---------------------------------------------------
(DOLLAR AMOUNTS IN MILLIONS) 1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
EXCLUDING INTEREST ON DEPOSITS
Fixed charges:
Interest expense (other than interest on deposits) $1,441 $1,289 $ 2,713 $2,455 $1,505 $1,215 $1,126
Interest payments on trust preferred securities
(see footnote (a)) 70 - 7 - - - -
Interest factor in rent expense 61 63 125 120 109 112 95
Other 1 - - - 3 2 1
---------------- --------------------------------------------------
$1,573 $1,352 $ 2,845 $2,575 $1,617 $1,329 $1,222
================ ==================================================
Earnings:
Income from operations $1,579 $1,443 $ 2,873 $2,664 $2,176 $1,954 $1,492
Applicable income taxes 1,066 1,016 1,900 1,903 1,541 1,474 1,190
Fixed charges 1,573 1,352 2,845 2,575 1,617 1,329 1,222
Other (27) - (9) (12) (55) (39) (14)
---------------- --------------------------------------------------
$4,191 $3,811 $ 7,609 $7,130 $5,279 $4,718 $3,890
================ ==================================================
RATIO OF EARNINGS TO FIXED CHARGES,
EXCLUDING INTEREST ON DEPOSITS 2.66 2.82 2.67 2.77 3.26 3.55 3.18
INCLUDING INTEREST ON DEPOSITS
Fixed charges:
Interest expense $4,231 $3,910 $ 8,072 $7,378 $4,842 $4,186 $4,895
Interest payments on trust preferred securities
(see footnote (a)) 70 - 7 - - - -
Interest factor in rent expense 61 63 125 120 109 112 95
Other 1 - - - 3 2 1
---------------- --------------------------------------------------
$4,363 $3,973 $ 8,204 $7,498 $4,954 $4,300 $4,991
================ ==================================================
Earnings:
Income from operations $1,579 $1,443 $ 2,873 $2,664 $2,176 $1,954 $1,492
Applicable income taxes 1,066 1,016 1,900 1,903 1,541 1,474 1,190
Fixed charges 4,363 3,973 8,204 7,498 4,954 4,300 4,991
Other (27) - (9) (12) (55) (39) (14)
---------------- --------------------------------------------------
$6,981 $6,432 $12,968 $12,053 $8,616 $7,689 $7,659
================ ==================================================
RATIO OF EARNINGS TO FIXED CHARGES,
INCLUDING INTEREST ON DEPOSITS 1.60 1.62 1.58 1.61 1.74 1.79 1.53
</TABLE>
(a) Trust preferred securities represent corporation obligated mandatorily
redeemable preferred securities of subsidiary trusts holding solely junior
subordinated deferrable interest debentures of the corporation.
<PAGE>
EXHIBIT 12(A)
PAGE 2 OF 2
BANKAMERICA CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30 YEAR ENDED DECEMBER 31
---------------- ---------------------------------------------------
(DOLLAR AMOUNTS IN MILLIONS) 1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
EXCLUDING INTEREST ON DEPOSITS
Fixed charges and preferred dividends:
Interest expense (other than interest on deposits) $1,441 $1,289 $ 2,713 $2,455 $1,505 $1,215 $1,126
Interest payments on trust preferred securities
(see footnote (a)) 70 - 7 - - - -
Interest factor in rent expense 61 63 125 120 109 112 95
Preferred dividend requirements (see footnote (b)) 107 167 307 389 424 423 304
Other 1 - - - 3 2 1
---------------- --------------------------------------------------
$1,680 $1,519 $ 3,152 $2,964 $2,041 $1,752 $1,526
================ ==================================================
Earnings:
Income from operations $1,579 $1,443 $ 2,873 $2,664 $2,176 $1,954 $1,492
Applicable income taxes 1,066 1,016 1,900 1,903 1,541 1,474 1,190
Fixed charges, excluding preferred dividend
requirements 1,573 1,352 2,845 2,575 1,617 1,329 1,222
Other (27) - (9) (12) (55) (39) (14)
---------------- --------------------------------------------------
$4,191 $3,811 $ 7,609 $7,130 $5,279 $4,718 $3,890
================ ==================================================
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED
DIVIDENDS, EXCLUDING INTEREST ON DEPOSITS 2.49 2.51 2.41 2.41 2.59 2.69 2.55
INCLUDING INTEREST ON DEPOSITS
Fixed charges and preferred dividends:
Interest expense $4,231 $3,910 $ 8,072 $7,378 $4,842 $4,186 $4,895
Interest payments on trust preferred securities
(see footnote (a)) 70 - 7 - - - -
Interest factor in rent expense 61 63 125 120 109 112 95
Preferred dividend requirements (see footnote (b)) 107 167 307 389 424 423 304
Other 1 - - - 3 2 1
---------------- --------------------------------------------------
$4,470 $4,140 $ 8,511 $7,887 $5,378 $4,723 $5,295
================ ==================================================
Earnings:
Income from operations $1,579 $1,443 $ 2,873 $2,664 $2,176 $1,954 $1,492
Applicable income taxes 1,066 1,016 1,900 1,903 1,541 1,474 1,190
Fixed charges, excluding preferred dividend
requirements 4,363 3,973 8,204 7,498 4,954 4,300 4,991
Other (27) - (9) (12) (55) (39) (14)
---------------- --------------------------------------------------
$6,981 $6,432 $12,968 $12,053 $8,616 $7,689 $7,659
================ ==================================================
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED
DIVIDENDS, INCLUDING INTEREST ON DEPOSITS 1.56 1.55 1.52 1.53 1.60 1.63 1.45
</TABLE>
(a) Trust preferred securities represent corporation obligated mandatorily
redeemable preferred securities of subsidiary trusts holding solely junior
subordinated deferrable interest debentures of the corporation.
(b) Preferred stock dividend requirements represent pretax earnings necessary to
cover preferred stock dividends declared during the six months ended June
30, 1997 and 1996 and the years ended December 31, 1996, 1995, 1994, 1993,
and 1992 of $64 million, $98 million, $185 million, $227 million, $248
million, $241 million, and $169 million, respectively.
<PAGE>
Exhibit 12(b)
-------------
Page 1 of 2
-----------
BANKAMERICA CORPORATION
Historical and Pro Forma Combined Ratio of Earnings
to Fixed Charges and Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends
The ratio of earnings to fixed charges is computed by dividing earnings by
fixed charges. The ratio of earnings to combined fixed charges and preferred
stock dividends is computed by dividing earnings by the sum of fixed charges and
preferred stock dividend requirements. Earnings consist primarily of income
(loss) before income taxes adjusted for fixed charges. Fixed charges consist
primarily of interest expense on short- and long-term borrowings and one-third
(the portion deemed representative of the interest factor) of net rents under
long-term leases.
The following table sets forth (i) the historical ratios of earnings to fixed
charges and the ratios of earnings to combined fixed charges and preferred stock
dividends for the year ended December 31, 1992 for BankAmerica Corporation and
its consolidated subsidiaries (BAC) and for Security Pacific Corporation and its
consolidated subsidiaries (SPC) and (ii) the pro forma combined ratios of
earnings to fixed charges and ratios of earnings to combined fixed charges and
preferred stock dividends for the year ended December 31, 1992, giving effect to
the April 22, 1992 merger between BAC and SPC (the Merger) as if it had been
consummated on January 1, 1991. The pro forma combined ratio has been
calculated using the pro forma combined financial information for the year ended
December 31, 1992, and should be read in conjunction with and is qualified in
its entirety by such pro forma combined information included in the 1994 Annual
Report to Shareholders. Pro forma adjustments made to arrive at the pro forma
combined ratio are based on the purchase method of accounting and are based upon
actual amounts recorded by BAC subsequent to the effective time of the Merger.
<PAGE>
Exhibit 12(b)
-------------
Page 2 of 2
-----------
<TABLE>
<CAPTION>
Year Ended
December 31, 1992
-----------------------
Historical Pro Forma
----------- ---------
BAC/a/ SPC Combined
--- --- ---------
<S> <C> <C> <C>
RATIO OF EARNINGS TO FIXED CHARGES
Excluding interest on deposits 3.18 /b/ 2.05
Including interest on deposits 1.53 /b/ 1.27
RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS
Excluding interest on deposits 2.55 /b/ 1.87
Including interest on deposits 1.45 /b/ 1.26
</TABLE>
- --------------------------------------------------------------------------------
/a/ This financial information reflects the effects of the Merger subsequent to
the Merger's consummation on April 22, 1992.
/b/ Because the Merger was consummated on April 22, 1992, there is no year-to-
date data for SPC.
These pro forma combined ratios are intended for informational purposes
and are not necessarily indicative of the future ratios of earnings to fixed
charges and ratios of earnings to combined fixed charges and preferred stock
dividends of the combined company or the ratios of earnings to fixed charges and
ratios of earnings to combined fixed charges and preferred stock dividends of
the combined company that would have actually occurred had the Merger been
effective on January 1, 1991.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS FINANCIAL DATA SCHEDULE ON FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1997
CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE
SHEET, CONSOLIDATED STATEMENT OF OPERATIONS, AVERAGE BALANCES, INTEREST, AND
AVERAGE RATES, NONACCRUAL ASSETS, RESTRUCTURED LOANS, AND LOANS PAST DUE 90 DAYS
OR MORE AND STILL ACCRUING INTEREST, QUARTERLY CREDIT LOSS EXPERIENCE, AND
COMPOSITION OF ALLOWANCE FOR CREDIT LOSSES, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH 10-Q FILING.
Any item provided in the schedule, in accordance with the rules governing the
schedule, will not be subject to liability under the federal securities laws,
except to the extent that the financial statements and other information from
which the data were extracted violate the federal securities laws. Also,
pursuant to item 601(c)(1)(iv) of Regulation S-K promulgated by the Securities
and Exchange Commission (SEC), the schedule shall not be deemed filed for
purposes of Section 11 of the Securities Act of 1933, Section 18 of the Exchange
Act of 1934 and Section 323 of the Trust Indenture Act, or otherwise be subject
to the liabilities of such sections, nor shall it be deemed a part of any
registration statement to which it relates.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 14,884
<INT-BEARING-DEPOSITS> 7,037
<FED-FUNDS-SOLD> 7,542
<TRADING-ASSETS> 16,765
<INVESTMENTS-HELD-FOR-SALE> 11,959
<INVESTMENTS-CARRYING> 3,858
<INVESTMENTS-MARKET> 3,655
<LOANS> 168,806
<ALLOWANCE> 3,563
<TOTAL-ASSETS> 258,363
<DEPOSITS> 173,168
<SHORT-TERM> 29,756
<LIABILITIES-OTHER> 20,335<F1>
<LONG-TERM> 14,736<F2>
<COMMON> 1,596
1,210
0
<OTHER-SE> 17,562
<TOTAL-LIABILITIES-AND-EQUITY> 258,363
<INTEREST-LOAN> 6,920
<INTEREST-INVEST> 556
<INTEREST-OTHER> 1,123<F3>
<INTEREST-TOTAL> 8,599
<INTEREST-DEPOSIT> 2,790
<INTEREST-EXPENSE> 4,231
<INTEREST-INCOME-NET> 4,368
<LOAN-LOSSES> 470
<SECURITIES-GAINS> 34
<EXPENSE-OTHER> 4,080
<INCOME-PRETAX> 2,645
<INCOME-PRE-EXTRAORDINARY> 2,645
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,579
<EPS-PRIMARY> 2.10
<EPS-DILUTED> 2.09
<YIELD-ACTUAL> 4.13
<LOANS-NON> 861
<LOANS-PAST> 214
<LOANS-TROUBLED> 302
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,523
<CHARGE-OFFS> 595
<RECOVERIES> 167
<ALLOWANCE-CLOSE> 3,563
<ALLOWANCE-DOMESTIC> 0<F4>
<ALLOWANCE-FOREIGN> 0<F4>
<ALLOWANCE-UNALLOCATED> 782
<FN>
<F1>Includes trust preferred securities of $1,873 million.
<F2>Includes subordinated capital notes of $354 million.
<F3>Includes interest income on trading account assets of $567 million.
<F4>These amounts are not reported in our interim filing.
</FN>
</TABLE>
